Online Bankers Training - Prepaid Cards, Terrorists & CIP!

A recent article on ACAMS’ “MoneyLaundering.com” reported that members of the terrorist cells that killed 164 victims in attacks on Paris and Brussels used prepaid cards to purchase goods and services and transfer funds between prepaid debit cards in the days and months ahead of the Paris attack to avoid detection by law enforcement. These attacks were perpetrated in part by the undetected movement of stored value!

Prepaid cards can offer various functions, which are not only attractive to consumers, but they also pose risks for banks that issue the cards and process prepaid card transactions. For example, prepaid cards are easily accessible, they can be used anonymously, and they present potential for high volumes of funds to flow through pooled prepaid access accounts. These functions make prepaid cards vulnerable to criminal abuse.

On March 21, 2016, FinCEN issued Interagency Guidance to help banks understand when Customer Identification Program (CIP) requirements should be applied to holders of prepaid cards. The Guidance clarified that certain prepaid cards issued by banks should be subject to the bank’s CIP, including when a bank issues prepaid cards under arrangements with third-party program managers that sell, distribute, promote, or market the prepaid cards issued by the bank.

For a full explanation of this Guidance, see our article “Prepaid Cards, Terrorist Financing & CIP” in the May issue of our newsletter.

Published
2016/05/06
Deb Irving