Treasury Department Issues Final Rule on “Prepaid Access” Under the Bank Secrecy Act


On July 27, 2011, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) released its much anticipated final rule (Final Rule) applying the anti-money laundering requirements of the Bank Secrecy Act to certain open and closed-loop prepaid payment products in a comprehensive manner for the first time.

The Final Rule redefines “stored value” as “prepaid access” and imposes significant regulatory obligations on both “providers” and “sellers” of “prepaid access,” including certain anti-money laundering program, reporting and recordkeeping requirements. Notably, in response to public comment, the Final Rule significantly enlarges the exemptions for closed-loop retailer gift card programs and narrows the definition of “seller of prepaid access,” as compared to the proposed rule. A copy of the Final Rule, as published in the Federal Register, is available here.

Overall assessment

The scope of the Final Rule reflects FinCEN’s effort to balance persistent law enforcement concerns about the abuse of “prepaid access” programs for money laundering1 against strong consumer demand for such products as reflected in the growth of the industry. While the Final Rule suggests FinCEN gained important industry insight as to the value of prepaid programs during the rulemaking process, the Final Rule may still have a significant adverse impact on the development of innovative payment systems and products. The efficacy of the Final Rule in preventing money laundering or terrorist financing remains to be seen, and the case for the necessity of the Final Rule remains—at most—incomplete.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Davis Wright Tremaine LLP | Attorney Advertising

Written by:


Davis Wright Tremaine LLP on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.