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TREAS/FINCEN

RIN: 1506-AB07

Publication ID: Spring 2010

Title: ●Amendment to the Bank Secrecy Act Regulations--Definitions and Other Regulations Relating to Prepaid Access
Abstract: The Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of the Treasury (Treasury), is proposing to revise the Bank Secrecy Act (BSA) regulations applicable to Money Services Businesses to include stored value or prepaid access. In this proposed rulemaking, we are reviewing the stored value/prepaid access regulatory framework with a focus on developing appropriate BSA regulatory oversight without impeding continued development of the industry, as well as improving the ability of FinCEN, other regulators and law enforcement to safeguard the U.S. financial system from the abuses of terrorist financing, money laundering, and other financial crime. The proposed changes are intended to address regulatory gaps that have resulted from the proliferation of prepaid innovations over the last 10 years and their increasing use as an accepted payment method. If these gaps are not addressed, there is increased potential for the use of prepaid access as a means for furthering money laundering, terrorist financing, and other illicit transactions through the financial system. This would significantly undermine many of the efforts previously taken by government and industry to safeguard the financial system through the application of BSA requirements to other areas of the financial sector. While seeking to address vulnerabilities existing currently in the prepaid industry, FinCEN also intends for this proposed rule to provide the necessary flexibility to address new developments in technology, markets, and consumer behavior. This is important, in order to avoid creating artificial limits on a mechanism that can be an avenue to meet the financial services needs of the unbanked and the underbanked. This rule proposes to subject certain providers of prepaid access to a comprehensive BSA regime. To make BSA reports and records valuable and meaningful, the proposed changes impose obligations on the party within any given prepaid access transaction chain with predominant oversight and control, as well as others in a unique position to provide meaningful information to regulators and law enforcement. More specifically, the proposed changes include the following: (1) Renaming "stored value" as "prepaid access" and defining that term; (2) deleting the terms "issuer and redeemer" of stored value; (3) imposing registration, suspicious activity reporting and customer information recordkeeping requirements on providers of prepaid access, and new transactional recordkeeping requirements on both providers and sellers of prepaid access; and (4) exempting certain categories of prepaid access products and services posing lower risks of money laundering and terrorist financing from certain requirements. FinCEN recognizes that the Credit CARD Act of 2009 mandated the increased regulation of prepaid access, as well as the consideration of the issue of international transport, and we will address these mandates, either through regulatory text or solicitation of comment in this rulemaking. In the course of our regulatory research into the operation of the prepaid industry, we have encountered a number of distinct issues, such as the appropriate obligations of payment networks and financial transparency at the borders, and we anticipate future rulemakings in these areas. We will seek to phase in any additional requirements, however, as the most prudent course of action for an evolving segment of the money services business (MSB) community.
Agency: Department of the Treasury(TREAS)	Priority: Other Significant
RIN Status: First time published in the Unified Agenda	Agenda Stage of Rulemaking: Proposed Rule Stage
Major: No	Unfunded Mandates: No
CFR Citation: 31 CFR 103
Legal Authority: 12 USC 1829b 12 USC 1951 to 1959 31 USC 5311 to 5314 31 USC 5316 to 5332

Legal Deadline:

Action	Source	Description	Date
NPRM	Statutory	30-day public comment period.	01/01/2010
Final	Statutory	Final as directed by Congress.	02/15/2010

Timetable:

Action	Date	FR Cite
NPRM	04/00/2010

Regulatory Flexibility Analysis Required: Yes	Government Levels Affected: None
Small Entities Affected: Businesses	Federalism: No
Included in the Regulatory Plan: No
RIN Data Printed in the FR: Yes
Agency Contact: Elizabeth Baltierra Regulatory Policy Project Officer Department of the Treasury Financial Crimes Enforcement Network P. O. Box 39, Vienna, VA 22183 Phone:703 905-5132 Email: elizabeth.baltierra@fincen.gov Koko (Nettie) Ives Department of the Treasury Financial Crimes Enforcement Network Suite 4600, 1099 14th Street NW., Washington, DC 20005 Phone:202 354-6014 Email: koko.ives@fincen.gov