Two’s the Charm: FinCEN Trying for a Cross-Border Reporting Rule Again
After a previous attempt by FinCEN to implement an anti-money laundering rule stalled and was withdrawn, the agency is planning to reintroduce a version of the rule. A FinCEN spokesman told Reuters the rule is being revised and could be submitted next year.
That initial rule had required consumers to declare when they transport prepaid cards, along with cash or other monetary instruments, with a value of more than $10,000 into or out of the U.S.
FinCEN’s efforts date back to 2011 when it issued a notice of proposed rulemaking that would amend the definition of “monetary instrument” in the Bank Secrecy Act to include prepaid cards. The impetus for the rule was to enable law enforcement to clamp down on money laundering across the border.
During the 60-day comment period for the rule, U.S. Immigration and Customs Enforcement submitted one comment supporting the rule, while nearly a dozen industry associations and payment card providers submitted comments opposing it, according to the Reuters report.
In a meeting between prepaid industry representatives, FinCEN, the Office of Management and Budget and the Department of Homeland Security in 2013, industry representatives argued cardholders should not have to declare whether they had more than $10,000 on prepaid cards because the rule violated several financial privacy statutes. FinCEN withdrew its proposal in 2014.
Although the NBPCA fully supports law enforcement efforts to eliminate the use of all financial products for money laundering and terrorist financing, the association argues that FinCEN was correct when it withdrew its 2011 proposal to define prepaid cards as monetary instruments due to conflicts with applicable privacy laws, says Brad Fauss, NBPCA president and CEO.
“We believe that FinCEN correctly realized that reloadable prepaid cards are functionally equivalent to checking accounts in that they undergo identity verification procedures, are often FDIC insured and will soon be regulated in the same manner as other consumer asset accounts under Regulation E when the CFPB issues its final rule on prepaid accounts,” Fauss tells Paybefore. “More importantly, they are simply access devices to the underlying financial accounts and should not be treated as currency or currency equivalents.”