(a) Except as otherwise provided in (b) of this section, a surety bond, a letter of credit, or another similar security acceptable to the department in the amount of $25,000 plus $5,000 for each location, not exceeding a total addition of $125,000, must accompany an application for a money transmission license.

(b) Security must be in a form satisfactory to the department and payable to the state for the benefit of a claimant against the money transmission licensee to secure the faithful performance of the obligations of the money transmission licensee with respect to money transmission.

(c) The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a money transmission licensee may maintain an action on the bond, or the department may maintain an action on behalf of the claimant.

(d) A surety bond must cover claims for as long as the department specifies, but for at least five years after the money transmission licensee ceases to provide money services in this state. However, the department may permit the amount of security to be reduced or eliminated before the expiration of that time to the extent the amount of the money transmission licensee's payment instruments or stored-value obligations outstanding in this state is reduced. The department may permit a money transmission licensee to substitute another form of security acceptable to the department for the security effective at the time the money transmission licensee ceases to provide money services in this state.

(e) Instead of the security prescribed in this section, an applicant for a money transmission license or a money transmission licensee may provide security in a form prescribed by the department.

(f) The department may increase the amount of security required to a maximum of $500,000 if the financial condition of a money transmission licensee requires the increase, as evidenced by reduction of net worth, financial losses, or other relevant criteria.