To obtain a money transmitter license, every state requires a surety bond. Depending on your state, this license may be called money remitter, money services business, check casher, or sales of check license.

Why Do I Need This Bond?

A surety bond is made to protect the public. In basic terms, it guarantees your business will adhere to all laws and requirements in your industry. In the event your business conducts unlawful acts, a consumer of your services may file a claim on the bond.

Nearly any company that offers payment services requires a money transmitter bond. Due to a history of fraudulence and inaccurate money transmissions, state agencies now require this bond to protect consumers. While this bond does not protect the business owner, it offers proof that your business handles clients’ money responsibly.

How Much Will the Bond Cost?

The cost of the bond, the “premium,” depends largely on the bond amount and the applicant’s financial status. The state requiring the bond determines the amount. At Surety 1, we will find you the lowest quote for your bond, starting at only 1.5% of the bond amount.

 

Money Transmitter Bond

In order to get your money transmitter’s business license, you’ll need a bond.

• Required by: Iowa Division of Banking
• Minimum bond amount: $50,000
• Maximum bond amount: Varies
• Valid: 1 year-renewable

The applicant should verify the bond amount with the obligee before applying for the bond to ensure the bond amount is correct.

This bond is required to ensure the principle will comply with Iowa’s Uniform Money Services Act (Iowa Code Chapter 533C) along with other rules and regulations in Iowa.

 

Money Transmitter License

These are additional details about the licensing process that you should be aware of. (Only the bond is handled at Surety1, but this information will help you get your license.)

• A license is valid for one year, and the state of Iowa charges a $500 annual licensing renewal fee.
• A minimum net worth of $100,000 must be maintained by the applicant in order for the applicant to be able to apply for a license.
• Iowa charges a $1,000 non-refundable investigation fee upon application. The investigation will determine if the applicant meets all the criteria for this type of license.

All licensing fees are required by the obligee, not the surety company.

Information must be included on the application is as follows:

• Legal name of applicant
• Residential address of applicant and business address
• The money services the applicant plans on providing in Iowa
• Surety bond
• List of the applicant’s planned authorized delegates along with locations where business will be conducted by the delegates

The license application can be filled out using an electronic system referred to as NMLS. Although, for businesses that are not conducting multi-state businesses or do not want to use the electronic application system can also have access to other application forms.

Money transmitters in Iowa must also register as a money services business (MSB) with the Federal Crimes Enforcement Network (FinCEN). The registration process must be completed by the Bank Secretary Act (BSA) e-filing system.

Learn more at the Iowa Division of Banking, and see a checklist for new money transmitter license applications at NMLS.