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FinCEN Proposed Rule for Cross Border Reporting on Prepaid Cards

By Industry Insider | Published October 9, 2012 | Google+

On October 17, 2011 the Financial Crimes Enforcement Network (“FinCEN”), a division of the United States Department of the Treasury, published a proposed rule that would add “tangible prepaid access devices” to the list of monetary instruments that must be reported when such devices are transported, mailed, or shipped into or out of the United States. FinCEN has indicated that is rule is proposed to address money laundering and terrorist financing vulnerabilities.

Pursuant to the Bank Secrecy Act as implemented by FinCEN, a person transporting currency or other monetary instruments in excess of $10,000 across a U.S. border is required to file a Report of International Transport of Currency or Monetary Instruments (“CMIR”). Under the proposed rule, tangible prepaid access devices would be covered under the definition of “monetary instrument.” Thus, transporting a prepaid access device with a load value in excess of $10,000 across a U.S. border would trigger the CMIR filing requirement.

General-use prepaid cards, gift cards, store cards, payroll cards, and government benefit cards are included in the definition of “tangible prepaid access device” under the proposed rule. Under the proposed rule, “tangible prepaid access device” would also include tangible devices that have the capability to access prepaid funds at a merchant location.

Under the proposed rule, the term “tangible prepaid access device” would not include:

  • Intangible methods of accessing prepaid funds, such as codes and PINs;
  • Credit cards used to obtain money or other items on credit;
  • Tangible items with only “incidental” access to prepaid access, such as laptop computers, web-enabled cell phones, or other devices that are not “dedicated to accessing specific prepaid funds”; or
  • Debit cards issued or approved for use through a payment card network to debit an individual’s asset account.

FinCEN requested comments to various aspects of the proposed rule including:

  • The difficulties law enforcement may have enforcing the proposed rule;
  • The exclusion of other devices from proposed rule including closed-loop prepaid access devices which can only be used at specific merchants locations and do not provide access to cash and customer name embossed open-loop prepaid access cards issued by a depositary institution which are already subject to anti-money laundering requirements; and
  • The reporting of prepaid access devices which have ability to be loaded with funds in excess of $10,000 even if not currently loaded with funds in excess of $10,000 at the time of border crossing.

The Comment Period to the proposed FinCEN rule closed on December 16, 2011 with 15 comments being filed.

~~ Ray Bilbao, former General Counsel for

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