BSA Series: Alert! New CIP Rules on Prepaid Cards

New Customer Identification Program rules on prepaid cards came out through interagency guidance to clarify that a bank’s Customer Identification Program (CIP) should apply to the cardholders of general purpose prepaid cards that have the features of an account and are issued by a bank. This guidance states that a general purpose prepaid card should be treated as an account if it provides a bank’s customer with (1) the ability to reload funds or (2) access to credit or overdraft features. The guidance applies to these cards even if they are sold, distributed, promoted, or marketed by third-party program managers.

The CIP rule, set forth in Section 326 of the USA PATRIOT Act, requires a bank to obtain information sufficient to form a reasonable belief regarding the identity of each “customer,” including, at a minimum, obtaining the customer’s name, date of birth, address, and tax identification number, and to establish risk-based procedures to verify the identity of new customers. To determine if CIP requirements apply to purchasers of prepaid cards, the issuing bank should first determine whether the issuance of a prepaid card results in the creation of an account; and if so, ascertain the identity of the holder of that card.

This program will review this new interagency guidance for financial institutions from start to finish. Plus we will review other BSA issues on Prepaid Cards including Money Services Business (MSB) registration and examination issues for a high risk product. You'll also receive a Sample Policy Change and Sample Procedures.

Covered Topics:

  • Overview
  • CIP Overview
  • Determining the existence of account
    • General Purpose Prepaid Cards With the Ability to Reload Funds
    • General Purpose Prepaid Cards With Access to Credit or Overdraft Features
    • Activation of General Purpose Cards
  • Identifying the Customer
    • Prepaid Cardholders and Third Parties
    • Payroll Cards
    • Government Benefit Cards
    • Health Benefit Cards
  • Contracts with Third Party Program Managers
  • MSB Registration for Prepaid Cards which is an existing BSA rule
  • BSA Examination Issues on Prepaid Cards

Who Should Attend?

BSA Officers, Staff, Deposit Operations, Prepaid Card Administrators, Training, Branch Personnel, and New Accounts