Rhode Island Currency Transmitter Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain Rhode Island Currency Transmitter Bonds

At a Glance:

• Lowest Cost: $750 per year or $75 per month based on the applicant’s credit
• Bond Amount: $50,000
• Who Needs it: All currency transmitters operating in Rhode Island
• Purpose: To ensure the public will receive compensation for any damages should the currency transmitter violate licensing law
• Who Regulates Debt Management Companies In Rhode Island: The Rhode Island Department of Business Regulation

Background

The Rhode Island Currency Transmissions Act requires all currency transmitters operating in the state to obtain a license with the Department of Business and Regulation. The Rhode Island legislature enacted the licensing laws and regulations to ensure that currency transmitters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, currency transmitters must purchase and maintain a $50,000 surety bond to be eligible for licensure.

What is the Purpose of the Rhode Island Currency Transmitter Bond?

Rhode Island requires currency transmitters to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the currency transmitter fails to comply with the regulations set forth in the Rhode Island Currency Transmissions Act. Specifically, the bond protects the public in the event the currency transmitter engages in any acts of fraud or breaches any contracts made with consumers. In short, the bond is a type of insurance that protects the public if the currency transmitter breaks licensing laws.

How Can an Insurance Agent Obtain a Rhode Island Currency Transmitter Surety Bond?

BondExchange makes obtaining a Rhode Island Currency Transmitter Bond easy. Simply login to your account and use our keyword search to find the “currency” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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Is a Credit Check Required for the Rhode Island Currency Transmitter Bond?

Surety companies will run a credit check on the owners of the currency transmission company to determine eligibility and pricing for the Rhode Island Currency Transmitter bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.

How Much Does the Rhode Island Currency Transmitter Bond Cost?

The Rhode Island Currency Transmitter Bond can cost anywhere between $750 to $3,750 per year or $75 to $375 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $50,000 bond requirement.

$50,000 Debt Management Services Bond Cost

How Does Rhode Island Define “Currency Transmitter?”

To paraphrase the Rhode Island Currency Transmissions Act, a currency transmitter is any business entity who sells checks or who transfers currency electronically.

BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.

How Do Currency Transmitters Apply for a License in Rhode Island

Currency transmitters in Rhode Island must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.

License Period – The Rhode Island Currency Transmitter License expires on December 31 of each year and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Currency transmitters must purchase and maintain a $25,000 surety bond

Step 2 – Meet the Net Worth Requirements

Applicants for the Rhode Island Currency Transmitter License must at all times maintain a positive company net worth (assets – liabilities). Applicants must submit company financial statements verifying their net worth when submitting their license application.

Step 3 – Hire a Qualifying Individual

Currency transmitters must employ a qualified individual who is capable of handling the day to day operations of the business. The qualifying individual must have a minimum of 5 years experience in the money services industry, and hold physical employment in the company’s main office.

Step 4 – Request a NMLS Account

The Rhode Island Currency Transmitter License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.

Step 5 – Complete the Application

All Rhode Island Currency Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Company financial statements indicating a positive net worth
  • Locations for all company authorized delegates
  • Primary company and consumer complaint contacts
  • Company’s FinCEN confirmation number and filing date
  • Disclosure questions
  • Company’s independently reviewed AML/BSA policy
  • Company business plan
  • Certificate of good standing
  • Company staffing and internal policies
  • Flow of funds structure
  • Company formation documents
  • Company management and organizational charts
  • Trust account authorizations

Currency transmitters must pay the following fees when submitting their license application:

• • $1,000 license fee
  • $500 application fee
  • $36.25 background check fee (per person)
  • $15 credit report fee (per person)

How Do Rhode Island Currency Transmitters Renew Their License?

Currency transmitters can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Rhode Island Currency Transmitter License expires on December 31 of each year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Rhode Island Currency Transmitter License?

Rhode Island does not require currency transmitters to purchase any form of liability insurance  as a prerequisite to obtaining a business license. Currency transmitters must purchase and maintain a $25,000 surety bond.

How Do Rhode Island Currency Transmitters File Their Bond?

Currency transmitters should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the currency transmission company. The surety company should include the following information on the bond form:

• Name and NMLS number of entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond goes into effect
• Date the bond is signed

What Can Rhode Island Currency Transmitters Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, currency transmitters in Rhode Island must ensure that they follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage in any acts of fraud
• Do not breach any contracts made with consumers

What Other Insurance Products Can Agents Offer Currency Transmitters in Rhode Island?

Rhode Island does not require currency transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for Rhode Island Currency Transmitter Customers?

The NMLS conveniently provides a public database to search for active currency transmitters in Rhode Island. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.