Bank Secrecy Act Regulations-Definitions and Other Regulations Relating to Prepaid Access, 45403-45420 [2011-19116]

Agencies

• DEPARTMENT OF THE TREASURY
• Financial Crimes Enforcement Network

[Federal Register Volume 76, Number 146 (Friday, July 29, 2011)]
[Rules and Regulations]
[Pages 45403-45420]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19116]


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DEPARTMENT OF THE TREASURY

Financial Crimes Enforcement Network

31 CFR Parts 1010 and 1022

RIN 1506-AB07


Bank Secrecy Act Regulations--Definitions and Other Regulations 
Relating to Prepaid Access

AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.

ACTION: Final rule.

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SUMMARY: FinCEN is issuing this final rule to amend the Bank Secrecy 
Act (``BSA'') regulations applicable to Money Services Businesses 
(``MSB'') with regard to stored value. More specifically, this final 
rule amends the regulations by: renaming ``stored value'' as ``prepaid 
access'' and defining that term; deleting the terms ``issuer'' and 
``redeemer'' of stored value; imposing suspicious activity reporting, 
customer information and transaction information recordkeeping 
requirements on both providers and sellers of prepaid access, and, 
additionally, a registration requirement on providers only; and 
exempting certain categories of prepaid access products and services 
posing lower risks of money laundering and terrorist financing from 
certain requirements. These changes address regulatory gaps that have 
resulted from the proliferation of prepaid innovations over the last 
twelve years and their increasing use as an accepted payment method.

DATES: Effective Date: This rule is effective September 27, 2011.
    Compliance Date: The compliance date for 31 CFR 1022.380 is January 
29, 2012.

FOR FURTHER INFORMATION CONTACT: FinCEN, Regulatory Policy and Programs 
Division at (800) 949-2732 and select Option 1.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

A. In General

    The BSA, Titles I and II of Public Law 91-508, as amended, codified 
at 12 U.S.C. 1829b and 1951-1959, and 31 U.S.C. 5311-5314 and 5316-
5332, authorizes the Secretary of the Treasury (the ``Secretary'') to 
issue regulations requiring financial institutions to keep records and 
file reports that the Secretary determines ``have a high degree of 
usefulness in criminal, tax, or regulatory investigations or 
proceedings, or in the conduct of intelligence or counterintelligence 
matters, including analysis to protect against international

[[Page 45404]]

