Washington money transmitters and currency exchangers must adhere to the provisions of SB 5031 following its passage in April and subsequentJuly 23, 2017 effective date.
A notable impact SB 5031 makes on Washington money transmitters is in its elimination of allowing other forms of financial security in place of a surety bond. This means that applicants will no longer be allowed to submit certificates of deposit or any other form of security the Director of the Department of Financial Institutions previously accepted.
The surety bond amount is calculated based on the previous year’s money transmission and payment instrument dollar volume. The bond must be at least $10,000 and no more than $550,000, though the Director may increase the bond up to $1,000,000. The surety bond is continuous until cancelation, which becomes effective 30 days after the Department receives written notice of its cancellation. The bond must cover claims for five years following the money transmitter’s violation of state and/or federal laws, or for five years after the business stops providing money transmission services, whichever is longer.
Washington money transmitters, like money transmitters in most states, are licensed through the Nationwide Multistate Licensing System (NMLS). Washington state has a list of prerequisites prepared for money transmitter applicants that should be reviewed before submitting an application. Among other requirements, some of the prerequisites include the following:
- Tangible net worth of at least $10,000 per $1 million of money transmission and payment instrument volume; minimum net worth of $10,000 and maximum of $3,000,000
- Registration as a Money Services Business (MSB) with the U.S. Department of the Treasury
- Master Business License issued by the Washington State Department of Revenue’s Business Licensing Service
- If the company is not a sole proprietorship, it must be registered with the Washington Secretary of State
The state has also assembled a list of general licensure requirements for Washington money transmitters, which is meant to give applicants an idea of any issues that might come up during their application process. Some of the information required on the license application is as follows:
- $1,000 for corporate business location and NMLS processing fee
- Criminal background check ($36.26) and credit report authorization ($15) for all control persons
- DBAs and other trade names
- Resident or registered agent if business’s corporate location is out-of-state
- MSB and Master Business License numbers
- Recent audited financial statements for the business, or for individuals if sole proprietorship
- Original, signed, sealed surety bond
Online currency exchangers in Washington must also become licensed and acquire a surety bond under SB 5031. Currency exchangers exchange one government’s currency for another’s. Currency exchangers apply for the same licenses as money transmitters, but their surety bond must be between $10,000 and $50,000, with rules to be implemented by the Director. Their bond must have a one-year tail on claims as opposed to money transmitters’ five-year tail.
Ready to get a Washington state surety bond? Get in touch with Single Source Insurance today!