Money laundering risks of prepaid stored value cards.pdfVIP

TRENDS ISSUES in crime and criminal justice No. 363 September 2008 Money laundering risks of prepaid stored value cards Kim-Kwang Raymond Choo In the past decade, there has been an increasing reliance on electronic means of transferring funds for personal and business purposes. One recent development has been the emergence of plastic cards with the capacity to store value electronically, which can be used for a range of retail transactions. With the advent of comprehensive anti-money laundering laws throughout the developed world, criminals are turning to alternative ways of moving funds across borders to circumvent reporting and detection systems. One identified risk is the misuse of prepaid stored value cards to keep the proceeds of crime and move them across borders without alerting law enforcement and financial intelligence units. This paper describes the nature of these risks and considers whether existing regulatory measures are adequate to address them. ISSN 0817-8542 Judy Putt ISBN 978 1 921185 92 2 General Manager, Research The use of electronic transactions has increased considerably in recent years. In Australia, the volume GPO Box 2944 and value of cheque transactions in paper-based clearing systems fell from an average of 2.7 million per day in 2001 to 2.1 million in 2005, and from an average of $8.3b per day in 2001 to $6.3b in Canberra ACT 2601 2005 (APCA 2005). A correspondingly large increase in electronic banking has also been observed.