Compliance Blog

Written by Steve Van Beek

Last week FinCEN issued a final rule on prepaid access (formerly called "stored value").  The definition itself has not changed but FinCEN updated the name to better reflect the current terminology used in the market.

The regulation amends FinCEN's "money services businesses" rules and was required by Section 503 of the Credit CARD Act of 2009.

Naturally, the first question is does this apply to credit unions?

The final rule discusses this issue in a couple of footnotes:  

Footnote 26:  "By virtue of the regulatory definition of a money services business, neither a bank nor any other participants in the bank-centered prepaid program would be required to register with FinCEN."  

Footnote 27: Banks currently serving in a role that could otherwise fit the definition of a provider of prepaid access are not subject to this rule because FinCEN has excluded banks from its definition of MSB.  See 31 CFR 1010.100(d), (ff). However, banks are subject to distinct FinCEN rules implementing the BSA with respect to their products and services generally.  Additionally, banks are subject to regulation by the federal banking agencies ("FBAs") and, as such, must comply with the appropriate provisions of Title 12 of the CFR. FinCEN and the FBAs have issued examination guidance directed specifically at banks involved in the operation of a prepaid program. This guidance may be found at: http://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_061.htm, specifically pages 234-238, entitled "Electronic Cash – Overview."  (emphasis added).

Thus, credit unions are not subject to this new rule - but they should be sure to review the existing guidance in the BSA Examination Manual.

***

My fiance was in Ohio with her family and taking care of a few wedding details.  I figured I'd have a pretty relaxing weekend.  Boy was I wrong.  Who would have guessed that the strength (and length) of a Honey-Do list increases when the bride-to-be heads out of town?