terrorism.'' \1\ The Secretary's authority to administer the BSA and 
its implementing regulations has been delegated to the Director of 
FinCEN.\2\ FinCEN has interpreted the BSA through implementing 
regulations (``BSA regulations'' or ``BSA rules'') that appear at 31 
CFR Chapter X.\3\
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    \1\ 31 U.S.C. 5311.
    \2\ See Treasury Order 180-01 (Sept. 26, 2002).
    \3\ On October 26, 2010, FinCEN issued a final rule creating a 
new Chapter X in title 31 of the Code of Federal Regulations for the 
BSA regulations. See 75 FR 65806 (October 26, 2010) (Transfer and 
Reorganization of Bank Secrecy Act Regulations Final Rule) (referred 
to herein as the ``Chapter X Final Rule''). The Chapter X Final Rule 
became effective on March 1, 2011. Because the Notice of Proposed 
Rulemaking, Definitions and Other Regulations Relating to Money 
Services Businesses, 74 FR 22129 (May 12, 2009), was issued before 
the Chapter X Final Rule became effective, it was proposed in the 31 
CFR part 103 format. In this Final Rule, for ease of reference and 
where appropriate, we have included the former 31 CFR part 103 
citation after the 31 CFR chapter X regulatory citation.
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    FinCEN has defined the BSA term ``financial institution'' to 
include a ``money services business,'' \4\ (``MSB'') a category that 
includes: a dealer in foreign exchange; a check casher; an issuer, 
seller, or redeemer of traveler's checks, money orders, or stored 
value; and money transmitter.\5\ FinCEN is authorized to deem any 
business engaged in an activity determined by regulation to be an 
activity similar to, related to, or a substitute for these activities a 
``financial institution.'' \6\
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    \4\ ``MSB'' is a term FinCEN created that refers to certain non-
bank financial institutions that offer specific services (often in 
combination) and are without a Federal functional regulator.
    \5\ 31 CFR 1010.100(ff) implementing 31 U.S.C. 5312(a)(2)(J), 
(K), (R) and (V).
    \6\ 31 U.S.C. 5312(a)(2)(Y).
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    FinCEN has issued regulations implementing the recordkeeping, 
reporting, and other requirements of the BSA. MSBs are required with 
some exceptions to: (1) Establish written anti-money laundering (AML) 
programs that are reasonably designed to prevent the MSB from being 
used to facilitate money laundering and the financing of terrorist 
activities; \7\ (2) file Currency Transaction Reports (``CTRs'') \8\ 
and Suspicious Activity Reports (``SARs''); \9\ and (3) maintain 
certain records, including records relating to the purchase of certain 
monetary instruments with currency,\10\ relating to transactions by 
dealers in foreign exchange,\11\ and relating to certain transmittals 
of funds.\12\ Most types of MSBs are required to register with 
FinCEN.\13\
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    \7\ See 31 CFR 1022.210.
    \8\ See 31 CFR 1010.311.
    \9\ See 31 CFR 1022.320. Check cashers and transactions solely 
involving the issuance, sale or redemption of stored value are not 
covered by the SAR requirement. See 31 CFR 1022.320(a)(1) and 
(a)(5).
    \10\ See 31 CFR 1010.415.
    \11\ See 31 CFR 1022.410
    \12\ See 31 CFR 1010.410(e)-(f).
    \13\ See 31 CFR 1022.380.
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    On May 22, 2009, the President signed the Credit Card 
Accountability Responsibility and Disclosure (CARD) Act of 2009 (``CARD 
Act'').\14\ Section 503 of the CARD Act required the issuance of 
``regulations in final form implementing the Bank Secrecy Act, 
regarding the sale, issuance, redemption, or international transport of 
stored value, including stored value cards.'' \15\ Pursuant to the BSA 
and the CARD Act, FinCEN published the Notice of Proposed Rulemaking 
Definitions and Other Regulations Relating to Prepaid Access on June 
28, 2010 (``NPRM'').\16\
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    \14\ Public Law 111-24 (May 22, 2009), 123 Stat. 1734.
    \15\ Id., Sec. 503(a), (c).
    \16\ 75 FR 36589.
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B. Prior Regulation of Stored Value

    In 1999, when FinCEN issued its final MSB rule,\17\ it deferred 
certain requirements for stored value based on its complexity and the 
desire to avoid unintended consequences with respect to an industry 
then in its infancy. Therefore, unlike most other categories of MSB, an 
issuer, seller, or redeemer of stored value was not required to 
register as an MSB with FinCEN or to file SARs. An issuer, seller or 
redeemer of stored value, as defined by our regulations, was required 
to file CTRs \18\ and to establish a written AML program, including 
policies, procedures, and internal controls commensurate with its 
activities and reasonably designed to prevent it from being used to 
facilitate money laundering and the financing of terrorist 
activities.\19\
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    \17\ Definitions Relating to, and Registration of, Money 
Services Businesses, 64 FR 45438 (Aug. 20, 1999).
    \18\ 31 CFR 1010.311.
    \19\ 31 CFR 1022.210.
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    In a 2009 notice of proposed rulemaking generally addressing the 
MSB definition,\20\ we proposed folding all regulated entities dealing 
with stored value into one category so that issuers of stored value and 
sellers or redeemers of stored value would be in the same category. In 
that rulemaking, FinCEN did not propose making any substantive changes 
to the definition of this category, reserving those changes for the 
rulemaking specifically focused on prepaid access.
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    \20\ See Definitions and Other Regulations Relating to Money 
Services Businesses, 74 FR 22129 (May 12, 2009).
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II. Notice of Proposed Rulemaking

