Atlanta Fed Paper Examines Money Laundering Risks for GPR Cards (Feb. 7, 2013)
Feb. 7, 2013
Do GPR cards pose significant money laundering threats? That’s the question the Retail Payments Risk Forum at the Federal Reserve Bank of Atlanta explores in recently published paper. Among the paper’s findings is that, as GPR prepaid cards have grown in popularity and come under increased scrutiny by regulators, significant regulatory measures as well as industry-wide adopted practices have greatly reduced, but not eliminated, the cards’ money laundering risks. The most significant risks, however, seem to be posed by cards issued by countries outside the U.S. that may not have the same AML requirements, according to the report.
“Given both the regulatory and industry measures in place for mitigating money laundering risks associated with U.S.-issued GPR prepaid cards, these products are no longer the attractive instruments for money laundering that they once might have been,” according to the paper, which examined 15 U.S. GPR card programs. Identification and registration requirements to gain full use of the cards, as well as limits on card value, loads, spending and withdrawals have reduced the money laundering risks for GPR cards. To address the risks posed by cards issued outside the U.S., the report suggests that declaration requirements at the border related to the number and value of these instruments should be considered. It also recommends that financial institutions and other ATM operators should consider imposing stricter cash withdrawal limits on foreign-issued GPR cards.
For U.S.-issued cards, the paper notes that programs and their target audiences vary greatly, and such variation makes a “one size fits all” approach to risk mitigation impractical.