In Wake of Paris Attacks, France Eyes Stricter Prepaid Rules (Nov. 24, 2015)
French officials are calling for tighter regulation of prepaid products in the European Union, claiming that prepaid cards were used in preparation for the terrorist attacks in Paris earlier this month. In a press conference on Monday, French Finance Minister Michel Sapin said changes are necessary to prevent those involved in terrorism from transferring and spending money anonymously. Current EU law allows prepaid cardholders to load up to €2,500 (US$2,663) to a card over one year without showing identification. Single-use cards can be loaded up to €250 (US$266) anonymously. Germany in 2012 adopted an even lower threshold of €100 (US$107) before KYC requirements are triggered for prepaid products sold at retail.
The proposal to tighten regulation for prepaid cards is part of a broader French initiative to combat terrorist financing, which Sapin identified as a key aspect of anti-terrorism strategy. “The struggle against terrorism . . . is first and foremost a struggle against its financing,” he said, according to the Financial Times. Among the other aspects of the French plan are increased information sharing between EU nations, broader powers to freeze assets of those with suspected ties to terrorism and changes to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, which banks around the world use to send interbank messages and information related to financial transactions.
Sapin shared details of the reform package in a Dec. 8 meeting with all 28 EU countries. In addition to adding controls for prepaid cards, ministers discussed ways to better track financial transfers, freeze assets and limit movements of cash and precious metals, according to an AP report. While Sapin called for fast action, no firm decisions were taken and the EU’s executive Commission was tasked with drawing up a list of priorities for their next meeting in January, the report said.
“The 4th AML Directive already is addressing these concerns in respect of Simplified Due Diligence cards,” notes Craig James, CEO of London-based compliance consultancy Neopay Ltd. “What is interesting is that they have identified that cards were used. This is valuable intelligence that they wouldn’t have had if cash had been used,” he continues. “Activity on cards is monitored, with transaction time and location stamped, which means you can track movements—not something you can do with cash. If you can time and location stamp, you have an opportunity to match to CCTV images as well. If law enforcement engages more fully with issuers, then we can help them track suspects and build a case to allow them to intercept before such atrocities take place.”
In related news, EU interior and justice ministers last week lobbied the European Commission (EC) to strengthen controls on remittances, virtual currencies, cash carriers and prepaid products over concerns that such methods could be used to facilitate terrorist funding. The EC already is conducting risk assessments on several payment methods that could be used for terrorist financing and money laundering, with particular attention on virtual currency, according to Reuters.