OCC BULLETIN 2016-10
Subject: Prepaid Cards
Date: March 21, 2016
To: Chief Executive Officers of National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties
Description: Interagency Guidance to Issuing Banks on
Note for Community Banks
The principles contained in this guidance apply to all national banks, federal savings associations, and federal branches and agencies.
Prepaid cards have become mainstream financial products, used by individuals, corporations, and other private sector entities, as well as by state, federal, and local governments. General purpose prepaid cards can be used at multiple, unaffiliated merchants and permit cardholders to perform a variety of functions, including some that have traditionally been conducted using other mechanisms, such as checks or debit cards tied to bank deposit accounts or credit cards. Such functions include withdrawing cash at automated teller machines, paying bills, and transferring funds to and receiving funds from other cardholders.
The agencies have clarified that money laundering and other financial crime risks associated with the issuance of prepaid cards and the processing of prepaid card transactions require the implementation of strong and effective mitigating controls. Controls already put in place, such as limits on card value and the frequency and number of transfers permitted, and due diligence on third parties and cardholders have assisted in mitigating these risks. This guidance addresses questions that have arisen regarding the application of the CIP rule to prepaid cards issued by banks, including cards issued by banks under arrangements with third-party program managers.
Please contact Spencer W. Doak, Director for BSA/AML Compliance Policy, at
Grovetta N. Gardineer
Senior Deputy Comptroller for Compliance and Community Affairs