FinCEN Rules On Declaring Prepaid Cards Still Need Work

Last year the Financial Crimes Enforcement Network proposed rules to require travelers to declare the value of prepaid cards they are carrying at the border, but industry observers say that the rules need changes to make them practical and fair.

However, the enforceability of such a rule, which could come into play by the end of the year, has been questioned by, among others, Cynthia Merritt, assistant director of the Retail Payments Risk Forum at the Federal Reserve Bank of Atlanta

The agency is apparently already testing handheld card swipe machines to check balances. However, the rule is beset by a number of problems. For example, distinguishing prepaid cards from true debit cards (a problem that will be exacerbated when Green Dot launches its checking accounts) could be a problem. Program mangers impose load limits that mean FinCEN is unlikely to turn up many offending cards. Finally, cash tends to be the currency of choice for criminals by most reports. Clearly the rules need work, but perhaps the most important thing is that prepaid cards should be recognized as an important financial tool that helps the poor mange funds, help governments and businesses save money, and provides benefits that outweigh the risks.

Click here to read a blog post from the Atlanta Fed. Click here to read FinCEN’s rules. Click here to read Ben Jackson’s Perspective regarding this subject.