North Dakota Money Transmitter Bond

A North Dakota money transmitter bond is a mandatory requirement for businesses engaged in transmitting money or monetary value within or outside the state. It’s part of the licensing process regulated by the North Dakota Department of Financial Institutions (DFI). This bond protects consumers and ensures money transmitters follow all state laws and regulations. If you’re planning to operate as a money transmitter in North Dakota, understanding the bond’s purpose, cost, and requirements is essential before you start operations.

A North Dakota Money Transmitter Bond is a type of surety bond that serves as a financial guarantee to the state and consumers. It ensures that licensed money transmitters handle funds responsibly and comply with the North Dakota Money Transmitter Act. If a licensee engages in fraud, mismanagement, or fails to deliver funds, affected parties can file a claim against the bond for compensation. Businesses that transmit money, issue payment instruments, or handle virtual currency transactions generally need this bond to operate legally.

The cost of a North Dakota Money Transmitter Bond depends on the bond amount set by the DFI, the applicant’s creditworthiness, and other financial indicators.

Bond Amount

According to the North Dakota DFI, the required bond amount is between $150,000 and $500,000, depending on transaction volume and business risk profile. The state may increase this amount if it deems a business’s operations to carry higher risk.

Premium

While the bond amount determines the coverage, the business only pays a percentage of that amount—known as the premium. Premium rates typically range from 1% to 5% of the total bond amount. For example:

• $150,000 bond at 1% premium = $1,500 annually
• $500,000 bond at 5% premium = $25,000 annually
   

Bond Term

The bond is generally issued for a one-year term. Businesses must maintain continuous coverage to keep their license active.

Renewals

Bond renewals are straightforward. Surety companies usually send notifications ahead of expiration. Paying the renewal premium ensures uninterrupted bond coverage, which is critical to maintaining your money transmitter license.

The state’s bond requirements aim to ensure only financially stable and compliant businesses operate in the industry.

Financial and Legal Qualifications

Applicants must demonstrate good credit history, financial stability, and compliance with state laws. The DFI may require audited financial statements and proof of a minimum net worth as part of the licensing process.

Bond Duration and Cancellation

The bond must remain active for as long as the license is valid. Surety providers can cancel the bond by giving the DFI 30 days’ written notice, but licensees must replace the bond before cancellation to avoid losing their license.

Obtaining a North Dakota Money Transmitter Bond involves several steps.

Apply Through the NMLS System

All applications are processed via the Nationwide Multistate Licensing System (NMLS). This platform streamlines the submission of bond and licensing documents.

Prepare Financial Documents

Gather audited financial statements, proof of net worth, and any other documents required by the DFI.

Obtain a Surety Bond

Work with a licensed surety provider to secure your money transmitter bond. Premiums will vary based on your financial profile.

Submit Application

Submit your completed bond form, financial documents, and licensing application through the NMLS.

Annual Renewal

Renew both your license and bond annually to continue operations without disruption.

Meeting the bond requirement is just one part of the licensing process. Businesses must also follow the state’s full application steps to secure their money transmitter license. If you’re unsure about the process, this guide on how to get a money transmitter license walks you through every stage, from gathering documents to filing through the NMLS.

Purchase the Required Surety Bond

Secure your bond from a reputable surety provider before filing your application.

File the Bond Electronically

Bonds must be filed electronically via the NMLS for verification and approval.

Include Bond Details

Ensure that the bond form includes accurate business information, bond amount, and the name of the surety provider.

Maintain Net Worth

Licensees must meet the state’s net worth requirements at all times to keep their license valid.

To remain compliant, you must renew your bond annually. Most surety companies will send renewal notices well in advance. Late renewals can result in license suspension. Keeping your business’s credit profile strong can help reduce renewal premiums over time.

Operating without a valid bond is a serious offense. Penalties may include license suspension, fines, and legal action. If a bond claim is paid due to a business’s misconduct, the licensee must reimburse the surety company for the claim amount. Continued violations can lead to permanent license revocation.

In addition to obtaining a money transmitter bond, licensees may be required to carry other insurance policies, such as fidelity coverage to protect against employee theft. They must also comply with anti-money laundering laws, reporting requirements, and state-specific financial regulations. The North Dakota DFI provides detailed requirements on its official website.

North Dakota Department of Financial Institutions. (n.d.). Money Transmitters. Retrieved from
https://www.nd.gov/dfi/

Nationwide Multistate Licensing System & Registry. (n.d.). Money Transmitter Licensing. Retrieved from
https://mortgage.nationwidelicensingsystem.org/

JW Surety Bonds. (n.d.). How to get a money transmitter license. Retrieved from
https://www.jwsuretybonds.com/licensing/money-transmitters/

JW Surety Bonds. (n.d.). Money transmitter bond. Retrieved from
https://www.jwsuretybonds.com/license-bonds/money-transmitter-bond

U.S. Department of the Treasury – Financial Crimes Enforcement Network. (n.d.). Financial Regulations. Retrieved from
https://www.fincen.gov/money-services-business-msb-registration