Section 3.13.030. 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(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)  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.   
	(d)  Instead of providing a surety bond or letter of credit, a person may deposit, with a financial institution possessing trust powers that is authorized to conduct a trust business in this state and is acceptable to the department, an aggregate amount of United States currency, certificates of deposit, or other cash equivalents that equals the total amount of the required security. The deposit   
		(1) must be held in trust in the name of and be pledged to the department;   
		(2)  must secure the same obligations as the other security described in (a) of this section; and  
		(3) is subject to other conditions and terms the department may reasonably require.  
	(e)  The security remains in effect until canceled. Cancellation may occur only after at least 30 days' written 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.  
	(f)  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.   

Authorities

06.55.104;44.33.020

Notes

Authority

AS 06.55.104 AS 44.33.020

History

Eff. 7/12/2008, Register 187