A. General Considerations

    FinCEN's proposed rule on the regulation of prepaid access marked 
the agency's effort to establish a more comprehensive regulatory regime 
over an industry in which technological advances had outpaced existing 
regulation. Previously regulated to a lesser degree than its MSB 
counterparts, prepaid access (formerly ``stored value'') is becoming 
increasingly pervasive in American commerce, far more so than in the 
late 1990s when the original MSB categories were established and 
accompanying regulations were drafted. We believe that the prepaid 
access market has matured and now warrants, at a minimum, commensurate 
regulation with other MSBs.
    In the NPRM, we sought to regulate this industry with an approach 
and terminology that acknowledged its unique characteristics, in that 
it inhabits both the physical, tangible dimension (cards, key fobs, 
tokens), yet appears to exhibit increasing migration to the Internet 
space (e-retailers and social networking sites). Increasingly, other 
technology developments, such as smartphones, are being employed for 
tendering and receiving payment, by both individuals and merchants. 
These technological innovations are being widely embraced by the 
American consumer, particularly among the younger demographic.
    The growth of prepaid access in the marketplace continues to 
flourish. The most recent Federal Reserve Payments Study \21\ noted 
that, of all forms of noncash payment methods included in its research, 
prepaid card usage was the fastest growing segment. On average, the 
number of prepaid card transactions increased 21.5 percent per year 
from 2006 to 2009, and the value of prepaid transactions increased 22.4 
percent per year. Private label (commonly known as ``gift cards'') was 
the most used type of prepaid card, with 2.7 billion transactions in 
2009.\22\ A 2005 American Bankers Association study revealed that 
consumers prefer both giving and receiving retailer-specific gift cards 
instead of cash, as they are considered more personal and valued by the 
recipient.\23\ Based on the above, the American public has not just 
accepted

[[Page 45405]]

prepaid access; it often prefers it to other types of payment methods.
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    \21\ The 2010 Federal Reserve Payments Study--Noncash Payment 
Trends in the United States: 2006-2009, pg. 6. https://www.frbservices.org/files/communications/pdf/press/2010_payments_study.pdf.
    \22\ See id. at 17.
    \23\ 2005/2006 Study of Consumer Payment Preferences, published 
October 2005.
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B. Reconciling Varied Stakeholder Positions

    Our NPRM addressing prepaid access proposed comprehensive 
regulation of stored value, addressing the needs of law enforcement, 
the financial services industry, and the general public. From FinCEN's 
law enforcement stakeholders, we have heard that prepaid access has 
been implicated in a number of criminal enterprises, for example, 
involving border smuggling of blank card stock. Law enforcement 
generally has expressed the need for strict regulation of prepaid 
access, in some cases extending beyond existing requirements for other 
MSBs. Law enforcement's concern comes in part due to the ease with 
which prepaid access can be obtained, the high velocity of money that 
potentially can be moved with prepaid access, and the anonymous use of 
some, primarily closed loop, prepaid access. While we seek to empower 
law enforcement with the necessary information to perform its mission, 
we also seek to balance the many legitimate uses and societal benefits 
offered by prepaid access.
    The prepaid industry and other financial services member 
stakeholders have an interest in delivering payment options to the 
general public that have proven popular and are increasing in demand. 
Other stakeholders, such as transit systems, university and academic 
environments, and even segments of the Federal government are also 
among those finding that prepaid access is an attractive, cost-
effective method to transact business.
    In the following, we will discuss the principal issues surfaced by 
the public comments received in response to our NPRM, and how we have 
resolved the issues in the final rule. In total, we received 76 comment 
letters, representing viewpoints from depository institutions, prepaid 
access program managers, service providers, industry trade 
associations, retailers, state and Federal government agencies, private 
individuals and others. As varied were the sources, so were the 
opinions offered. We have carefully read, catalogued and analyzed the 
information provided to us and have used it to inform our final 
decisions.

