The rise of online vendors offering to buy bulk gift cards is drawing the attention of investigators who believe the nascent industry may serve as an avenue for money launderers.
Lobbying by the world's largest stored value payment facilitator has indefinitely delayed, and perhaps permanently blocked, a plan to give customs officials the ability to read prepaid cards, say sources.
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.
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.
Senators chastised the U.S. Treasury Department Wednesday for delays in regulating prepaid access products that can be used to smuggle drug proceeds from the United States into Mexico.
Several banks are asking the U.S. Treasury Department's financial crimes bureau for the unthinkable: more anti-money laundering compliance responsibilities.
Money services businesses and sellers of stored value cards will know this summer whether final rules by the U.S. Treasury Department will increase their anti-money laundering compliance duties and costs.
The U.S. Treasury Department will miss a Feb. 22 deadline set by Congress to implement rules subjecting stored value cards to the Bank Secrecy Act, according to consultants and bank lobbyists.
The U.S. Treasury Department remains on schedule to issue regulations early next year that will bring stored-value cards under the purview of the Bank Secrecy Act, according to a government official.
Money services businesses do not need to keep separate bank accounts for their different business lines to comply with the Bank Secrecy Act, according to a U.S. Treasury Department ruling.
The European Union proposed rules Tuesday on how electronic money might be issued, a step meant to further expand the market for prepaid and stored value payment products.
Merchants and automatic teller machines that help customers reload stored value cards do not necessarily qualify as money services businesses subject to anti-money laundering regulations, the U.S. Treasury Department said.
Financial institutions introducing the popular programs should review the hiring practices and other due diligence procedures of the employers seeking to participate in the programs, compliance professionals say.
Because AML regulation for cards is "unclear," they "provide an ideal laundering instrument to anonymously move monies associated with all types of illicit activity, without fear of documentation, identification, law enforcement suspicion, or seizure," according to a federal government report.
Proposed legislation designed to streamline the prosecution of money laundering cases and allow prosecutors to seek penalties for some foreign crimes overextends the reach of law enforcement, according to banking compliance and criminal lawyers.