Retailers That Sell Gift Cards Now Subject to Federal AML Regulations

New York, NY, February 17, 2012 --(PR.com)-- The US Treasury’s Financial Crimes Enforcement (FinCEN) has confirmed that retailers of “pre-paid access products,” which include gift cards, now must comply with anti-money-laundering (AML) Regulations. The final rule is available at this link: www.fincen.gov/news_room/nr/html/20110726b.html

TransGuardian's online compliance solution will help retailers in the Diamond and Jewelry industry follow these AML Regulations (CFR 31, Chapter X) under the Bank Secrecy Act (BSA) as amended by the USA PATRIOT Act.

“The rule addresses regulatory gaps that have resulted from the proliferation of prepaid access innovations over the last 12 years and their increasing use as an accepted payment method,” said FinCEN Director James H. Freis, Jr. “FinCEN prepaid access regulations provide a balance to empower law enforcement with the information needed to attack money laundering, terrorist financing, and other illicit transactions through the financial system while preserving innovation and the many legitimate uses and societal benefits offered by prepaid access.”

Retailers who issue gift cards with values of or below $2,000 are exempt from pre-paid access regulations, unless the card is valid internationally or can be refilled remotely.

If a retailer issues gift cards for purchases or in exchange for merchandise returns in its own stores for values of $2,001 or more, the retailer must be take steps to defend against these products being used to launder money.

If a retailer issues cards with a value of $1,000 or more that can be used at stores other than that of the issuing retailer, the retailer must comply.

If the retailer issues pre-paid access products to a customer with a value of 10,000 or more for a single transaction, the retailer must comply.

Retailers that sell gift cards for use in their stores or that issue gift cards in exchange for merchandise returns in the amount of $2,000 or more, are required to take certain steps to ensure these products are not being used to launder money.

Retailers who issue a gift card in an amount of $2000 or less only for credit and only to be used for a purchase in their store do not have to comply, unless this card can be used internationally or “reloaded” remotely.

If a gift card in the amount of $1,000 or more can be used at outside stores (another store or chain) for other items, than retailers have to comply.

Retailers that issue any pre-paid access products to a customer in the aggregate amount of $10,000 or more in one day, have to comply.

Compliance consists of understanding the risks associated with pre-paid access products and applying precautionary steps and controls similar to those embodied in the Diamond or Jewelry Business’s existing AML Program.

TransGuardian is the leading online AML Compliance provider to the Diamond and Jewelry Industry. For questions, please call (877)570-7447 or contact support@transguardian.com.

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