With the enactment of Senate Bill 2093 on March 14, 2019, North Dakota collection agencies and money brokers are now subject to a $50,000 surety bond requirement. Previously, the bond amount was set at $25,000. Money brokers and collection agencies are required to get a surety bond before getting licensed by the North Dakota Department of Financial Institutions and going into business. Surety bonds are required for these entities because they guarantee to the public that money brokers and collection agencies will abide by all applicable rules and regulations.
What’s the difference between a collection agency and a money broker?
Collection agencies are tasked with tracking down and collecting money that people owe on debts. A third party can hire these agencies to find those who owe debts to another financial institution. Money brokers, on the other hand, give out short-term loans both to individuals and to larger financial institutions. They also advise people on how to invest money in the stock market and execute trades for their investors.
How do I become a money broker or start a collection agency in North Dakota?
The state of North Dakota categorizes money brokers and collection agencies as financial institutions, which are defined as organizations authorized to conduct financial business under state or federal laws. Examples of financial institutions include credit unions, banks, trust companies, and loan associations. To become a money broker or collection agency in North Dakota, the company must have at least $1 million in capital with no less than $500,000 in liquid assets that can easily be converted into cash. The State Banking Board may also require additional capital, surplus, or profits as they see fit.
North Dakota collection agencies and money brokers must also complete an application to be sent to the Commissioner of Financial Institutions. The commissioner will review the application to ensure all state requirements are met. This is a one-time process, but licensees need to pay an annual renewal fee of either $500 or .25% of the monetary transmission amount in North Dakota for the year starting June 30. The fee will be whichever amount is greater and cannot exceed $2,500.
To start the licensing process, visit the Nationwide Multistate Licensing System & Registry website to fill out an application. The financial institution will also need to purchase a surety bond of at least $50,000 to guarantee to the state of North Dakota that funds are available if the licensee fails to conduct their business in accordance with the law.
How much does a surety bond for North Dakota collection agencies and money brokers cost?
Surety bonds for North Dakota collection agencies and money brokers are subject to review by an underwriter before the cost can be determined. Factors such as the applicant’s credit and relevant industry experience are taken into account when reviewing an application and can even be used to help an applicant receive a better rate. For example, an applicant for a collection agency license who an underwriter determines to be highly qualified may be approved to pay just 1% of their total bond amount, meaning an applicant could pay $500 for a $50,000 surety bond.
Need a surety bond in North Dakota?
Although the bond amount has changed, the experts at SuretyBonds.com have years of experience issuing collection agency and money broker bonds in North Dakota, meaning they can get you the bond you need while saving you time and money. Call 1 (800) 308-4358 or visit SuretyBonds.com today to find out how much you can save on your North Dakota collection agency or money broker surety bond.