C. The Definition of ``Provider of Prepaid Access''

    In the NPRM we sought to define the provider of a prepaid access 
program consistently with the other categories of MSBs.\24\ To that 
end, we expressly stated that the provider would be determined by the 
``facts and circumstances'' surrounding the activities in which the 
party engaged. To aid the reader, we also offered a list of five 
activities that we believed would generally be descriptive of the 
provider role while cautioning that no single act or duty alone would 
be determinative. The ``facts and circumstances'' standard would employ 
a totality approach.
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    \24\ See 31 CFR 1010.100(ff)(5)(ii).
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    Consistency with wording in other MSB regulations, while important, 
was not our only reason for this approach. We believed that prepaid 
programs, although many and varied in their purposes and operation, 
would always involve a central entity that would meet the definition of 
a provider, according to the factors and activities that we delineated.
1. Comments on the Definition
    The commenting public, to a degree, agreed that our five elements 
were fundamental aspects of any prepaid program; but, in general, they 
strongly disagreed that one entity would always, or even primarily, be 
responsible for these duties. They asserted that the duties were 
typically allocated among several entities, and that the various 
activities might circulate from one participant to another at various 
points throughout the development of a prepaid program. FinCEN received 
approximately 26 letters commenting on these issues.\25\
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    \25\ Many of the comment letters we received were critical of 
our initial provider definition. The approach that we used, 
outlining criteria that we believed were generally descriptive of 
the provider role, was criticized by several industry members and 
some state regulatory officials as too indefinite and ambiguous. 
Other commenters made the point that often it is only the issuing 
bank that meets the definitional test of a provider under our 
criteria. Many commenters advocated allowing the participants to 
allocate responsibilities by agreement. Other commenters preferred 
some form of bright-line test rather than the facts and 
circumstances approach that FinCEN proposed.
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    Another objection, offered by 16 commenters, was the lack of an 
MSB-entity in the prepaid transaction chain that could accurately meet 
the definitional test of a provider as defined in the NPRM. Instead, 
these comments explained, the various duties and the ``centrality'' 
concept would lead directly to the issuing bank \26\ in most cases. 
Although all of these commenting parties agreed that the appropriate 
regulatory focus should be on the depository institution, they differed 
with respect to their preferred alternative regulatory approaches. Some 
stated that banks are already sufficiently regulated; while others 
argued for additional regulatory constraints on banks involved in the 
prepaid access business. Of these 16 letters, four were submitted by 
prepaid access-issuing banks themselves.\27\
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    \26\ By virtue of the regulatory definition of a money services 
business, neither a bank nor any other participants in the bank-
centered prepaid program would be required to register with FinCEN.
    \27\ Banks currently serving in a role that could otherwise fit 
the definition of a provider of prepaid access are not subject to 
this rule because FinCEN has excluded banks from its definition of 
MSB. See 31 CFR 1010.100(d), (ff). However, banks are subject to 
distinct FinCEN rules implementing the BSA with respect to their 
products and services generally. Additionally, banks are subject to 
regulation by the Federal banking agencies (``FBAs'') and, as such, 
must comply with the appropriate provisions of Title 12 of the CFR. 
FinCEN and the FBAs have issued examination guidance directed 
specifically at banks involved in the operation of a prepaid 
program. This guidance may be found at: https://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_061.htm, specifically pages 234-
238, entitled ``Electronic Cash--Overview.''
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2. Determining the Provider by Agreement
    The body of opinions addressing how to identify the correct party 
as the provider was quite varied, but a single common recommendation 
surfaced among many of the commenters: the best solution, both for 
clarity among the participants in the prepaid program and for 
simplicity in administration, would be to allow a contractual 
determination among the participants as to who would serve as the 
provider (``the agreement approach''). Commenters were nearly unanimous 
in the belief that only this approach allowed for a clear allocation of 
duties that would benefit the operation of the program, as well as 
regulators and law enforcement authorities. The ability to clearly 
identify the provider by the mutually-determined decision, along with 
the requisite submission to FinCEN of MSB registration materials, would 
offer instant identification of the principal entity in the 
transaction. FinCEN is finalizing the rule with the agreement approach.
    Under the agreement approach, the provider will serve as the 
principal conduit of information for the other members of the program, 
thereby simplifying the production and strengthening the integrity of 
required reports and recordkeeping. The provider will accept and manage 
the flow of information generated by all of the program participants in 
such a way as to comply with regulatory requirements. The decisions 
regarding what processes or methodologies are established to accomplish 
this objective are best left to the program participants; the provider

[[Page 45406]]

