Contents 489D-1 Short title 489D-2 Purpose 489D-3 License required 489D-4 Definitions 489D-5 Exclusions 489D-6 License qualifications 489D-6.2 Registration with NMLS 489D-7 Bond or other security device 489D-8 Permissible investments and statutory trust 489D-9 License and registration; application 489D-9.5 Limited exemption for financial institutions; financial institutions as authorized delegates 489D-10 Application and license fees 489D-11 Issuance of license; grounds for denial 489D-12 Renewal of license and annual report 489D-12.5 Penalties and other charges 489D-13 Licensee liability 489D-14 Extraordinary reporting requirements 489D-14.5 Name change 489D-15 Changes in control of a licensee 489D-16 Money laundering reports 489D-17 Examinations 489D-18 Maintenance of records 489D-19 Confidentiality of records 489D-20 Money transmitter receipts and refunds 489D-21 Authorized delegate contracts 489D-22 Authorized delegate; conduct 489D-22.5 Voluntary surrender of license 489D-23 Prohibited practices 489D-24 Suspension or revocation of licenses 489D-25 Suspension or revocation of authorized delegates 489D-26 Orders to cease and desist 489D-27 Consent orders 489D-28 Civil penalties 489D-29 Criminal penalties 489D-30 Unlicensed persons 489D-31 Administrative procedures 489D-32 Hearings 489D-33 Division functions 489D-34 Rules

     §489D-7  Bond or other security device.  (a)  Each application for a license shall be accompanied by a surety bond, irrevocable letter of credit, or other similar security device acceptable to the commissioner in the amount of $10,000 for the initial twelve months licensure.  Thereafter, each licensee shall maintain a bond in the amount required by subsection (g) unless otherwise required by the commissioner.  The commissioner may increase the amount of the bond or security device to a maximum of $500,000 upon the basis of the impaired financial condition of a licensee, as evidenced by a reduction in net worth, financial losses, or other relevant criteria.

     (b)  The security device shall be in a form satisfactory to the commissioner and shall run to the State for the benefit of any claimants against the licensee to secure the faithful performance of the obligations of the licensee relating to the receipt, handling, transmission, and payment of money in connection with the sale and issuance of payment instruments or transmission of money.  In the case of a bond, the aggregate liability of the surety shall not exceed the principal sum of the bond.  Claimants against the licensee may bring suit directly on the security device or the commissioner may bring suit on behalf of claimants, either in one action or in successive actions.

     (c)  To meet the requirement of a security device or of any portion of the principal amount thereof, the licensee may deposit with the commissioner, or with such banks in this State as the licensee may designate and the commissioner may approve, cash, interest-bearing stocks and bonds, notes, debentures, or other obligations:

     (1)  Of the United States or any agency or instrumentality thereof;

     (2)  Guaranteed by the United States;

     (3)  Of the State, a county, or instrumentality of the State; or

     (4)  Guaranteed by the State,

in an aggregate amount based upon the principal amount or market value, whichever is lower, of not less than the amount of the security device or portion thereof.

     (d)  The securities or cash deposited pursuant to subsection (c) shall secure the same obligations as would the security device, but the depositor shall:

     (1)  Be entitled to receive all interest and dividends thereon;

     (2)  Have the right, with the approval of the commissioner, to substitute other securities for those deposited; and

     (3)  Be required to substitute other securities for those deposited upon a showing of good cause and written order of the commissioner.

     (e)  The security device shall remain in effect until cancellation, which may occur only after thirty days written notice to the commissioner.  Cancellation shall not affect any liability incurred or accrued during the period.

     (f)  The security device shall remain in place for no longer than five years after the licensee ceases money transmission operations in the State.  Notwithstanding this provision, the commissioner may permit the security device to be reduced or eliminated prior to that time to the extent that the amount of the licensee's payment instruments outstanding in the State are reduced.  The commissioner may also permit a licensee to substitute a letter of credit or other form of security device acceptable to the commissioner for the security device in place at the time the licensee ceases money transmission operations in the State.

     (g)  After the initial year of licensure, a licensee shall obtain a bond or other security device of $5,000 if the licensee's annualized money transmissions as calculated in section 489D-12(a) are less than $10,000,000.  The bond or security device shall be $10,000 if the licensee's annualized money transmissions as calculated in section 489D-12(a) are $10,000,000 or more.  Each licensee shall perform this calculation on an annual basis. [L 2006, c 153, pt of §1; am L 2013, c 167, §3]