The NationalAssociation of Convenience Stores (NACS) has responded on FinCEN’s proposedregulatory changes that would, primarily, require most retailers to follow KYCregulations when selling a broad range of prepaid products. The NAC’stake away tells the story by saying such a requirement “would be impossible toadminister, and even if it could be implemented, would threaten the continuedviability of prepaid access products.”
NACS sent a letter last week to the Financial Crimes Enforcement Network(FinCEN) regarding its proposed regulations on prepaid access gift cards, whichit maintains would create an undue burden for retailers under its current form.
FinCEN’s Bank Secrecy Act proposes an exemption for closed-loop prepaidaccess and prepaid access, limited to a $1,000 maximum. However, thoseexemptions would only apply if a prepaid access device does not permitinternational transmission, which creates problems for Internet redemptions ,redemptions outside of the U.S., and transfers among users.
Accordingly, as written, the rules would require retailers to register withFinCEN as a Money Services Business, with Providers and sellers of prepaidaccess required to verify, collect, store, and retrieve personal information,file suspicious activity reports and current transaction reports, and maintainanti-money laundering (AML) programs.
NACS urged FinCEN to construct the Act with a reasonable balance betweenthe regulatory burdens and the anticipated benefits, commenting that theproposed exemptions “are drawn too narrowly to benefit those retailers engagingin transactions that pose a low risk of illicit activity.” It also said thatthe network shoul
not impose a $1,000 thresholdaggregated across all types of prepaid access, maintaining that such arequirement “ would be impossible to administer, and even if it could beimplemented, would threaten the continued viability of prepaid accessproducts.”
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