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Prepaid cards: vulnerable to money laundering?


  • Stanley J. Sienkiewicz


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.

Suggested Citation

  • Stanley J. Sienkiewicz, 2007. "Prepaid cards: vulnerable to money laundering?," Payment Cards Center Discussion Paper 07-02, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpdp:07-02

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    References listed on IDEAS

    1. Julia S. Cheney, 2005. "Prepaid card models: a study in diversity," Payment Cards Center Discussion Paper 05-03, Federal Reserve Bank of Philadelphia.
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    Cited by:

    1. Edward M. Gramlich, 2008. "Auges y quiebras: el caso de las hipotecas subprime," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 6-10, Enero-mar.
    2. W. Scott Frame & Lawrence J. White, 2009. "Technological Change, Financial Innovation, and Diffusion in Banking," Working Papers 09-03, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. Michele Braun & James McAndrews & William Roberds & Richard Sullivan, 2008. "Comprendiendo la administración de riesgos en los pagos minoristas emergentes," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 29-52, Enero-mar.
    4. Eduardo Turrent Díaz, 2008. "Las tres etapas de la autonomía del banco central en México," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 11-28, Enero-mar.

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