The final rule:
• Renames “stored value” as “prepaid access,” without narrowing or broadening the meaning of the term, but to more aptly describe the underlying activity.
• Adopts a targeted approach to regulating sellers of prepaid access products, focusing on the sale of prepaid access products whose inherent features or high dollar amounts pose heightened money laundering risks.
• Exempts from the rule prepaid access products of $1,000 or less and pay roll products if they cannot be used internationally, do not permit transfers among users, and cannot be reloaded from a non-depository source.
• Exempts closed loop prepaid access products sold in amounts of $2,000 or less.
• Excludes government funded and pre-tax flexible spending for health and dependent care funded prepaid access programs.
While the rules have a variety of exemptions, making sense of what programs are covered and which aren’t will be a chore. In addition, because the rules require new activities of merchants that sell prepaid cards, a real risk is that some merchants will simply decide that prepaid cards aren’t worth having in the stores. So the real regulatory pinch may come from business decisions rather than court decisions.
Read the FinCEN press release at:http://www.fincen.gov/news_room/nr/html/20110726b.html
Digital Transactions also covered the story: http://www.digitaltransactions.net/news/story/3135