Delaware Check Seller and Money Transmitter Bond: A Comprehensive Guide

April 15, 2021

This guide provides information for insurance agents to their customers obtain Check Seller and Money Transmitter Bonds

At a Glance:

• Average Cost: Between 1.5% to 7.5% of the bond amount per year based on the applicant’s credit
• Bond Amount: $25,000 plus an additional $5,000 per branch location not exceeding $250,000
• Who Needs it: All check sellers and money transmitters seeking to obtain a license in Delaware
• Purpose: To ensure the public will receive compensation for any damages should check sellers and money transmitters fail to comply with licensing law
• Who Regulates Check Sellers and Money Transmitters in Delaware: The Office of the State Bank Commissioner

Background

Delaware Statute 2303 requires all check sellers and money transmitters operating in the state to obtain a license with the Office of the State Bank Commissioner. The Delaware legislature enacted the licensing laws and regulations to ensure that check sellers and money transmitters engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, check sellers and money transmitters must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Delaware Check Seller and Money Transmitter Bond?

Delaware requires check sellers and 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 licensee fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the licensee breaks licensing laws.

How Can an Insurance Agent Obtain a Delaware Check Seller and Money Transmitter Surety Bond?

BondExchange makes obtaining a Delaware Check Seller and Money Transmitter Bond easy. Simply login to your account and use our keyword search to find the “check” 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 Delaware Check Seller and Money Transmitter Bond?

Surety companies will run a credit check on the owners of the check seller and money transmitter company to determine eligibility and pricing for the Delaware Check Seller and Money Transmitter bond. Owner’s 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 Delaware Check Seller and Money Transmitter Bond Cost?

The Delaware Check Seller and Money Transmitter surety bond can cost anywhere between 1.5% to 7.5% 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 Check Seller and Money Transmitter Bond Cost

*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.

How Does Delaware Define “Check Seller?”

To paraphrase Delaware Statute 2302, a check seller is any business entity who sells or issues checks to the general public.

How Does Delaware Define “Money Transmitter?”

To paraphrase Delaware Statute 2302, a money transmitter is any business who engages in the business of receiving money for transmission.

How do Check Sellers and Money Transmitters Apply for a License in Delaware?

Check sellers and money transmitters in Delaware must navigate several steps to secure their license. Below are the general guidelines, but license applicants should refer to the NMLS’s application guidelines for details on the process.

License Period –  The Delaware Check Seller and Money Transmitter license expires annually and must be renewed before the expiration date

Step 1 – Meet the Net Worth Requirements

Applicants for the Delaware Check Seller and Money Transmitter License must have a company net worth (assets – liabilities) of at least $100,000 per licensed branch location. Applicants must submit an unaudited financial statement verifying their net worth when submitting their license application.

Step 2 – Purchase a Surety Bond

Check sellers and money transmitters must purchase and maintain a surety bond with a limit of $25,000 plus an additional $5,000 per branch location not exceeding $250,000.

Step 3 – Request a NMLS Account

The Delaware Check Seller and 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 Delaware Check Seller and Money Transmitter License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:

• • Unaudited financial statements indicating a company net worth of at least $100,000
  • Complete list of the company’s authorized agents
  • List of company’s branch locations (if applicable)
  • The following company contacts:
    • Primary Company Contact
    • Accounting
    • Exam Billing
    • Licensing
    • Consumer Complaint (Public)
    • Exam Delivery
    • Litigation
    • Consumer Complaint (Regulator)
    • Legal
    • Pre-Exam Contact
  • The company’s FinCen registration confirmation number and filing date
  • Bank account information for the company’s primary trust account(s)
  • The most recent version of the AML/BSA 
  • A company business plan detailing the following information:
    • Marketing strategies
    • Products
    • Target markets
    • Fee schedule
    • Operating structure the applicant intends to employ
  • Certificate of Good Standing obtained from the Delaware Division of Corporations
  • Information on company staffing policies
  • Copy of the company’s transaction receipts
  • Flow of funds structure
  • Management chart detailing the company’s hierarchy
  • Organizational chart detailing the company’s ownership structure
  • Detailed explanation of a derogatory credit accounts
  • Personal financial statements for all company owners
  • Work experience form
  • Supervisory Assessment Disclosure

License applicants must pay the following fees when submitting their application:

• • $172.50 investigation fee
  • $230 license fee (per location)
  • $36.25 background check fee (per person)
  • $15 credit report fee (per person)
  • $4.60 fee per authorized agent
  • $0.25 annual fee for all registered agents

How Do Delaware Check Sellers and 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 Delaware Check Seller and Money Transmitter license expires annually and must be renewed before the expiration date.

What Are the Insurance Requirements for the Delaware Check Seller and Money Transmitter License?

The State of Delaware does not require check sellers and money transmitters to obtain any form of liability insurance as a prerequisite to obtaining a business license. Check sellers and money transmitters must purchase and maintain a surety bond with a limit of $25,000 plus an additional $5,000 per branch location not exceeding $250,000.

How Do Delaware Check Sellers Money Transmitters File Their Bond?

Check sellers and money Transmitters should submit the completed bond form, including the power of attorney, electronically through the NMLS. The check seller and money transmitter surety bond requires signatures from both the surety company that issues the bond and a representative from the check sellar and money transmitter company. The surety company should include the following information on the bond form:

• Legal name of entity/individual(s) buying the bond
• Surety company’s name and address
• Bond amount
• Date the bond is signed

What Can Delaware Check Sellers and Money Transmitters Do to Avoid Claims Against Their Bond?

In order to avoid claims made against their bond, check sellers and money transmitters in Delaware must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:

• Faithfully account for all funds received from customers
• Do not engage in any acts of fraud

What Other Insurance Products Can Agents Offer Check Sellers and Money Transmitters in Delaware?

Delaware does not require check sellers and money transmitters to purchase any form of liability insurance as a prerequisite to obtaining a 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 Delaware Check Seller and Money Transmitter Customers?

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