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Prepaid Cards y g Anti-money laundering St t i t Mitigate Risk Strategies to Miti t Ri k February 2009 Aquiles Nunez FIBA AML/TF Conference - Miami, Florida Strategies for Risk Mitigation p g Robust Compliance Risk Management Program. What are the key risk factors? Geography, Customers and Products. must. Inclusion in Product Development is a must exposure. What controls can help mitigate the exposure y Dynamic process. Strategies for Risk Mitigation KYC recommendations for Anonymous Prepaid Cards. Limit the amount of the initial load. Limit funding options. Limit or prohibit reloads. Limit or prohibit cash access or limit cross border access to cash. Require a purchaser of an unusually large number of cards to provide CIP information as purchases. well as rationale for the bulk purchases Strategies for Risk Mitigation Internal Controls / Monitoring. g Limits on the number of cards issued per customer, define program parameters. Aggregation and reporting capabilities. Identify bulk purchases under same identifiers (same name, same address, SSN, etc). Identification requirements. Restrict value loads and cash access based on amounts that are reasonable for the customer and product type. amounts, frequency, use. Load amounts frequency national or international use Strategies for Risk Mitigation Internal Controls / Monitoring (cont’d) (cont d). Monitor for single-source funding to multiple p p prepaid cards. Leverage on fraud monitoring tools. Monitor card activity – unusual transactions in size, volume, location, and type of activity. o to a ue oads ade or through third Monitor Value loads made by o t oug t d parties and sales agents. Retail network Employers. Strategies for Risk Mitigation Monitor sales of bulk purchases at the point f l of sale. Monitor International transactions. Monitor ATM withdrawals. Monitor refund / return transactions. o Thank you. Highlights. Red Flags - Highlights Use suspicious identification Collusion between agents, documents. cardholders and /or point of sales cardholders, Customer unwilling to provide with transactions in large scales. information required by the CIP. Customer uses various tax id Cardholder that makes multiple numbers with variations of his loads using multiple load locations. name. Repetitive transactions occurring at Use of structuring and ‘smurfing’. the same time for the same amount. Customers with excessive number Large transactions at high risk of cards (based on program (j y, merchants (jewelry, etc).) t ) parameters). Requests shipment of cards abroad. Multiple transactions below the reportable thresholds. Transactions occurring in more than Use of ATMs using multiple cards one state or country on the same to make withdrawals withdrawals. day day. Unexplainable transactions with no logical purposes. Sources: 1) Recommended Practices for Anti-money Laundering Compliance for U.S. Based Prepaid Card Programs. Network Branded Prepaid Card Association (NBPCA). 2008. ; 2) FATF- Report on new Payment Methods. 2006; 3) FATF Typologies Report; 4)UIAFColombia.
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