Attn : Please place graphic 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 Typically, Money-laundering is segmented into 3 stages:
Regulatory Framework addressing Pre-paid risk in Singapore Electronic Money Two categories of E-money in Singapore - Single Purpose & Multiple Purpose Stored Value SPSVCs – only to pay for goods/services of issuer MPSVCs- to pay for goods/services of other merchants MPSVFs who can issue
The Banking Act (s.77A) allows only banks authorized by Monetary Authority of Singapore to issue MPSVCs;
Payment System (Oversight) Act 2006 (s.33) allows any entity/person to issue MPSVCs with stored values below S$30 million;
SPSVCs may be issued by any entity.
India: Regulatory Framework Regulatory Framework addressing Pre-paid risk in India 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 issue Banks 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
Capital Requirements 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 Transfer Pre-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
Regulatory Framework addressing Pre-paid risk in Sri Lanka Main Legislation Payment and Settlement System Act, 2005 Regulation Money, 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
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
Registration Non-bank entities are required to register at CBSL as Specialized Stored Value Card Institution to issue Stored Value Card Currency Stored 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
Regulatory Framework addressing Pre-paid risk in Bangladesh Applicable Laws Bangladesh 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
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