Nebraska Money Transmitter Bond: A Comprehensive Guide
July 21, 2021
This guide provides information for insurance agents to help their customers obtain Nebraska Money Transmitter Bonds
At a Glance:
- Average Cost: Between 1% to 12.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Based on the total amount of money transmitter transactions in the previous four quarters:
Table 1.1
| Dollar Amount of Money Transmitter Transactions | Bond Amount |
|---|---|
| $0 to $2 million | $100,000 |
| Over $2 million to $4 million | $150,000 |
| Over $4 million to $6 million | $200,000 |
| Over $6 million | $250,000 |
- Who Needs it: All money transmitters operating in Nebraska
- Purpose: To ensure the public will receive compensation for any damages should the money transmitter violate licensing law
- Who Regulates Money Transmitters in Nebraska: The Nebraska Department of Banking and Finance
Background
Nebraska statute 8-2724 requires all money transmitters operating in the state to obtain a license with the Department of Banking and Finance. The Nebraska legislature enacted the licensing laws and regulations to ensure that money transmitters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, money transmitters must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Nebraska Money Transmitter Bond?
Nebraska requires money transmitters to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the money transmitter fails to comply with the regulations set forth in the Nebraska Money Transmitter Act. Specifically, the bond protects the public in the event the money transmitter engages in any acts of fraud or fails to transfer funds owed to consumers. In short, the bond is a type of insurance that protects the public if the money transmitter breaks licensing laws.
How Can an Insurance Agent Obtain a Nebraska Money Transmitter Bond?
BondExchange makes obtaining a Nebraska Money Transmitter Bond easy. Simply login to your account and use our keyword search to find the “money” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
Is a Credit Check Required for the Nebraska Money Transmitter Bond?
Surety companies will run a credit check on the owners of the money transmission company to determine eligibility and pricing for the Nebraska Money Transmitter bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Nebraska Money Transmitter Bond Cost?
The Nebraska Money Transmitter Bond can cost anywhere between 1% to 12.5% of the bond amount per year. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $100,000 bond requirement.
$100,000 Money Transmitter Bond Cost
Table 1.2
| Credit Score | Bond Cost (1 year) |
|---|---|
| 720+ | $1,000 |
| 680 – 719 | $1,500 |
| 650 – 679 | $2,000 |
| 600 – 649 | $4,000 |
| 550 – 599 | $7,500 |
| 500 – 549 | $12,250 |
How Does Nebraska Define “Money Transmitter?”
Nebraska statute 8-2716 defines a money transmitter as any business entity who sells or issues payment instruments or stored value, transmits money inside or outside the US by any means, or provides a bill paying service (except when an agent of a payee receives funds on behalf of the payee).
How do Money Transmitters Apply For a License in Nebraska?
Money Transmitters in Nebraska must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Nebraska Money Transmitter License expires on December 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Money transmitters must purchase and maintain a surety bond (limits outlined in Table 1.1)
Step 2 – Request a NMLS Account
The Nebraska Money Transmitter License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.
Step 3 – Complete the Application
All Nebraska Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
-
- Audited company financial statements prepared by a CPA
- Personal financial statements for all company owners with a 10% or greater company ownership interest (only applicable to non-incorporated companies)
- Company’s FinCen registration number and filing date
- Bank account information for the company’s operating and primary trust account(s)
- Copies of all filing made with the SEC
- Permissible Investment Worksheet
- Company business plan containing the following information:
- How money will be collected
- How money will be transmitted
- Records collection and retention
- Use of authorized delegates/additional locations (if applicable)
- Specific products and services provided to Nebraska consumers
- Certificate of Good Standing
- Sample form of payment instrument and a specimen form of any receipt issued
- Company formation documents
- Management chart detailing the company’s hierarchy
- Organization chart detailing the company’s ownership structure
- List of all Nebraska company locations
- Sample contract used with authorized agents
- Names and locations of all company authorized agents
- Affidavit of Prior Activity
Money transmitters must pay a $1,000 fee when submitting their license application.
How Do Nebraska Money Transmitters Renew Their License?
Money transmitters can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Nebraska Money Transmitter License expires on December 31 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Nebraska Money Transmitter License?
Nebraska does not require money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business license. Money transmitters must purchase and maintain a surety bond (limits outlined in Table 1.1).
How Do Nebraska Money Transmitters File Their Bond?
Money transmitters should submit the completed bond form, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from both the surety company that issues the bond and a representative from the money transmission company. The surety company should include the following information on the bond form:
- Name and address of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Nebraska Money Transmitters Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, money transmitters in Nebraska must follow all license regulations in the state, including some of the most important issues below that tend to cause claim
- Do not engage in any acts of fraud
- Pay all money owed to consumers
What Other Insurance Products Can Agents Offer Money Transmitters in Nebraska?
Nebraska does not require money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Nebraska Money Transmitter Customers?
The NMLS conveniently provides a public database to search for active money transmitters in Nebraska. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
