6. Benefits of using Pre-paid/Stored Value Cards:
Attn : Please place graphic
Easy to get & Convenient Affordable Reduced
use - • Can be • Funds are overdraft risk
Availability purchased, immediately • Reduces risk of
reloaded (for available overdraft
• Card-holder/buyer Open & Semi-
anonymity • Often at lower • Allows nearly
open), redeemed cost then when immediate
• Credit checks not and refunded at using traditional
required liquidity to users
conveniently banking services
• Evidence of located
identification may merchants e.g.
not be required supermarkets

7. FATF definition of ‘Money Laundering’ -
“the processing of…criminal proceeds to
disguise their illegal origin” in order to
“legitimize” the ill-gotten gains of crime.
FATF, ‘What is money laundering?,
Basic Facts About Money
Laundering’, at http://www.fatf-gafi.
org/MLaundering_en.htm.

8. Typically, Money-laundering is segmented into 3 stages:
Attn : Pls place graphic
• Process through which illegal funds or
assets are introduced into the financial
Placement system or converted into monetary
instruments
• Process through which illegal origins of
Layering placed funds are disguised
• Process through which
disguised/layered funds are made
Integration available for investment in legitimate or
illegitimate business

9. Money-
Money-Laundering Process through Pre-paid/SVC
Pre-
Attn : pls place graphic
Usage:
• Easy to acquire;
• Bank account not LAYERING
required; • can be used as a
• Accepted online, via means of payment by
fax or through non- • Value is either: criminals;
financial outlets; • redeemed (Closed • can be used to make
• May not require face- or Semi-closed payment for services
to-face verification Cards), or rendered
• sent overseas
PLACEMENT INTIGRATION

16. Regulatory Framework addressing Pre-paid risk in
Singapore
Two categories of E-money in Singapore -
Electronic Money Single Purpose & Multiple Purpose Stored Value
SPSVCs – only to pay for goods/services of issuer
MPSVCs- to pay for goods/services of other merchants
• The Banking Act (s.77A) allows only banks authorized
by Monetary Authority of Singapore to issue MPSVCs;
• Payment System (Oversight) Act 2006 (s.33) allows
any entity/person to issue MPSVCs with stored values
MPSVFs below S$30 million;
who can issue • SPSVCs may be issued by any entity.

17. India: Regulatory Framework Pre-paid risk in
Regulatory Framework addressing
India
Pre-paid payment Pre-paid payment instruments facilitate purchase of
instruments goods and services against the value stored on such
instruments - smart cards, magnetic cards, m-wallets
Closed system, Semi-closed system, Semi-open system
Types and Open system
Banks and NBFCs can issue Open System Cards, subject
Who can issue to approval from RBI. Others are allowed to issue other
system cards other than Open System
Entities issuing closed-system pre-paid card are
License and
exempted, subject to reporting requirements to RBI;
Supervision
All other entities would require RBI authorization

18. Capital Only Banks/NBFCs meeting regulatory Capital
Requirements Adequacy Ratio are allowed to issue all types of Pre-
paid Instruments
KYC/AML/CFT rules applicable based on the features of
KYC/AML/CFT instruments and vulnerability of misuse
Deployment of Collected money should be held with the issuing entities. Non-bank
issuers (except those exempted) required to maintain outstanding
Money collected balance in escrow account with a scheduled bank.
Reloading of Both banks and NBFCs may issue reloadable instruments.
Cards Reloading Closed System Cards allowed at retail agents. Bank
issued SVCs can be reloaded at ATM & through Internet banking.

19. Pre-paid payment instruments can be used for transfer
Money Transfer of funds online or using mobile phone networks.
KYC/AML/CFT rules applicable based on the features of
KYC/AML/CFT instruments and vulnerability of misuse
Security and Adequate information and data security systems, and
Fraud Prevention prevention and detection of frauds should be at place
Complaints and Effective mechanism for redressal of customer
Redressal complaints shall be in place

20. Regulatory Framework addressing Pre-paid risk in Sri
Lanka
Main Legislation Payment and Settlement System Act, 2005
Money, Payment, Clearing and Settlement Providers
Regulation Regulation No. 1 of 2007
Regulation empowers Central Bank of Sri Lanka (CBSL) to supervise,
regulate and monitor service providers including entities offering
money service or payment system
Direction on Service Providers of Card Based Payment
Instruments – made under Regulation No. 1 of 2007

21. Card Based A payment instrument or “Payment card” includes -
Payment Credit Card, Charge card, ATM card, Debit Card, Stored Value
Card
Instrument
A physical or virtual Card-Based Payment Instrument acquired by
Prepaid Card Cardholder by paying advance amount, and value of funds is
installed in card as stored value, presented in rupee or converted
into other units
Single/Multi- A physical or virtual Prepaid card issued to execute
purpose Stored payment of an obligation/s incurred in single type of
Value Card economic transaction
Specialized A non-bank institution registered by CBSL for Stored
Stored Value Value Card business of single-purpose multi-
Card merchant, multi-purpose multi-merchant and non-
merchant

22. Non-bank entities are required to register at CBSL as
Registration Specialized Stored Value Card Institution to issue
Stored Value Card
Stored Value Card used for transactions in Sri Lanka are
Currency required to calculate units in rupees
Prior Notification to CBSL required for giving advertisement
Notification or for cards promotion
Customer Financial Transactions Reporting Act / Anti Money laundering Act requires
Information reporting of suspicious cash transactions to CBSL and places KYC obligations
on banks and financial institution

23. Regulatory Framework addressing Pre-paid risk in
Bangladesh
Bangladesh Payment and Settlement Systems Regulation,
Applicable Laws 2009;
Money Laundering Act, 2002; and
Foreign Exchange Regulation Act, 1947
Regulatory Scope Regulating and supervising of payment systems is operative
in Bangladesh, including cross border transactions
Recognizes Payment Service Providers (PSP) as new quasi
financial entities and recognizes issuance of E-money, electronic
fund transfer (EFT), Pre-paid Card
For license PSPs may be required to maintain capital adequacy
at levels specified by the Bangladesh Bank [Reg.4(vii)]
Banks/Financial Institutions maintaining accounts with Bangladesh
Bank for meeting Cash Reserve Requirement are exempted from
obtaining license as PSP.

24. Regulatory Approach: One Size Does Not Fit All
Proportionate and risk based regulations
Low risk prepaid products with no cash redemptions may be exempted from license
Fees should be designed keeping in mind the poor, unbanked and underserved
community
Semi-closed/open products may be exempted, subject to following a regular code of
conduct
Conditions for authorization should be pre-specified
With regard to risk management, security and integrity - General Guidelines should be
in place to be followed by all to ensure best practice

25. Exchange of
Information
between FIUs
Ratification and
Information
Implementation
Exchange in a
of International
Conventions AM Rapid manner
L
Build a Proper
Comprehensive International
and Efficient Co-operation
Domestic Framework
Capacity