simply must have the ability to amass the appropriate information with 
dispatch.
    We understand that prepaid transactions often involve more parties 
and sub-parties than might be typical of routine debit or credit card 
transactions and, for this reason, the information generated by the 
sale and use of prepaid access is often more dispersed. But because the 
information needs of law enforcement often necessitate speed and 
efficiency for successful criminal investigation and prosecution, 
requiring the separate pursuit of various records or documents all 
along the points of the transaction chain would be inefficient and 
inevitably lead to lost opportunities. Having the provider serve as the 
central source of information should help to minimize the inefficiency 
and allow for those most knowledgeable about how the business operates 
to make this fundamental business decision.
3. Retaining the NPRM Provider Criteria
    As we have discussed, the final rule adopts the agreement approach, 
and we begin our regulatory text by stating that the participants 
within a prepaid program must determine a single participant to be the 
provider of prepaid access. A determination among the program 
participants, communicated through the appropriate filing of an MSB 
registration with FinCEN, will identify the participant subject to 
regulatory obligations as the provider.
    We noted previously, however, that there is rapid growth and 
innovation in many segments of the payments industry and such is 
certainly the case with prepaid access. We believe that our regulations 
should anticipate, to the degree possible, situations where the program 
participants fail to come to an agreement.
    In the NPRM, we listed five criteria pertaining to the oversight 
and control necessary to be deemed a provider of prepaid access. While 
we heard objections to this list of factors when it was published as 
the determinative criteria in the NPRM, we have chosen to retain the 
language in the final rule as illustrative of the analytical factors 
that would be useful in determining the provider. We note that while 
the commenters took issue with the application of our list of criteria 
to a single entity, they offered positive observations on the accuracy 
and utility of the list. Commenters stated that the factors were 
appropriate and helpful and demonstrated FinCEN's understanding of the 
complexities of the ways in which prepaid programs function.
    We understand that it would be unlikely to find all of these 
characteristics present in a single entity in the prepaid program; 
however, it may be helpful to weigh and assess the totality of the 
factors against the characteristics of the various program participants 
in reaching a regulatory determination of the provider. The list of 
factors is by no means exhaustive. We retain them within the regulatory 
text, however, to demonstrate that FinCEN will use these factors to 
make a provider determination in instances where a provider of prepaid 
access has failed to register.

D. Sellers of Prepaid Access

    In the NPRM, FinCEN proposed to regulate sellers of prepaid access 
as a separate category of MSB. Specifically, the NPRM proposed to 
require sellers to: (1) Develop and implement an effective AML program; 
(2) report suspicious activity; and (3) comply with recordkeeping 
requirements related to customer identifying information and 
transactional data. The NPRM did not include a registration requirement 
for sellers of prepaid access. The NPRM did, however, raise the 
possibility of an additional limitation to the definition of a seller 
of prepaid access, which would cover only those entities that sold 
prepaid products (including products not covered under the regulatory 
definition of prepaid program) in an amount over $1,000 to any person 
on any day in one or more transactions.
    The rationale behind covering sellers of prepaid access under the 
BSA was based on the unique role played by sellers in the prepaid 
transaction chain. Typically, sellers of prepaid access are general 
purpose retailers such as pharmacies, convenience stores, supermarkets, 
discount stores or any of a number of other types of businesses 
offering a full spectrum of products. Sellers of prepaid access 
generally have face-to-face contact with consumers at the point of sale 
and, thus, they are in the best position to collect customer 
identifying information. As a general matter, AML program requirements 
applicable to a range of financial institutions can play an important 
role in mitigating risks involved in certain face-to-face transactions 
as they relate to the ``placement'' stage of money laundering.
    In response to the NPRM, FinCEN received 45 comment letters that 
addressed the proposal to regulate sellers of prepaid access. These 
letters were primarily from companies whose business operations include 
some aspect of providing or selling prepaid access, including 
individual retailers, issuing banks, prepaid program managers, prepaid 
card networks, payment processors, other service providers, trade 
groups and other associations. Most of these commenters opposed any 
direct regulation of sellers of prepaid access. Some commenters 
questioned whether the Internal Revenue Service (IRS), the current 
delegated examiner for MSBs, has the resources to adequately examine 
and enforce such rules, and whether the information collected by 
sellers of prepaid access would be useful to law enforcement. Other 
commenters expressed concerns that implementation of the proposed rule 
would result in: high compliance costs; customer service challenges; 
privacy and data security issues; conflicts with state laws; and 
stigmatization of the unbanked and underbanked population.
    None of these comments challenge the underlying rationale behind 
regulating sellers of prepaid access. Although, as some commenters 
pointed out, prepaid access devices and vehicles may be sold in 
convenience stores, pharmacies and other retail establishments 
alongside non-financial products, prepaid access is fundamentally 
different than non-financial products and services. It would be an 
unacceptable loophole in the BSA rules if prepaid access could be 
bought and sold without adequate oversight. Because prepaid access is 
essentially a financial service that provides consumers with access to 
the financial system, it should be subject to an appropriate level of 
regulation to prevent its misuse.
    Based on this underlying rationale, FinCEN continues to consider it 
appropriate to regulate sellers of prepaid access as a type of MSB. 
However, FinCEN has decided to make certain changes to the rule with 
respect to sellers of prepaid access, balancing the concerns expressed 
in the comment letters with the legitimate need to mitigate money 
laundering risks and provide law enforcement with the information and 
investigatory tools necessary to prevent the use of prepaid access for 
money laundering, terrorist financing and other criminal purposes. 
FinCEN has adopted a targeted approach to regulating sellers of prepaid 
access, focusing on the sale of prepaid access whose inherent features 
or high dollar amounts pose heightened money laundering risks.

