Prepaid Cards Anti-money laundering y g by jizhen1947


									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
    What are the key risk factors?
     Geography, Customers and Products.

    Inclusion in Product Development is a must

    What controls can help mitigate the exposure

    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
     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
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.
Thank you.
Red Flags - Highlights
          Use suspicious identification                                    Collusion between agents,
          documents.                                                       cardholders and /or point of sales
          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 )
                                                                           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
          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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