There is a new law regarding money transmitters in South Dakota titled HB 1009. The previous law required a cash deposit or securities of $100,000, and $5,000 for each extra location in the state. The maximum amount one could deposit was $250,000 under prior law. As a replacement for the deposit or securities, a surety bond was allowed to be posted in the same amount. Under law HB 1009, letter of credit, a surety bond, or other security is required in the sum of $100,000. The new law would permit the Director of the Division of Banking to increase the amount of the bond/security if the licensee’s financial condition is weakened, as evidenced by a reduction in financial losses, net worth, etc. The new law also raises the maximum amount of the bond/security from $250,000 to $500,000. Under existing law, the surety’s accountability would be limited to the penal sum of the bond; the bond is cancellable. The new law allows direct actions to be taken on the bond/security from any applicant in opposition to the licensee. The Director of the Division of Banking would be allowed to take action against the bond or security.
Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog.