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Each application must be accompanied by a surety bond, irrevocable letter of credit or other similar security device, referred to as “security device” in this section, acceptable to the commissioner in the amount of fifty thousand dollars ($50,000). If the applicant proposes to engage in business under this chapter at more than one (1) location, through authorized agents or otherwise, then the amount of the security device will be increased by ten thousand dollars ($10,000) per additional location, up to a maximum of eight hundred thousand dollars ($800,000). The security device shall be in a form satisfactory to the commissioner and shall run to the state of Tennessee 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 and/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. Surety bonds shall be obtained for a term of not less than one (1) year and evidence of the renewal of the surety bond shall be provided to the commissioner not less than thirty (30) days before the bond expiration date. Claimants against the licensee or its authorized agents may themselves 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. In the case of an irrevocable letter of credit, licensees shall obtain letters of credit for terms of not less than three (3) years and renew the letters of credit annually.
The security device shall remain in effect until cancellation, which may occur only after thirty (30) days' written notice to the commissioner. Cancellation shall not affect any liability incurred or accrued during that period.
The security device shall remain in place for three (3) years after the licensee ceases money transmission operations in the state. However, notwithstanding this provision, the commissioner may permit the security device to be reduced or eliminated prior to that time 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.