On July 29, 2011, the Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a Final Rule applicable to Money Services Businesses (MSBs) with regard to stored value. FinCEN issued the Final Rule to address regulatory gaps that have resulted from the proliferation of prepaid innovations and their increasing use as an accepted payment method. The Notice of Proposed Rulemaking initially addressing these regulatory issues was issued by FinCEN on June 28, 2010.
The effective date of the Final Rule is September 27, 2011, and the compliance date with respect to registration requirements is January 29, 2012.
Background
Under the Bank Secrecy Act (BSA), sellers or redeemers of stored value are covered under the definition of the term MSBs. MSBs are generally required to (1) establish written anti-money laundering (AML) programs that are reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities; (2) file Currency Transaction Reports and Suspicious Activity Reports; and (3) maintain certain records, including those relating to the purchase of certain monetary instruments with currency, transactions by currency dealers or exchangers, and certain transmittals of funds. Most types of MSBs are also required to register with FinCEN, and all are subject to examination for BSA compliance by the Internal Revenue Service.
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