If a business transmits money, it is likely that business must purchase a money transmitter bond. This form of insurance is required by companies that use the banking system to transfer, wire, or otherwise send money between parties. The bond assures that the money will be handled as expected and that the company will act legally and ethically. If a problem occurs, the bond will reimburse the party whose money was mishandled. Because of the risk involved in this type of bond, rates are typically higher than for many other types of bonds.
Before companies purchase a bond from an agency, they must submit themselves to a credit check, have their application approved, and go through other screening processes.
Money transmitter bonds are required by any company that acts as a third party between persons exchanging currency through online means. As an example, if you owned a page where anyone could buy and sell items such as eBay, and you did not wish to use the services of an existing money transmission company like PayPal, you are required to obtain a bond and license before beginning to transact.
The money transmitter bond is in place to protect consumers from fraudulent acts or mismanagement of finances committed by your business that may cause them to suffer monetary loss. The bond is used to return any lost money that the complainant has suffered should the claim be found to be valid.
The bond does not protect you from any kind of lawsuit or prison time that may be incurred by committing financial fraud or other crimes associated with the responsibility of making sure payments are delivered correctly. The sole purpose of the bond is to protect the consumer from all possible malpractice by you and your employees.
The bond is not an insurance policy; all monies that are used to pay consumers from your bond must be reimbursed to the bond broker by your company after the fact.
The application process for acquiring a money transmitter licence requires in depth screening of personal and business finances. You will also be required to get signed affirmations from your employees to ensure that they have read and understood the laws in relation to monetary fraud.
Completion of this form constitutes permission for Cal Society Insurance Services to obtain customer information which will be used to determine bonding eligibility.
This information will be held in the strictest confidence.