§ 2507 - Security
§ 2507. Security
(a) Except as otherwise provided in subsection (b) of this section, the following rules apply:
(1) A surety bond, letter of credit, or other similar security acceptable to the commissioner of not less than $100,000.00 shall accompany an application for a license.
(2) If an applicant proposes to provide money services at more than one location through authorized delegates or otherwise, the amount of the security shall be increased by $10,000.00 per location, not exceeding a total of $500,000.00.
(b) The commissioner may increase the amount of security required to a maximum of $2,000,000.00 based upon the financial condition of a licensee, as evidenced by reduction of net worth, financial losses, or other relevant criteria.
(c) Security shall be in a form satisfactory to the commissioner, and payable to the state for use of the state and for the benefit of any claimant against the licensee and its authorized delegates to secure the faithful performance of the obligations of the licensee and its authorized delegates with respect to money transmission.
(d) The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a licensee or its authorized delegate may maintain an action directly against the bond, or the commissioner may maintain an action on behalf of the claimant against the bond. The power vested in the commissioner by this subsection shall be in addition to any other powers of the commissioner under this chapter.
(e) A surety bond shall cover claims effective for as long as the commissioner specifies, but for at least five years after the licensee ceases to provide money services in this state. However, the commissioner may permit the amount of security to be reduced or eliminated before the expiration of that time to the extent the amount of the licensee's payment instruments or stored-value obligations outstanding in this state is reduced. The commissioner may permit a licensee to substitute another form of security acceptable to the commissioner for the security effective at the time the licensee ceases to provide money services in this state.
(f) In lieu of the security prescribed in this section, an applicant for a license or a licensee may provide security in a form otherwise permitted by the commissioner. (Added 2001, No. 55, § 1, eff. Jan. 1, 2002.)