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July 26, 2011

Treasury Department Publishes Final Prepaid Product Rules

By Colby Adams and Brian Monroe

The U.S. Treasury Department Tuesday prescribed new compliance rules on the prepaid product industry, a sector largely unregulated despite concerns about its vulnerability to money launderers. By September, providers and sellers of stored value products must implement know-your-customer programs and file suspicious activity reports on certain questionable transactions related to the purchase of the cards, according to the 69-page rule issued by the department's Financial Crimes Enforcement Network (FinCEN). Under the regulations, prepaid access companies must contractually determine which businesses in the transaction chain will assume primary anti-money laundering (AML) responsibilities and answer to the Internal Revenue Service-an issue left...

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Prompted by signs that criminals are increasingly exploiting prepaid cards, federal and state investigators are turning to a handful of recent legal decisions to justify reading the value held on the instruments, sources say.

FinCEN to Introduce Amended Rule for Declaration of Prepaid Value in September

An amended version of a long-delayed U.S. Treasury Department proposal to place new controls on the international transport of prepaid cards is under White House review and slated for introduction within three months.

Lawmakers Again Rap White House Over Delayed Prepaid Card Declaration Rule

An apparent decision by White House officials to postpone the issuance of final rules governing the cross-border transport of prepaid access products has once again drawn criticism from U.S. lawmakers.

In White House Budget Analysis, a Logjam for Prepaid Card Rule

A congressionally-mandated plan to require U.S. border crossers to declare funds held on prepaid cards remains stalled at the White House more than a year after its submission for final review.

$45 Million Cyber-Heist Reflects Broader Security Problems for Prepaid Industry

The theft of $45 million by cybercriminals exploiting and manipulating stolen prepaid card data highlights weaknesses in how financial institutions monitor the use of stored value products, say security experts.

Senators Call for AML Prosecutions, Improved Oversight of Cross-Border Money Transport

U.S. lawmakers Thursday criticized federal officials for delays in finalizing anti-money laundering rules and failing to prosecute banks and bankers that facilitate billions of dollars in illicit transactions.

Focus on US Prepaid Vulnerabilities Overlooks Exploitation of Foreign-Issued Cards

As U.S. officials work to shield American prepaid cards from abuse by financial crooks, foreign-issued stored value products remain a relatively easy avenue to move money into the United States anonymously.

U.S. Border Agents to Begin Testing Prepaid Card Readers Ahead of Final Reporting Rules

American officials will begin field-testing prepaid card readers at U.S. border stops next month as part of the lead-up to the Treasury Department regulations governing their cross-border transport, say officials.

Four Months after Deadline, Prepaid Companies Have Yet to Say Who’s on the Hook

Disputes and confusion over which companies will be responsible for anti-money laundering rules on stored value products has delayed federal registration and oversight of the sector, say industry representatives.

Direct Communication with Investigators is ‘Invaluable,’ Says ICE Official

Personally letting law enforcement agents know about clients' questionable activity can be crucial to identifying money launderers, according to Hector Colon, unit chief of the Illicit Finance and Proceeds of Crime Unit of Homeland Security Investigations at U.S. Immigration and Customs Enforcement.

Law Enforcement Officials to Lobby for Stronger Prepaid Transport Rules

Displeased with proposed regulations, federal and state law enforcement officials are asking lawmakers and the U.S. Treasury Department to strengthen controls on the cross-border movement of prepaid access products.

Test Your AML IQ

Money laundering-related red flags associated with virtual assets and virtual asset service providers include:

A. The use of the same IP-address for a large number of seemingly unrelated virtual asset wallets.

B. Depositing virtual assets and then immediately withdrawing them.

C. Both A and B.

D. None of the above.

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Treasury Department Publishes Final Prepaid Product Rules

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Test Your AML IQ

Money laundering-related red flags associated with virtual assets and virtual asset service providers include: