§ 40-22-106 — Bond or other security device

(a) A surety bond, irrevocable letter of credit or other
similar security device acceptable to the commissioner shall be
provided with a license application or upon approval of the
application, as determined by the applicant. An application
without a security device may be conditionally approved by the
commissioner pending receipt of the security device. The surety
bond, irrevocable letter of credit or other security device
shall be in the amount of ten thousand dollars ($10,000.00) or
two and one-half (2½) times the outstanding payment instruments,
whichever is greater, not to exceed five hundred thousand
dollars ($500,000.00). The commissioner may increase the
required amount of the security device up to the maximum amount
authorized by this subsection upon the basis of the impaired
financial condition of a licensee as evidenced by a reduction in
net worth, financial losses or other relevant criteria. The
security device shall be in a form satisfactory to the
commissioner and shall run to the state for the benefit of any
claimants against the licensee to secure the faithful
performance of the obligations of the licensee with respect to
the receipt, handling, transmission and payment of money in
connection with the sale and issuance of payment instruments or
transmission of money. In the case of a bond, the aggregate
liability of the surety in no event shall exceed the principal
sum of the bond. Claimants against the licensee may bring suit
directly on the security device or the commissioner may bring
suit on behalf of the claimants either in one (1) action or in
successive actions.
(b) In lieu of a security device or any portion of the
principal thereof as required by this section, the licensee may
deposit with the commissioner or with banks in this state as the
licensee may designate and the commissioner may approve, cash,
interest bearing stocks and bonds, notes, debentures or other
obligations of the United States or any agency or
instrumentality thereof, or guaranteed by the United States, or
of this state or a political subdivision, or guaranteed by this
state, to an aggregate amount, based upon principal amount or
market value, whichever is lower, of not less than the amount of
the security device or portion thereof. The securities or cash
shall be deposited and held to secure the same obligations as
would the security device. The depositor shall be entitled to
receive all interest and dividends and shall have the right with
the approval of the commissioner, to substitute other securities
for those deposited, and shall be required to do so on written
order of the commissioner made for good cause shown.
(c) The security device shall remain in effect until
cancellation, which may occur only after written notice to the
commissioner thirty (30) days prior to the effective date of
cancellation. Cancellation shall not affect any liability
incurred or accrued during the thirty (30) day period.
(d) The security device shall remain in place for no
longer than five (5) years after the licensee ceases money
transmission operations in the state. The commissioner may
permit the security device to be reduced or eliminated prior to
the five (5) years to the extent that the amount of the
licensee's payment instruments outstanding in this state are
reduced. The commissioner may also permit a licensee to
substitute a letter of credit or other form of security device
acceptable to the commissioner for the security device in place
at the time the licensee ceases money transmission operations in
the state.