This document summarizes a presentation on preparing for prepaid regulatory examinations. It discusses the types of exams prepaid companies may face, the parties involved in prepaid, how to prepare for exams, what to expect during exams, specific exam focus areas, concluding exams, exam trends, and challenges facing the industry. Breakout sessions provided scenarios on explaining different monitoring processes, helping examiners understand prepaid retailers vs agents, preparing as a new MSB, and handling issues found at agent locations during an exam. The presentation aimed to help prepaid companies effectively prepare for upcoming regulatory examinations.

1. Prepaid Regulatory Changes and
How to Effectively Prepare for
Upcoming Examinations
John ReVeal
Partner
Bryan Cave, LLP
Mabel Wilson
Vice President, Compliance
Blackhawk Network
Wednesday, June 26, 2013
Workshop D
Jeanette Barraza
Director of BSA and Nondepository
Supervisory Processes
Conference of State Bank Supervisors
Marilyn Barker
Chief Regulatory Counsel Senior Vice
President
The Bancorp
Janath Gode
Senior Consultant
Sightspan Inc.
© 2013 Network Branded Prepaid Card Association

2. Thank You To Our Sponsors
2
Presenting Sponsors
Supporting Sponsor Welcoming Reception Sponsor
Associate Sponsors
Founding Sponsors

3. The Basics – Exam Types
• Bank Exams
– Federal, State or Joint Exams
• Safety and Soundness
• Compliance
– Consumer Financial Protection Bureau (CFPB)
• Non-Bank Exams
3

4. The Basics – Parties in the Prepaid Value
Chain
• Issuer – usually a Bank, but may be a Non-Bank
• Program Manager – may also be a Provider of
Prepaid Access/MSB
• Retailer, Distributor or Agent
• Processor
• Network
4

5. How can we best prepare for an upcoming
Exam?
• Risk Assessments
• Keep current with regulatory developments
• Ensure you have timely access to information
• Ongoing monitoring and testing
• Organization
5

6. What should we expect during the Exam?
• Different examiners, different styles
• Exam targeted towards your specific role/business
model
• Educate and translate
6

7. What are some specific areas we should be
prepared to address?
• Final FinCEN prepaid access rule – how did you
implement?
• AML and Fraud monitoring – system used, has it
been independently tested and verified?
• Third party oversight, including agent location visits
• Fee disclosures
• SAR filings
7

8. Concluding the Exam
• Examiner’s process steps in concluding exam
• Exit meetings and what to expect
• How to respectfully disagree
• When to call Counsel
8

9. What are you seeing as Exam Trends?
• Third Party Payment Processor considerations
• Bank exams extending to the program manager
• Focus on agent location visits
9

10. What Challenges are Facing the Industry
from an Exam Perspective?
• Education of examiners
• Multiple roles
• Cooperation between all prepaid parties
• Negative media
10

11. BREAK-OUT SESSION
11

12. Scenario One
• Your institution (an issuer) offers both gift
card, LAP, payroll and GPR programs. The
examiner doesn’t understand why your
monitoring processes differ by program, and is
especially concerned about how you monitor
gift card purchases and usage.
• How can you best explain this to your
examiner?
12

13. Scenario Two
• Your company (a Provider of Prepaid
Access/MSB) offers its prepaid products
through retail. Your examiner wants to apply
a traditional agent model to the exam.
• How can you help the examiner understand
the differences between prepaid retailers and
a traditional agent model?
13

14. Scenario Three
• Your company is a newly registered Prepaid
Provider/MSB. You have never been through
an examination before.
• How would you best prepare? Discuss what
regulations apply to you and specific items to
prep.
14

15. Scenario Four
• Your company sells its card programs through
retails agents. Your examiner did on-site visits
of agent locations during the exam and
discovered one Agent who refuses to put up
signage required by the State. This agent
represents 20% of your sales.
• How will you handle this situation?
15

16. Questions?
16