New Jersey Administrative Code › Title 3 - BANKING › Chapter 27 - MONEY TRANSMITTERS › Subchapter 4 - BONDING, SECURITY DEVICES › Section 3:27-4.1 - Bond or security device requirements

Current through Register Vol. 56, No. 14, July 15, 2024
(a) A person who
				seeks an initial license to engage in the business of a money transmitter or in
				the business of foreign money transmitter shall comply with the requirements of
				17:15C-8 and shall obtain a surety
				bond, utilizing a bond form provided by the Department, from a surety company
				authorized to do business in this State, or an irrevocable letter of credit, or
				a security device, authorized by the Commissioner in the amounts stated in
				chapter Appendix A which is incorporated herein by reference.
(b) The security device shall be in a form
				satisfactory to the Commissioner and shall run to the State for the benefit of
				any person injured by a wrongful act, default, or misrepresentation of the
				licensee, including its directors, officers, authorized delegates and
				employees, 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,
				transmission of money, or both and for the benefit of the Department for unpaid
				examination bills, unpaid penalties and any other unpaid obligation of the
				money transmitter to the Department, including, but not limited to, returned
				items submitted to the Department in payment of bills, penalties, charges or
				fees.
(c) The security device shall
				remain in effect until cancellation, which may only occur after 30 days'
				written notice to the Commissioner. Cancellation shall not affect any liability
				incurred or accrued during the period the security device was in
				effect.
(d) The security device
				shall remain in place for no longer than five years after the licensee ceases
				money transmission operations in the State. The Commissioner may periodically
				review the amount of the licensee's payment obligations and the security device
				may be increased or reduced accordingly. However, notwithstanding this
				provision, the Commissioner may permit the security device to be reduced or
				eliminated prior to that time to the extent that the amount of the licensee's
				payment instruments outstanding in this State are reduced or eliminated. The
				Commissioner may also permit a licensee to substitute an irrevocable 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 by surrender, revocation or expiration of its
				license.
(e) Attorney's fees,
				pre-or post-judgment interest, court costs and similar charges are not
				recoverable through the security device, unless such charges are included in a
				final judgment against the money transmitter and the surety company was given
				prior notice of the court action and an opportunity to respond.
(f) The security device shall not be payable
				for claims made by business creditors.
(g) The security device shall not be payable
				for treble damage claims pursuant to the Consumer Fraud Act or any other State
				or Federal law.