Prepaid Cards: Vulnerable to Money Laundering?

22 Pages Posted: 13 Mar 2007

Date Written: February 2007

Abstract

This paper discusses the potential money laundering threat that prepaid cards face as they enter the mainstream of consumer payments. Over the past year, several government agencies have issued reports describing the threat to the U.S. financial system, including the use of prepaid cards by money launderers. Also, this paper incorporates the presentations made at a workshop hosted by the Payment Cards Center at which Patrice Motz, executive vice president, Premier Compliance Solutions, and Paul Silverstein, executive vice president, Epoch Data Inc., led discussions. These two leading anti-money laundering strategists explained how money laundering occurs in financial payments and how firms can mitigate and detect money laundering activities. This paper provides an overview of money laundering, describes how prepaid cards could be abused, and outlines how both the government and the payment sectors have responded to mitigate risks.

Keywords: Prepaid cards, Money laundering

Suggested Citation

Sienkiewicz, Stanley J., Prepaid Cards: Vulnerable to Money Laundering? (February 2007). Federal Reserve Bank of Philadelphia Payment Cards Center Discussion Paper No. 07-02, Available at SSRN: https://ssrn.com/abstract=969042 or http://dx.doi.org/10.2139/ssrn.969042

Stanley J. Sienkiewicz (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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