If you provide or sell prepaid cards, you may be subject to the federal regulations that became effective in the latter half of 2011. In 2011, the Financial Crimes Enforcement Network (FinCEN) published a final rule amending the Bank Secrecy Act Regulations (BSA Regs) regarding money services businesses to include providers and sellers of prepaid access. This means that some people involved in selling prepaid cards became subject to federal regulation.
The prepaid final rule established a more comprehensive regulatory approach for prepaid access and focused on prepaid access products whose inherent features, or high-dollar amounts, pose heightened risks related to money laundering, terrorist financing and other illicit transactions.
Shortly after the prepaid final rule came into effect, FinCEN proposed another amendment to the BSA Regs which would add prepaid cards to the definition of “monetary instrument.” The purpose is to include tangible prepaid access devices within the international transport of currency and monetary instrument reporting (CMIR) requirement. The CMIR requirement mandates that a form be filed reporting every international transportation, mail, or shipment of currency or other monetary instruments in an aggregate amount that exceeds $10,000. The proposed revision would: (i) expand the definition of “monetary instrument” to include tangible prepaid access devices; (ii) limit the application of the expanded definition to tangible prepaid access only for purposes of the CMIR reporting requirement; (iii) establish that the value of any such prepaid access device would be determined by the amount of the funds available through the device at the time of physical transportation, mail or shipment into or out of the US; and (iv) clarify that credit cards and debit cards are not a form of monetary instrument for BSA purposes. While the public comment period for the proposed amendment ended some time ago, FinCEN has yet to release the final rule.
Click here for a copy of FinCEN’s FAQs related to the regulation of prepaid access.