California AB 2789 rewrites the current law for
money transmitters. Current law requires such persons to be licensed and post cash, securities or a surety bond. The bond or deposit must be in the amount that the Commissioner of Financial Institution (Commissioner) requires. The new law specifies the amount required by statute instead. Licensees that sell or issue payment instruments or stored value must post a bond in an amount not less than $500,000 or 50% of the average daily outstanding payment instrument and stored value obligations in California, whichever would be greater. The bond would be capped at $2 million. Licensees that receive money for transmission must post a bond in an amount greater than the average daily outstanding obligations for money received. The bond could not be less than $250,000 or more than $7 million. The new law allows securities to be deposited in lieu of the bond and provides that the amount of the bond or securities required to be maintained is cumulative. The law also requires the bond to cover claims for as long as the Commissioner specifies, but for at least four years after the licensee ceases to provide money transmitter services in California.