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Prepaid Regulatory Changes and How to Effectively Prepare for Upcoming Examinations

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Prepaid Regulatory Changes and How to Effectively Prepare for Upcoming Examinations

  1. 1. Prepaid Regulatory Changes andHow to Effectively Prepare forUpcoming ExaminationsJohn ReVealPartnerBryan Cave, LLPMabel WilsonVice President, ComplianceBlackhawk NetworkWednesday, June 26, 2013Workshop DJeanette BarrazaDirector of BSA and NondepositorySupervisory ProcessesConference of State Bank SupervisorsMarilyn BarkerChief Regulatory Counsel Senior VicePresidentThe BancorpJanath GodeSenior ConsultantSightspan Inc.© 2013 Network Branded Prepaid Card Association
  2. 2. Thank You To Our Sponsors2Presenting SponsorsSupporting Sponsor Welcoming Reception SponsorAssociate SponsorsFounding Sponsors
  3. 3. The Basics – Exam Types• Bank Exams– Federal, State or Joint Exams• Safety and Soundness• Compliance– Consumer Financial Protection Bureau (CFPB)• Non-Bank Exams3
  4. 4. The Basics – Parties in the Prepaid ValueChain• Issuer – usually a Bank, but may be a Non-Bank• Program Manager – may also be a Provider ofPrepaid Access/MSB• Retailer, Distributor or Agent• Processor• Network4
  5. 5. How can we best prepare for an upcomingExam?• Risk Assessments• Keep current with regulatory developments• Ensure you have timely access to information• Ongoing monitoring and testing• Organization5
  6. 6. What should we expect during the Exam?• Different examiners, different styles• Exam targeted towards your specific role/businessmodel• Educate and translate6
  7. 7. What are some specific areas we should beprepared to address?• Final FinCEN prepaid access rule – how did youimplement?• AML and Fraud monitoring – system used, has itbeen independently tested and verified?• Third party oversight, including agent location visits• Fee disclosures• SAR filings7
  8. 8. Concluding the Exam• Examiner’s process steps in concluding exam• Exit meetings and what to expect• How to respectfully disagree• When to call Counsel8
  9. 9. What are you seeing as Exam Trends?• Third Party Payment Processor considerations• Bank exams extending to the program manager• Focus on agent location visits9
  10. 10. What Challenges are Facing the Industryfrom an Exam Perspective?• Education of examiners• Multiple roles• Cooperation between all prepaid parties• Negative media10
  11. 11. BREAK-OUT SESSION11
  12. 12. Scenario One• Your institution (an issuer) offers both giftcard, LAP, payroll and GPR programs. Theexaminer doesn’t understand why yourmonitoring processes differ by program, and isespecially concerned about how you monitorgift card purchases and usage.• How can you best explain this to yourexaminer?12
  13. 13. Scenario Two• Your company (a Provider of PrepaidAccess/MSB) offers its prepaid productsthrough retail. Your examiner wants to applya traditional agent model to the exam.• How can you help the examiner understandthe differences between prepaid retailers anda traditional agent model?13
  14. 14. Scenario Three• Your company is a newly registered PrepaidProvider/MSB. You have never been throughan examination before.• How would you best prepare? Discuss whatregulations apply to you and specific items toprep.14
  15. 15. Scenario Four• Your company sells its card programs throughretails agents. Your examiner did on-site visitsof agent locations during the exam anddiscovered one Agent who refuses to put upsignage required by the State. This agentrepresents 20% of your sales.• How will you handle this situation?15
  16. 16. Questions?16

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