§ 8-7A-7 — Security

Alabama § 8-7A-7

• Jurisdiction: Alabama
• Title 8: Commercial Law and Consumer Protection
• Ch. 7A: Alabama Monetary Transmission Act

Text

(a) A licensee shall maintain a surety bond, letter of credit, or other similar security in an amount, determined by rule or order of the commission, sufficient to secure faithful performance of the obligations of the licensee with respect to money transmission in Alabama.
(b) Security must be in a form satisfactory to the commission and payable to the commission for the benefit of any claimant against the licensee.
(c) A claimant against a licensee may maintain an action on the bond, or the commission may maintain an action on behalf of the claimant.
(d) A surety bond must cover claims for a minimum of five years after the licensee ceases to provide money transmission services in this state. The surety bond may be reduced or eliminated, at the discretion of the commission, to the extent the amount of the licensee’s outstanding payment instruments and stored-value obligations are less than the surety bond coverage.
(e) The commission has discretion to accept other forms of security in lieu of the bond.
(f) In no event shall the bond be set at an amount less than one hundred thousand dollars ($100,000), or the average daily outstanding obligations for money received for transmission in Alabama plus 50 percent of the average daily outstanding payment instrument and stored value obligations in Alabama, whichever is greater.
(g) The commission may increase the amount of security required to a maximum of five million dollars ($5,000,000) if the financial condition of a licensee so requires, as evidenced by reduction of net worth, financial losses, or other relevant criteria.

Legislative History

(Act 2017-389, §2.)