|   Commentary


  |   Commentary


North Carolina Amends Money Transmitter Bond Amounts

North Carolina Bill introduces new bonding and licensing requirements for money transmitters.

As of October 1 this year, North Carolina money transmitters must comply with a new requirement concerning their money transmitter bond. House Bill 289, which was passed at the end of June, introduces a different way for determining the exact surety bond amount. The bill also introduces changes to the licensing procedure for money transmitters in the state.

Read the details below!

New North Carolina money transmitter bond amount

Previously the base amount of the money transmitter bond was $150,000 plus $5,000 for every additional location that the transmitter had. With House Bill 289, also known as the North Carolina Money Transmitters Act, the additional $5,000 for every location is eliminated.

Instead, depending on the amount of their transmissions, money transmitters may have to obtain a bond from anywhere between the base amount of $150,000 and the upper limit of $250,000. As of October 1, this new requirement applies both to newly licensed money transmitters as well as to already licensed ones.

As with all surety bonds, whether this change will influence the cost of money transmitters' bonds will be determined both by their own financial status as well as the amount of their bond. The exact amount will depend on the amount of transmissions the money transmitter has had in the past 12 months:

  • $150,000 bond for transmissions with a volume of up to $1 million

  • $175,000 bond for transmissions with a volume greater than $1 million but less than $5 million

  • $200,000 bond for transmissions with a volume greater than $5 million but less than $10 million

  • $225,000 bond for transmissions with a volume greater than $10 million but less than $50 million

  • $250,000 bond for transmissions with a volume greater than $50 million

According to §53‑208.47.(c) of the Bill, any increases in the surety bond based on the above conditions must be filed with the Commissioner of Banks of the State of North Carolina on or before May 31 each year.

Furthermore, as specified in §53‑208.47.(d), the Commissioner may also require license applicants or already licensed transmitters to obtain additional insurance coverage. This may be necessary when the Commissioner establishes that there are "cybersecurity risks inherent in the applicant's business model as it relates to virtual currency transmission and to the extent such risks are not within the scope of the required surety bond."

New North Carolina money transmitter licensing requirements

Another important change in the licensing requirements for money transmitters is the new licensing procedure. Both new applicants as well as already licensed money transmitters will be required to apply for their license through the Nationwide Multistate Licensing System & Registry (NMLS) as of November 15, 2016. Companies who already have such a license must also transition to the NMLS by submitting a license transition request by December 31.

When submitting their license transition request, licensed North Carolina money transmitters will need to fill in and submit an MU1 Company form as well as an MU2 Individual form for each control person in the company. Companies who already have an NMLS record are not required to post these forms but will still need to supply some additional information to the NMLS.

Moving license applications to the NMLS is expected to speed up the licensing process for all parties involved, as well as provide better and easier access to information. It is also expected to serve as a database and make tracking and electronic management of all licensing information, including their surety bonds, easier.

Another notable licensing requirements for NC money transmitters is the requirement for a minimum net worth of $250,000. The bill also provides that the minimum net worth can be raised by the Commissioner if it is determined that an increase is necessary to "ensure safe and sound operation" based on a variety of factors listed in the Bill.

Helpful or not?

As a North Carolina money transmitter, do you consider the new bonding and licensing requirements, such as the NMLS application procedure, helpful and necessary or not? Let us know what you think in the comments!

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