Money Laundering Creates Problems for Stored-value Cards


The U.S. Treasury’s U.S. Money Laundering Threat Assessment, published last December, says that many types of stored-value cards have the potential to become major avenues for money laundering, suggesting—although not saying explicitly—that stringent anti-money laundering regulations are in the offing for the card products.

Industry groups are preparing what amount to pre-emptive negotiations to keep the issue off the floor of Congress, hopefully minimizing potential regulations that could, in the view of many in the industry, cripple the business case for what bankers and other payments executives consider several promising new revenue streams. But prepaid-card executives are declining to speak publicly about the issue, hoping to keep public discussion about stored-valued cards “positive.”

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Manhattan District Attorney and Money Laundering Regulations

Manhattan District Attorney Robert Morgenthau, together with federal and New York state banking officials, is on the verge of settling serious money laundering charges against the Bank of America Corp. with a reported $25 million fine, making this the second largest money laundering case the long-time DA has settled in three months. In December, the Manhattan DA, the New York State Banking Department, and the Federal Deposit Insurance Corp. settled a similar case with Israel Discount Bank of New York, also for a fine totaling $25 million, including the costs of the investigation.

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Fox leaving FinCEN for Bank of America

The Financial Crimes Enforcement Network (FinCEN) said today that William J. Fox, its director since Dec. 2003, is leaving to become senior compliance executive for compliance risk management at Bank of America (BofA). Fox starts at BofA on Feb. 21; he’ll be replaced as director by Deputy Director William F. Baity, effective February 4.

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