Recommended Practices to Reduce Potential for Prepaid Card Money Laundering

The document provides recommendations for all network branded prepaid card industry participants to support compliance with the U.S. Bank Secrecy Act (BSA) anti-money laundering (AML) program requirements. It recommends how to implement internal controls, monitor and manage third-parties involved with prepaid card processes and mitigate risks associated with money laundering. It is the result of 11 months of work by the NBPCA AML Task Force, which drew on the extensive experience of the NBPCA membership, which includes card brands, financial institutions, issuers, program managers, law firms, distributors and processors.

“Prepaid cards are already less vulnerable to illicit activity than other forms of payment such as cash or checks, but the recommended practices in this document provide a roadmap to risk reduction that will further safeguard prepaid cards,” said Terry Maher, Partner, Baird Holm LLP and Chair of the NBPCA AML Task Force. “These recommended practices are a must-have for all businesses that sell, market, issue or fund prepaid card programs.”

To ensure the document addresses the questions and concerns of law enforcement and government agencies, the NBPCA has and will continue to maintain an open dialogue with federal, state and local regulatory agencies as well as law enforcement officials. The document addresses risks identified through information sharing between the industry and critical agencies that monitor financial crime.

“Recommended Practices for Anti-Money Laundering Compliance for U.S.-based Prepaid Card Programs” is a practical guide to setting up, implementing and auditing a compliance program. It covers the following areas:

1. How to conduct a risk assessment.

2. How to establish a set of internal controls to achieve compliance with AML program requirements of the BSA.

3. Federal reporting requirements and red flags to look for with respect to suspicious activity.

4. Adopting and implementing programs to comply with know your customer requirements.

5. Reducing risk when working with non-financial institutions, third-party agents and processors.

6. How to implement independent compliance testing.

7. Training program guidelines for key personnel.

The NBPCA is making “Recommended Practices for Anti-Money Laundering Compliance for U.S.-based Prepaid Card Programs” available to anyone in the prepaid card industry. The report can be downloaded from the NBPCA website at http://www.nbpca.com.

“The NBPCA encourages practices that reduce the opportunities for prepaid cards to be used in illicit activities. We support national and international efforts to combat money laundering, terrorist financing and financial crime,” said Anil D. Aggarwal, NBPCA Chairman of the Board. “We are committed to helping our members and all prepaid card industry participants comply with such laws and regulations…this industry-created guide serves as a blueprint in that pursuit.”