Gas Week

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Prepaid cards a gift to criminals; briefing paper issued by the Australian High Tech Crime Centre and the Australian Institute of Criminology

Posted by gasweek on 28 September, 2007

Christmas shoppers who bought prepaid gift vouchers stored on electronic cards might soon have to queue up for identity checks along with their gift wrapping, after crime experts said the popular new products were a money laundering threat, according to Julian Bajkowski reported in The Australian Financial Review (25/9/2007, p. 35). Proliferating payment pathways: A briefing paper issued by the Australian High Tech Crime Centre and the Australian Institute of Criminology had flagged new regulations to control the use of electronic financial products, including prepaid gift cards and Internet payment services. Authorities were worried that they would start to lose track of how criminals launder their proceeds because of a proliferation of new electronic and web transaction products, Bajkowski reported. “The anonymity offered by prepaid cards could be abused for illicit financial transactions, money laundering and bulk cash smuggling, particularly as value limits increase,” the paper says.

Anti-money laundering measures tightened: Visa director of corporate relations Andrew Woodward said the financial services industry had worked closely with authorities and regulators to ensure anti-money laundering and counter terrorism financing (AML-CTF) measures adequately addressed risks. The new AML-CTF laws came into effect this year and imposed strict customer identification requirements on merchants that handled large volumes of cash. Visa offered a range of prepaid gift and purchasing cards in conjunction with Australia and New Zealand Banking Group. Formal identification is not required for disposable prepaid card products under $U$750 ($865) in value. Some of the products can be used in automatic teller machines to withdraw cash.

ID checks required: However, customers who wanted a card that they can reload with value, such as the credit union-backed BoPo card aimed at the teen market, require a 100-point identity check. Retailers, including Woolworths, Myers, Bunnings, David Jones and Coles, have flocked to embrace branded prepaid cards over the past 18 months because they have automated the once clumsy manual process of redeeming vouchers. Australian Retailers Association spokesman David Lonie said there was little difference in transactions between paper gift vouchers of the past 70 years and newer electronic products. Most merchants preferred to issue electronic gift cards that could be redeemed only for goods from their own shops. “It would be a very expensive way to launder money if you were redeeming against purchases from retailers,” Mr Lonie said “I don’t think it would be worth the trouble.”

The Australian Financial Review, 25/9/2007, p. 35

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