Kansas Money Transmitters See New License Bond Requirements

Kansas Money Transmitters See New License Bond Requirements

Date Enacted:  April 29, 2015

Date Effective:  July 1, 2015

Recently, Kansas has updated the Kansas Money Transmitter Act. The amendments to this Act include an increase in the maximum financial security amount for money transmitters license bonds. Not bonded yet? Learn how to get your Kansas money transmitter bond.

Specific Money Transmitter Bond Changes

With the revisions to these statutes come financial security changes. HB 2216 allows for an increase in the maximum amount of a surety bond (or other security) from $500,000 to $1 million as determined by the State Bank Commissioner. This increase must be based on one of two factors: an increase in business volume in the state or evidence of financial impairment, such as a reduction in net worth or financial losses.

The minimum bond requirement for licensure remains at $200,000.

What is a Money Transmitter Bond?

If you’ve never been required to obtain a bond before, you may not understand how it works. A money transmitter bond (also known as a surety bond) is a type of insurance. It doesn’t protect the bond holder, but rather the public, by providing an assurance that the laws of the state will be adhered to. Businesses are required to obtain the bond in order to be licensed, and claims can be made against the bond if there is a breach of contract or other legal violation. While the bond may pay the claim, you will still have to reimburse the surety bond company.

How to Get and File a Money Transmitter Bond

Never applied for a bond before? No problem. Follow these simple steps to get one.

  1. Get a license/business application from the Office of the State Bank Commissioner.
  2. Apply for your money transmitter bond through a surety bond agency. Some companies, like JW Surety Bonds, approve bonds online which will allow you to easily apply from home.
  3. Once you get your approval, send your bond and your completed application to the Office of the State Bank Commissioner.

How Bond Premiums are Determined

The premium is determined by the size of the bond and your credit score. Bond premiums vary but they’re generally about 1-3% of the total bond amount if you have excellent credit and could be as much as 15% of the total bond amount if you have bad credit.

If you still have questions or concerns about surety bonds, you can always contact JW Surety Bonds for assistance.

If you want to see the full text of this new legislation, please read the Kansas Money Transmitter Act.