40-22-106. Bond or other security device.

(a) Each application shall be accompanied by a surety bond, irrevocable letter of credit or other similar security device acceptable to the commissioner in the amount of ten thousand dollars ($10,000.00) or two and one-half (2 ) times the outstanding payment instruments, whichever is greater. The commissioner may increase the required amount of the bond or security device to a maximum of five hundred thousand dollars ($500,000.00) 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.