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New regulations on prepaid debit cards on the horizon

December 18, 2012

The United States Treasury Department announced that it will increase efforts in the coming year to curb money laundering practices, particularly those that fund criminal or terrorist organizations.

The United States Treasury Department announced that it will increase efforts in the coming year to curb money laundering practices, particularly those that fund criminal or terrorist organizations. The Treasury Department will exercise its enforcement under its Financial Crimes Enforcement Network (FinCEN), targeting financial organizations such as short-term lenders or secured debit and credit cards, ensuring that the funds are not filtered into accounts of enemy groups. Under these new regulations, prepaid debit cards would be considered a monetary instrument, and any cards with a balance over $10,000 must be declared to United States customs.

If this legislation passes, it would cause repercussions on the payment industry that may extend beyond prepaid cards to digital and cloud payments involving mobile credit card processing. Although the target of these new regulations falls under Homeland Security defense strategies, the ramifications could extend to merchant services for retailers, particularly in tourist economies. Federal lawmakers are increasing the push toward regulations on lenders and the protection of consumer credit and identities. The attempt to regulate transnational crime and terrorism has changed many aspects of data security over the last decade, and it seems that merchant payments are one of the new frontiers for regulation.

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