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Expert Surety Bonds Since 2004
Need assistance? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Expert Surety Bonds Since 2004
The Alabama money transmitter bond starts at $100,000 and the Securities Commission sizes it to your outstanding obligations, so the premium is based on a number specific to your business. The bond uses the Commission's own Form USB, it names the State of Alabama and your customers as the protected parties, and a surety can quote it from your financials and the owner's credit without tying up operating capital.
Alabama requires every licensee under the Alabama Monetary Transmission Act, Code of Ala. 8-7A-1 and following, to maintain a surety bond or similar security filed with the Alabama Securities Commission. Under 8-7A-7 the bond is never less than $100,000. It is set at the licensee's average daily outstanding money transmission obligations in Alabama plus 50 percent of average daily outstanding payment instrument and stored value obligations, whichever is greater, and the Commission may raise it to $5,000,000. The bond is written on the Commission's Form USB.
We can help with all Alabama bonds!
Code of Ala. 8-7A-7 sets the security for an Alabama money transmitter at the greater of two numbers: $100,000, or the licensee's average daily outstanding obligations for money received for transmission in Alabama plus 50 percent of its average daily outstanding payment instrument and stored value obligations in Alabama. A new applicant with no Alabama volume starts at the $100,000 floor. A licensee with meaningful float will owe a larger bond, and the Securities Commission may increase the security to a maximum of $5,000,000 if the licensee's financial condition requires it. The Commission may also reduce or eliminate the bond to the extent outstanding obligations fall below the coverage. Budget for the formula, not the minimum.
Anyone who sells or issues payment instruments or stored value, or receives money for transmission, in Alabama needs a license from the Alabama Securities Commission under the Monetary Transmission Act, and every licensee maintains this security. Authorized delegates operate under the licensee's license and bond rather than their own. The Commission's page notes that entities licensed under the prior Chapter 7 as of August 1, 2017 were carried into the current Act. A licensee must also show a minimum net worth of $25,000 under generally accepted accounting principles, and the net worth requirement does not replace the bond.
The Commission prescribes Form USB. It runs to the State of Alabama for the benefit of any creditor of the licensee who is damaged by a failure to comply with the Act, and it conditions the principal on faithfully applying all funds received. The bond must cover claims for a minimum of five years after the licensee stops providing money transmission services in Alabama, so a surety will treat this as a long tail obligation and may ask for collateral or continued premium after the license is surrendered.
Licenses expire on March 31 each year. Renewal is due by March 15 with a 20 day grace period and a late fee of $100 per day. The initial filing fee is $500 and nonrefundable, the initial license fee is $500, and the annual renewal fee is a minimum of $500. Keep the bond continuous across each renewal.
If a licensee fails to transmit funds, fails to honor payment instruments or stored value, or otherwise breaches the Act, the state or an injured customer can recover against the bond up to the penal sum. The surety then pursues the licensee under the indemnity agreement. Confirm the current required amount and the filing method with the Securities Commission before the surety executes Form USB.
No. $100,000 is the floor under 8-7A-7. The required amount is the greater of $100,000 or your average daily outstanding Alabama transmission obligations plus 50 percent of your average daily outstanding payment instrument and stored value obligations. The Commission can raise it as high as $5,000,000.
The Act allows a surety bond, letter of credit or other similar security acceptable to the Commission. A surety bond is usually the least expensive option because it does not tie up cash or credit lines.
No. Authorized delegates act under the licensee's license and the licensee's security. The licensee is responsible for its delegates.
All licenses under the Act expire on March 31. Renewal is due by March 15, with a 20 day grace period and a $100 per day late fee. The renewal fee is a minimum of $500.
Under 8-7A-7 the surety bond must cover claims for a minimum of five years after the licensee ceases to provide money transmission services in Alabama. Plan for that tail when you surrender the license.
The surety quotes a percentage of the bond amount based on the company's financial statements, liquidity and the owner's personal credit. Larger bonds and start ups draw closer underwriting. The premium is paid annually for as long as the bond is in force.
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