3 AAC 13.030 - Security requirement
(a) An applicant for a money transmission
license or for approval under
AS
06.55.103 must provide, and must maintain at
all times, security that satisfies the requirements of
AS
06.55.104. The security must secure the
faithful performance of the obligations of the money transmission licensee,
including its principals, responsible individuals, employees, and authorized
delegates, with respect to money transmission. For purposes of this subsection,
the obligations of the money transmission licensee are
(1) its legal obligations to its
customers;
(2) its obligation to
comply with AS 06.55, with this chapter, with any order issued under AS 06.55
or this chapter, and with any other applicable law; and
(3) for a money transmission licensee that
engages in currency exchange or advertises, solicits, or holds itself out as
providing currency exchange under
AS
06.55.201(a)(2) or (3),
obligations listed in (1) and (2) of this subsection and related to currency
exchange.
(b) If a
surety bond is used to satisfy
AS
06.55.104, it must be in a form acceptable to
the department, issued by a surety company authorized to engage in business in
this state and acceptable to the department with an assignment in favor of the
department. The surety bond must cover claims for the entire period that the
person who is licensed under
AS
06.55.105 or is offering services under
AS
06.55.103 provides money transmission
services in this state and for at least five years after the person ceases to
provide those services. The department may require that the surety bond be kept
in place for more than five years after the services are no longer provided in
the state if the department determines that the surety bond will be needed to
satisfy claims against the person after expiration of the five-year
period.
(c) Not later than 14 days
after the money transmission licensee receives notice of an action against the
money transmission licensee that could result in recovery against the bond, a
money transmission licensee shall provide written or electronic notice to the
department of the action.
(d) The
bond must provide that, not later than 14 days after the surety receives notice
of an action against the bond or a final order of a court under (c) of this
section, the surety shall provide written or electronic notice of the action or
final order to the department.
(e)
The bond must provide that immediately upon a payment by the surety under the
bond, the surety shall provide written or electronic notice of the payment to
the department.
(f) If a letter of
credit is used to satisfy the security requirement of
AS
06.55.104, it must be
(1) in a form acceptable to the
department;
(2) clean and
unconditional;
(3) irrevocable for
a period not less than five years after the person obtaining the letter of
credit ceases to provide services in the state; and
(4) issued or confirmed by, and payable and
presentable at, a financial institution whose deposits are insured by the
federal government.
(g)
The security remains in effect until canceled. Cancellation may occur only
after at least 30 days' written or electronic notice to the department. Nothing
in this subsection affects any liability incurred or accrued during the period
covered by the security. Cancellation of a security used to satisfy the
requirements of
AS
06.55.104 constitutes grounds for suspension
or revocation of a license issued under AS 06.55 or the department's approval
to offer services in the state under
AS
06.55.103.
(h) If the department at any time reasonably
determines that the required security is insecure, deficient in amount, or
exhausted in whole or in part, the department will require the money
transmission licensee to provide new or additional security to comply with
AS
06.55.104 and this section. 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. In
determining whether to require new, additional, or increased security, the
department may consider one or more of the following criteria:
(1) significant reduction of net
worth;
(2) financial
losses
(3) potential losses
resulting from violations of AS 06.55 or this chapter;
(4) the licensee filing for
bankruptcy;
(5) a judicial or
administrative finding against the licensee in any state or foreign country
based on the conduct of a money services business;
(6) a licensee, executive officer, board
director, person in control, responsible individual, principal, or authorized
delegate being convicted of a felony;
(7) any unsafe or unsound practice;
(8) other events and circumstances that the
department considers to impair the ability of the licensee to meet its
obligations to its customers.
Notes
Authority:AS 06.55.104
AS 44.33.020
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