prepaid cards asia 2010
TRANSCRIPT
Attn : Please place graphic
Easy to get & use -Availability• Card-holder/buyer
anonymity• Credit checks not
required• Evidence of
identification may not be required
Easy to get & use -Availability• Card-holder/buyer
anonymity• Credit checks not
required• Evidence of
identification may not be required
Convenient• Can be
purchased, reloaded (for Open & Semi-open), redeemed and refunded at conveniently located merchants e.g. supermarkets
Convenient• Can be
purchased, reloaded (for Open & Semi-open), redeemed and refunded at conveniently located merchants e.g. supermarkets
Affordable• Funds are
immediately available
• Often at lower cost then when using traditional banking services
Affordable• Funds are
immediately available
• Often at lower cost then when using traditional banking services
Reduced overdraft risk• Reduces risk of
overdraft• Allows nearly
immediate liquidity to users
Reduced overdraft risk• Reduces risk of
overdraft• Allows nearly
immediate liquidity to users
Benefits of using Pre-paid/Stored Value Cards:
FATF definition of ‘Money Laundering’ -
“the processing of…criminal proceeds to disguise their illegal origin” in order to “legitimize” the ill-gotten gains of crime.
FATF, ‘What is money laundering?, Basic Facts About Money Laundering’, at http://www.fatf-gafi. org/MLaundering_en.htm.
Attn : Pls place graphic• Process through which illegal funds or
assets are introduced into the financial system or converted into monetary instruments
PlacementPlacement
• Process through which illegal origins of placed funds are disguisedLayeringLayering
• Process through which disguised/layered funds are made available for investment in legitimate or illegitimate business
IntegrationIntegration
Typically, Money-laundering is segmented into 3 stages:
Attn : pls place graphic
• Easy to acquire;• Bank account not
required;• Accepted online, via
fax or through non-financial outlets;
• May not require face-to-face verification
• Easy to acquire;• Bank account not
required;• Accepted online, via
fax or through non-financial outlets;
• May not require face-to-face verification
PLACEMENT
• Value is either:• redeemed (Closed
or Semi-closed Cards), or
• sent overseas
• Value is either:• redeemed (Closed
or Semi-closed Cards), or
• sent overseas
LAYERING• can be used as a
means of payment by criminals;
• can be used to make payment for services rendered
• can be used as a means of payment by criminals;
• can be used to make payment for services rendered
INTIGRATION
MoneyMoney--Laundering Process through PreLaundering Process through Pre--paid/SVC paid/SVC Usage:Usage:
Electronic MoneyTwo categories of E-money in Singapore -
Single Purpose & Multiple Purpose Stored Value
SPSVCs – only to pay for goods/services of issuerMPSVCs- to pay for goods/services of other merchants
MPSVFswho can issue
• The Banking Act (s.77A) allows only banks authorizedby Monetary Authority of Singapore to issue MPSVCs;• Payment System (Oversight) Act 2006 (s.33) allowsany entity/person to issue MPSVCs with stored valuesbelow S$30 million;• SPSVCs may be issued by any entity.
Regulatory Framework addressing Pre-paid risk in Singapore
Pre-paid payment instruments
Pre-paid payment instruments facilitate purchase of goods and services against the value stored on such
instruments - smart cards, magnetic cards, m-wallets
Types Closed system, Semi-closed system, Semi-open system
and Open system
Who can issueBanks and NBFCs can issue Open System Cards, subject to approval from RBI. Others are allowed to issue other
system cards other than Open System
License and Supervision
Entities issuing closed-system pre-paid card are exempted, subject to reporting requirements to RBI;
All other entities would require RBI authorization
India: Regulatory FrameworkRegulatory Framework addressing Pre-paid risk in India
Capital Requirements
paid Instruments
Only Banks/NBFCs meeting regulatory Capital Adequacy Ratio are allowed to issue all types of Pre-
paid Instruments
KYC/AML/CFT KYC/AML/CFT rules applicable based on the features of
instruments and vulnerability of misuse
Deployment of Money collected
Collected money should be held with the issuing entities. Non-bank issuers (except those exempted) required to maintain outstanding
balance in escrow account with a scheduled bank.
Reloading of Cards
Both banks and NBFCs may issue reloadable instruments.Reloading Closed System Cards allowed at retail agents. Bank
issued SVCs can be reloaded at ATM & through Internet banking.
Money TransferPre-paid payment instruments can be used for transfer
of funds online or using mobile phone networks.
KYC/AML/CFT KYC/AML/CFT rules applicable based on the features of
instruments and vulnerability of misuse
Security and Fraud Prevention
Adequate information and data security systems, and prevention and detection of frauds should be at place
Complaints and Redressal
Effective mechanism for redressal of customer complaints shall be in place
Main Legislation Payment and Settlement System Act, 2005
RegulationMoney, Payment, Clearing and Settlement Providers
Regulation No. 1 of 2007
Regulation empowers Central Bank of Sri Lanka (CBSL) to supervise, regulate and monitor service providers including entities offering
money service or payment system
Direction on Service Providers of Card Based Payment Instruments – made under Regulation No. 1 of 2007
Regulatory Framework addressing Pre-paid risk in Sri Lanka
Card Based Payment
Instrument
A payment instrument or “Payment card” includes -Credit Card, Charge card, ATM card, Debit Card, Stored Value
Card
A physical or virtual Card-Based Payment Instrument acquired by Cardholder by paying advance amount, and value of funds is
installed in card as stored value, presented in rupee or converted into other units
Prepaid Card
A physical or virtual Prepaid card issued to execute payment of an obligation/s incurred in single type of
economic transaction
Single/Multi-purpose Stored
Value Card
A non-bank institution registered by CBSL for Stored Value Card business of single-purpose multi-
merchant, multi-purpose multi-merchant and non-merchant
Specialized Stored Value
Card
RegistrationNon-bank entities are required to register at CBSL as
Specialized Stored Value Card Institution to issue Stored Value Card
CurrencyStored Value Card used for transactions in Sri Lanka are
required to calculate units in rupees
Prior Notification
Notification to CBSL required for giving advertisement or for cards promotion
Customer Information
Financial Transactions Reporting Act / Anti Money laundering Act requires reporting of suspicious cash transactions to CBSL and places KYC obligations
on banks and financial institution
Applicable LawsBangladesh Payment and Settlement Systems Regulation,
2009;Money Laundering Act, 2002; and
Foreign Exchange Regulation Act, 1947
Regulating and supervising of payment systems is operative in Bangladesh, including cross border transactions
Recognizes Payment Service Providers (PSP) as new quasi financial entities and recognizes issuance of E-money, electronic
fund transfer (EFT), Pre-paid Card
For license PSPs may be required to maintain capital adequacy at levels specified by the Bangladesh Bank [Reg.4(vii)]
Banks/Financial Institutions maintaining accounts with Bangladesh Bank for meeting Cash Reserve Requirement are exempted from
obtaining license as PSP.
Regulatory Scope
Regulatory Framework addressing Pre-paid risk in Bangladesh
Proportionate and risk based regulations
Low risk prepaid products with no cash redemptions may be exempted from license
Conditions for authorization should be pre-specified
Fees should be designed keeping in mind the poor, unbanked and underserved community
With regard to risk management, security and integrity - General Guidelines should be in place to be followed by all to ensure best practice
Semi-closed/open products may be exempted, subject to following a regular code of conduct
Regulatory Approach: One Size Does Not Fit All
AML
Exchange of Information
between FIUs
Information Exchange in a Rapid manner
Proper International Co-operation Framework
Build a Comprehensive
and Efficient Domestic Capacity
Ratification and Implementation of International Conventions