By Prepaid Media Staff
Although the network branded prepaid card industry takes its responsibilities seriously to minimize the risk of prepaid cards being used in money laundering schemes, the potential for prepaid cards to be used this way is clearly on the minds of law enforcement and regulators—evidenced by a variety of recent publications and conference topics.
“Some of these concerns appear to be misconceptions about how network branded prepaid cards are issued and controls related to their processing,” comments Marilyn Bochicchio, NBPCA president and executive director.
To address these concerns, the Network Branded Prepaid Card Association created a document that identifies four major misconceptions about network branded prepaid cards and explains how industry operating practices, based on existing law and regulation, reduce the risk of these cards being used as money laundering tools.
Key messages delivered in the document, which can be used as an educational tool, include:
- Network branded prepaid cards are issued by regulated banking institutions or other regulated organizations such as licensed money transmitters.
- From a transaction perspective, network branded prepaid cards “ride the rails” of the payment brands and/or PIN-based EFT networks so that security features, consumer protections, controls, and monitoring apply.
- Funds are not stored “on” network branded prepaid cards. Virtually 100 percent of transactions are authorized online in real time.
- With the exception of low-value, non-reloadable, non-cash accessible gift cards, “anonymous” network branded prepaid cards are virtually non-existent in today’s environment.
- In general practice, issuers conduct CIP or CIP-like procedures for higher value, reloadable, cash accessible cards before cards may be activated and used.
Also included in the document are FAQs about network branded prepaid cards and an overview of the features and benefits of several of the most common prepaid products.
Click here to read the NBPCA’s “Major Misconceptions About Network Branded Prepaid Cards and Money Laundering Risks.”