PIF Calls for Provision Clarifying AML Processes for E-Money Products (April 23, 2014)
London-based Prepaid International Forum (PIF) this week published a position paper outlining its concerns about certain provisions in the European Commission’s (EC) draft 4th Anti-Money Laundering Directive (4AMLD). The lack of clear rules on Simplified Customer Due Diligence (SDD) within 4AMLD could have unintended negative consequences for issuers of low-value, low-risk prepaid instruments that currently function without full verification of the customer’s identity, according to PIF. Such legal uncertainty could dampen the environment for new market providers and products, delay technical innovation and inconvenience consumers who rely on existing SDD e-money products that are carefully supervised and regulated, the industry group suggests.
PIF calls for the EC to add a provision to 4AMLD allowing application of SDD measures for e-money products, provided there are appropriately low monetary thresholds for purse and transaction limits; the issuer has adequate transaction-monitoring mechanisms in place; e-money transfers to or from SDD products are confined within products and accounts under the same issuer, and where redemptions allowed without fully verifying the customer’s identity are restricted to an appropriately low amount.
“The [prepaid] industry has invested heavily in transaction-monitoring systems to prevent e-money products from being abused for criminal purposes,” Dr. Hartwig Gerhartinger, chairman of PIF’s AML Working Group, said in a press release. “Due to detailed transaction records, including time stamps, merchant details and further usage data, these systems can be effectively applied even without fully identifying the end customer.”
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