2023 New York Laws › BNK - Banking › Article 13-B - Transmitters of Money › 643 - Bond or Securities.

§ 643.  Bond  or  securities.  1.  As a condition for the issuance and
  retention of the license, applicants for a license and  other  licensees
  shall,  within  thirty  days after notice by the superintendent, or such
  longer or shorter period as he or she shall  prescribe,  file  with  the
  superintendent  one  or more corporate surety bond or bonds, as required
  below, in form satisfactory to him  or  her  and  issued  by  a  bonding
  company  or  insurance  company authorized to do business in this state.
  One bond shall be in favor of the superintendent and in  such  principal
  amount  as  he  or she shall determine is necessary or desirable for the
  protection of the purchasers and holders of New York instruments sold or
  to be sold by the applicant or licensee, provided, however,  that  until
  June first, nineteen hundred seventy-seven, the principal amount of such
  bond  shall  be no less than two hundred ten thousand dollars and on and
  after June first, nineteen hundred seventy-seven, the  principal  amount
  of such bond shall be no less than five hundred thousand dollars. If the
  applicant  or  licensee  intends to engage or engages in the sale of New
  York traveler's checks, such applicant or licensee shall file  with  the
  superintendent  a  separate  bond.  Said  bond  shall be in favor of the
  superintendent and in such principal amount as he or she shall determine
  is necessary or desirable for  the  protection  of  the  purchasers  and
  holders  of  the  New  York  traveler's checks sold or to be sold by the
  applicant or licensee; provided, however, that the principal  amount  of
  such  bond  shall not be less than seven hundred fifty thousand dollars,
  unless the superintendent, for good cause shown, shall  have  determined
  that  a lesser amount will adequately protect the purchasers and holders
  of the New York traveler's checks sold or to be sold by  such  applicant
  or licensee.
In making any determination under this subdivision, the superintendent
  may  take  into  account  the  financial  condition of the licensee, the
  number of locations in this state at which the licensee, either directly
  or  through  agents,  transacts  the  business  of  selling   New   York
  instruments  or New York traveler's checks, the controls imposed on such
  agents or, and the possible exposure of purchasers and  holders  of  New
  York  instruments and New York traveler's checks to loss in the event of
  the  insolvency,  bankruptcy  or  other  financial  impairment  of   the
  licensee.  The  proceeds  of each bond shall constitute a trust fund for
  the exclusive benefit of the purchasers and  holders  of  the  New  York
  instruments  and  New York traveler's checks, as the case may be. Except
  as otherwise provided in the following sentence, in  the  event  of  the
  insolvency  or  bankruptcy  of any licensee, the proceeds of the bond or
  bonds held for the exclusive benefit of the purchasers  and  holders  of
  New  York instruments and the proceeds of the bond or bonds held for the
  exclusive benefit of the purchasers and holders of New  York  traveler's
  checks  shall be paid to the superintendent forthwith for disposition in
  accordance with  the  provisions  of  this  article.  If  any  New  York
  instruments  have  been  assigned  to the fund, the proceeds of the bond
  held for the exclusive benefit of the purchasers and holders of New York
  instruments shall constitute a trust fund for the benefit of, and  shall
  be  payable  to, the fund to the extent of such assignment. From time to
  time, the superintendent may require, upon thirty days  notice  or  such
  longer or shorter period as he or she shall prescribe, that such bond or
  bonds  be  increased  if he or she shall determine that such increase is
  necessary or desirable for the protection of the purchasers and  holders
  of New York instruments and New York traveler's checks.
