The Financial Crimes Enforcement Network (FinCEN) recently issued a letter (FIN-2012-R003) clarifying the registration obligations of certain participants in a bank-controlled prepaid access program. In general, the “provider of prepaid access” in a prepaid access program must register with FinCEN as a Money Services Business (MSB). However, a bank is excluded from being an MSB. Thus, while a bank that has “primary oversight and control over” the prepaid access program – e.g, issuing cards, establishing and maintaining account balances, processing card transactions – may otherwise be deemed a “provider of prepaid access” as defined by the rules, the bank is not required to register as an MSB. In fact, as the letter clarifies, in this type of prepaid access program, no other participant is required to register as the “provider.” This is consistent with the agency’s earlier statements regarding bank-controlled programs (see 76 Fed. Reg. 45403, 45405 n.26, 27 (July 29, 2011) and FinCEN’s prepaid access FAQs)
The letter does emphasize, however, that whether a prepaid access program falls within the bank “exception,” the entity that sells prepaid access can still be covered by the prepaid access rules as a “seller of prepaid access,” depending on certain load and verification requirements.
For more information on the prepaid access rules, please see our earlier summary of the rules, available here.