New CIP Rules on Prepaid Cards

Duration: 90 Minutes
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. The guidance applies to these cards even if they are sold, distributed, promoted, or marketed by third-party program managers.
New CIP Rules on Prepaid Cards
Product ID: 501967
This guidance states that a general purpose prepaid card should be treated as an account if it provides a bank’s customer with
  • The ability to reload funds or
  • Access to credit or overdraft features
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.

Objectives of the Presentation
  • 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
Why should you Attend
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.

Who will Benefit
BSA Officers, Staff, Deposit Operations, Prepaid Card Administrators, Training, Branch Personnel, and New Accounts
$300
Recorded Session for one participant
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Instructor Profile:
Armen Khachadourian is the founder and president of Digital Payments Inc, a consulting firm providing advisory services in the areas of merchant processing, ISO/MSP formation, development of best practices, BSA/AML guidelines, merchant portfolio and acquiring acquisitions, prepaid and alternative payment products including decoupled debit. As a trusted partner with vision to understand his client's future business he has helped design and evaluate new products and services in today's changing marketplace.

Mr. Khachadourian has also served in executive positions at several top ten financial institutions and helped them maximize growth and revenues in today's challenging electronic payments marketplace. As a vice president of JPMorgan Chase's Prepaid Product in Treasury Services he was responsible for designing and launching prepaid cards in the EU market. As a senior vice president at Visa USA, he expanded card acceptance to new markets such as supermarkets, recurring payments, quick service restaurants and federal government agencies. His expertise in card products extends to issuance of credit, debit, prepaid and commercial cards. He is also an experienced manager of technology solutions including development of best practices, network policy, third-party processor contract negotiation and problem resolution.

Mr. Khachadourian earned a Bachelor of Arts degree in mathematics and a Master of Science degree in computer science from the San Jose State University in California. He authored the “Basics of Data Communications” textbook and lectured at College of San Mateo, CA. He was awarded an honorary teaching credential from State of California. He is a member of the United States National Masters team and has represented United States at four world championships.
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