2.  The licensee shall give notice to the superintendent by registered
  or certified mail of any action which shall be brought against  him  and
  of  any judgment which shall be entered against him by such purchaser or
  holder of a New York instrument or a New  York  traveler's  check,  with

  details  sufficient  to identify the action or judgment, within ten days
  after the commencement of any such action or notice to the  licensee  of
  entry  of  any such judgment. The corporate surety shall within ten days
  after it pays any claim or judgment to any such purchaser or holder of a
  New  York  instrument  or a New York traveler's check give notice to the
  superintendent  by  registered  mail  of  such  payment,  with   details
  sufficient to identify the purchaser or holder and the claim or judgment
  so  paid. Whenever the principal sum of such bond or bonds is reduced by
  one or more recoveries or payments thereon the licensee shall furnish  a
  new or additional bond or bonds under the provisions of this section, so
  that  the  total  or aggregate principal sum of such bond or bonds shall
  equal the sum required pursuant to the provisions of  this  section,  or
  shall  furnish  an  endorsement  duly  executed  by the corporate surety
  reinstating the bond or bonds to the required principal sum thereof. The
  liability of the surety on such bond or bonds to the superintendent  and
  to  the said purchasers and holders of New York instruments and New York
  traveler's  checks  shall  not  be  affected   in   any   way   by   any
  misrepresentation,  breach  of warranty or failure to pay the premium or
  by any act or omission  upon  the  part  of  the  licensee  nor  by  the
  insolvency  or  bankruptcy  of  the  licensee  or  the insolvency of the
  licensee's estate, and in the event  of  the  death  or  dissolution  or
  liquidation  of  the  licensee,  shall  continue  upon  all transactions
  entered into by the agents of such  deceased,  dissolved  or  liquidated
  licensee  within a period of thirty days after the death, dissolution or
  liquidation of the  licensee  or  termination  of  the  bond  or  bonds,
  whichever   date   shall  first  occur,  provided,  however,  that  such
  transactions were entered into in good  faith  by  such  purchasers  and
  holders  of  New  York instruments and New York traveler's checks. Every
  such corporate surety bond shall  provide  that  in  the  event  that  a
  judgment  recovered  against the licensee or its legal representative or
  successor by any such purchaser or  holder  on  a  claim  arising  or  a
  transaction  entered  into  during  the  life  of  the bond shall remain
  unsatisfied after the expiration of thirty  days  from  the  service  of
  notice  of  entry  of  judgment  upon  the  licensee  or  upon his legal
  representative or successor or upon the attorney for the  licensee,  and
  upon  the  corporate surety, or in the event that the fund has become an
  assignee of any claim arising or a transaction entered into  during  the
  life of the bond, then an action may be maintained against the corporate
  surety  under  the terms of the bond (1) by such purchaser or holder for
  the amount of such judgment not exceeding the amount of the bond, except
  during a stay of execution of such judgment against the licensee or  his
  legal  representatives  or  successors, or (2) by the superintendent, on
  behalf of the fund, for the amount of  such  claim,  not  exceeding  the
  amount of the bond. The bond may not be cancelled either by the licensee
  or  the surety except upon notice to the superintendent by registered or
  certified mail with return receipt requested,  the  cancellation  to  be
  effective  not less than ten days after receipt by the superintendent of
  such notice.
3. In lieu of such corporate surety bond or bonds, or of  any  portion
  of the principal sum thereof as required by this section, applicants for
  a license and other licensees may keep on deposit, or may be required to
  keep on deposit by the superintendent, with such banks, trust companies,
  national  banks,  savings  bank,  savings and loan associations, federal
  savings associations, credit unions, or federal  credit  unions  in  the
  state  of New York as such applicants or licensees may designate and the
  superintendent may approve,  and  in  accordance  with  such  rules  and
  regulations  as  the  superintendent shall from time to time promulgate,
  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  of  a
  city,  county, town, village, school district or instrumentality of this
  state,  or guaranteed by this state, or dollar deposits, to an aggregate
  amount, based upon principal amount or market value, whichever is lower,
  in the case of the above-described securities,  of  not  less  than  the
  amount  of  the  required  corporate  surety bond or bonds or portion or
  portions thereof. Such securities or funds shall be deposited to  secure
  the same obligation or obligations as would the corporate surety bond or
  bonds filed under this section. So long as it shall continue business in
  the  ordinary  course,  such  licensee  shall  be  permitted  to collect
  interest on the securities  so  deposited  and  from  time  to  time  to
  exchange,  examine  and  compare  such  securities.  In the event of the
  failure or insolvency of such licensee,  the  securities,  any  proceeds
  therefrom  and  the  funds  deposited  pursuant  to  this  section shall
  constitute a trust fund for the exclusive benefit of the purchasers  and
  holders  of  New  York instruments or New York traveler's checks, as the
  case may be, or, in the event such New York instruments are assigned  to
  the fund, the securities, any proceeds therefrom and the funds deposited
  pursuant  to  this section for the benefit of the purchasers and holders
  of New York instruments shall constitute a trust fund, for  the  benefit
  of the fund.
4.  Notwithstanding  the  foregoing provisions of this section, if the
  superintendent shall find that a licensee has transacted the business of
  money transmission in this state for a period of five consecutive  years
  and  that  such  business  has  been conducted honestly, efficiently and
  safely and that the licensee's financial condition is sound and that its
  New York instruments are insured, the superintendent may dispense  with,
  modify  or  eliminate  any of the foregoing requirements of this section
  with respect to New York instruments; provided, however, that if at  any
  time  subsequent  thereto, the superintendent shall deem it necessary or
  desirable for the protection of the purchasers and holders of  New  York
  instruments,  to  reinstate  any of the requirements of this section, he
  may do so.