Oregon Money Transmitter Bond: A Comprehensive Guide

August 11, 2021

This guide provides information for insurance agents to help their customers obtain Oregon 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: $25,000 plus an additional $5,000 per branch location to maximum of $150,000
• Who Needs it: All money transmitters operating in Oregon
• Purpose: To ensure the public will receive compensation for any damages should the money transmitter violate licensing law
• Who Regulates Money Transmitters In Oregon: The Oregon Division of Financial Regulation

Background

Oregon statute 717.205 requires all money transmitters operating in the state to obtain a license with the Division of Financial Regulation. The Oregon 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 Oregon Money Transmitter Bond?

Oregon 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 Oregon statute 717.225. Specifically, the bond protects the public in the event the money transmitter engages in any acts of fraud or fails to transmit 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 an Oregon Money Transmitter Surety Bond?

BondExchange makes obtaining an Oregon 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 Oregon 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 Oregon 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 Oregon Money Transmitter Bond Cost?

The Oregon 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 $25,000 bond requirement.

$25,000 Money Transmitter Bond Cost

How Does Oregon Define “Money Transmitter?”

Oregon statute 717.200 defines a money transmitter as any business entity who sells payment instruments or who transfers money domestically or abroad.

How Do Money Transmitters Apply for a License in Oregon

Money transmitters in Oregon 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 Oregon Money Transmitter License expires on December 31 of every year and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the money transmitter license must maintain a minimum company net worth (assets – liabilities) at least $100,000, plus an additional $25,000 per Oregon location not to exceed $500,000. Money transmitters must submit an audited financial statement, prepared by a CPA, when submitting their license application.

Step 2 – Purchase a Surety Bond

Money transmitters must purchase a surety bond with a limit of $25,000 plus an additional $5,000 per branch location to a maximum of $150,000

Step 3 – Request a NMLS Account

The Oregon 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 4 – Complete the Application

All Oregon Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Audited financial statements verifying the company’s net worth
  • Locations of the company’s authorized agents
  • Primary company and consumer complaint contacts
  • Company’s FinCEN confirmation number and filing date
  • Disclosure questions
  • Company’s independently reviewed AML/BSA policy
  • Company business plan containing the following information:
    • Marketing strategies
    • Products
    • Target markets
    • Fee schedule
    • Operating structure
    • History of operations
    • The name and address of the clearing institution the company will use
    • A list containing the locations of all authorized agents used for Oregon transactions
  • Certificate of Good Standing
  • Sample payment instruments and agent contracts used (if applicable)
  • Flow of funds structure
  • Company formation documents
  • Management and organizational charts
  • List of all the company’s permissible investments

Money transmitters must pay the following fees when submitting their license application:

• • $1,000 application fee
  • $36.25 background check fee (per person)
  • $15 credit report fee (per person)
  • $0.25 annual fee per authorized agent to a maximum of $25,000 (the first 100 agents are exempt)

How Do Oregon 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 Oregon Money Transmitter License expires on December 31 of every year and must be renewed before the expiration date.

What Are the Insurance Requirements for the Oregon Money Transmitter License?

Oregon does not require money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a business license. Money transmitters must purchase a surety bond with a limit of $25,000 plus an additional $5,000 per branch location to a maximum of $150,000.

How Do Oregon 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 and address
• Bond amount
• Date the bond is signed

What Can Oregon Money Transmitters Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, money transmitters in Oregon must ensure that they follow all license regulations in the state, including some of the most important issues below that tend to cause claims:

• Do not engage in any acts of fraud
• Transmit all funds owed to consumers

What Other Insurance Products Can Agents Offer Money Transmitters in Oregon?

Oregon 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 other types of 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 Oregon Money Transmitter Customers?

The NMLS conveniently provides a public database to search for active money transmitters in Oregon. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.