Saudi Arabia Restricts Popular Prepaid Card over Terrorism, Money Laundering Concerns
The government of Saudi Arabia has banned in-person sales of one of the leading online payment products in the Middle East over concerns about money laundering and terrorist financing. The Saudi Arabian Monetary Agency (SAMA)—the country’s central bank—has barred the sale of CASHU prepaid cards through local agents, though consumers still may purchase cards from the company’s Website.
SAMA took action due to the large number of customers using CASHU cards and the government’s inability to monitor misuse, according to a report by the Saudi Gazette. Also at issue is the fact that CASHU is based outside of Saudi Arabia, with offices in Amman, Jordan, and Dubai. In its order to ban the cards, SAMA said only banks operating within Saudi Arabia are allowed to issue prepaid cards, according to the report.
A ban in Saudi Arabia would be a major setback for CASHU, which counts the country among its leading markets. Formed in 2003, CASHU has grown to become a major provider of online and mobile payments in the Middle East and North Africa, where populations tend to be young and access to traditional payment cards is limited. CASHU prepaid cards are mainly used to for purchases including online games, music and software, telecom and IT services, according to the company.
Concerns over money laundering and terrorist financing recently have put prepaid cards under the microscope in Europe as well. The European Commission last week released a proposal to lower the threshold for triggering cardholder identification requirements for prepaid cards and ban the use of anonymous prepaid cards online. The proposed amendments to the Fourth Anti-Money Laundering Directive followed a promise by the EC to tighten rules for prepaid cards in the wake of the terrorist attacks in Paris last year.