Mercator research suggests that FinCEN’s proposed rule changeswill have a significant negative impact on the prepaid market andyet I am unable to find anyone in the prepaid industry thatbelieves these proposed rules will prevent most of the crimesidentified in this blog posting:“To help identify potential risksrelated to prepaid access devices, FinCEN formed a subcommitteewithin their Bank Secrecy Act Advisory Group (BSAAG). Thesubcommittee has identified numerous risks, such as funding withcash from stolen credit cards and virtual money cards that allowindividuals without a bank account to access illicit cash via ATMsglobally. Some high-profile criminal activities have also surfaced,exposing some of these potential risks.”
It is particularly vexing that Ana pickedthe Payoneer story as the example of “high-profile criminalactivity” since this illegal activity is explicitly not preventedby these proposed rules since payroll cards are excluded from thisFinCEN proposal.
If FinCEN were to document how these proposed rules would preventspecific criminal activities, I think it is likely the prepaidindustry could prove FinCEN wrong. More importantly, if FinCEN wereto work directly with the industry, I am positive more effectivesolutions could be identified that would cause far less disruptionto the prepaid market.
Preventing disruption is important because these prepaid productsare the best hope for providing low cost access to financialservices for the unbanked and under served. Even as the FDICdecries the lack of affordable financial services for Low &Moderate Income families, FinCEN proposes new rules that I believewill greatly increase the cost associated with delivering financialservices to that same audience -but likely with no benefit to lawenforcement.