By, Gina Ellis
The regulatory agencies issued new guidance on March 21, 2016 that may require banks to enhance their Customer Identification Program (CIP) when issuing prepaid cards. The guidance indicates general purpose prepaid cards that can be reloaded by the cardholder or another party on behalf of the cardholder, which will create a formal banking relationship equivalent to opening a traditional deposit, loan or transaction account. This will require the issuing bank to perform CIP procedures on any purchasers who have not already been identified as existing customers. This new requirement may also apply in certain circumstances when issuing payroll or government benefit prepaid cards if the cardholder is allowed to reload the card from sources other than an employer or government agency. The guidance also clarifies that certain prepaid cards issued under an arrangement with third party program managers that sell, distribute or market the prepaid cards are subject to CIP requirements.
We recommend reviewing the types of prepaid cards your bank is issuing or selling through third party agreements. Depending on the types of prepaid cards you are issuing or selling, you may need to revise your CIP procedures and perform additional training for your front line personnel.
Want more information? Check out the below link to the complete guidance.
https://www.fincen.gov/statutes_regs/guidance/pdf/InterAgencyGuidance20160318.pdf
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