E. Prepaid Programs and Exclusions

1. In General
    The NPRM defined a prepaid program broadly as ``an arrangement 
under which one or more persons acting together provide(s) a particular 
form of

[[Page 45407]]

prepaid access.'' The NPRM excluded from the definition of prepaid 
program five types of arrangements because they are typically low-risk. 
However, the NPRM also identified three high-risk factors that would 
negate any exclusion.
    Comments tended to focus on the various exclusions from the core 
definition of ``prepaid program'' rather than on the core definition 
itself. Many public comments received in response to the various 
exclusions from the definition of a prepaid program argued for a more 
liberal, expansive reading of the relevant exclusions. Some commenters 
asserted that the exclusions were appropriate carve-outs, but that they 
did not go far enough. Other commenters expressed concerns about the 
effect of the three limits to the exclusions: international use, 
person-to-person transfers, and re-loads from a non-depository source 
other than for closed loop prepaid access. These limits to the 
exclusions, many commenters asserted, undercut the efficacy of the 
exclusions and would effectively render them meaningless. Only a 
handful of commenters chose not to address the program exclusions at 
all.
    We revised the rule in an effort to reconcile the need to make the 
exclusions as precise as possible with limiting any possible risks or 
vulnerabilities. The final rule differs from the NPRM with a new 
framework to more effectively achieve our goal of targeting those 
arrangements that present a realistic risk of being used for money 
laundering, terrorist financing, or other illicit activities.
2. Closed Loop Prepaid Access
    We heard from a broad range of American retailers, including lines 
of business as diverse as amusement parks, restaurants, and Internet 
software sales, commenting that our inclusion of closed loop prepaid 
access was an unwelcome departure from long-standing FinCEN policy. For 
a number of years, FinCEN has held that closed loop gift certificates 
and gift cards were not included within the regulatory interpretation 
of stored value.\28\
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    \28\ ``FinCEN does not currently interpret the definition of 
stored value to include closed system products such as a mall-wide 
gift card program. However, please be advised that FinCEN intends to 
engage in further rulemaking relating to the definition of stored 
value. Therefore, nothing in this letter should be relied upon by [ 
] as binding on FinCEN with respect to any changes to the current 
rules * * *'' FinCEN Ruling 2003-4 (Definition of Money Transmitter/
Stored Value (Gift Certificates/Gift Cards) (Aug. 15, 2003)).
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    Many commenters asserted that the inclusion of any closed loop 
prepaid access as a type of prepaid program was unnecessary. They 
explained that closed loop prepaid access offers very limited criminal 
or money laundering opportunities given that, by its nature, it only 
allows use within a narrowly-defined universe of entities, such as a 
specific retailer, a retail chain (including franchisees), a shopping 
center, or a group of retailers linked by common ownership, corporate 
affiliation or geographic proximity. In all of these instances, the 
prepaid access is ``closed'' to any other retailers which are not part 
of the specifically identified group of retailers. In addition, many of 
these commenters noted that closed loop prepaid access involved 
relatively low dollar amounts, most commonly issued in denominations of 
$500 or less. Such low dollar limits and the inability, except under 
rare, de minimis situations,\29\ to convert closed loop prepaid access 
to cash make it an inefficient, cumbersome tool for use by money 
launderers.
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    \29\ See e.g., Cal. Civ. Code Sec.  1749.5.
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    In the NPRM, we explained that there were attributes potentially 
associated with closed loop prepaid access that raised its risk level. 
We treated these potential attributes in two of the proposed ``limits 
to the exclusions.'' \30\ Based on information provided by law 
enforcement, we were concerned that closed loop prepaid access, when 
used internationally or with the ability to transfer value from person-
to-person, heightened its money laundering vulnerability considerably. 
We asked specific questions in the NPRM on this topic, and we received 
a great many responses. A total of 45 comment letters were received 
referencing closed loop prepaid access.
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    \30\ 75 FR 36608.
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    Some commenters provided very comprehensive, thoughtful responses 
in which they offered data and statistics about how their products 
operate and the reasons they view them as inapplicable to this 
rulemaking. The most frequent and strongly asserted statement was the 
limited dollar/limited scope of closed loop prepaid access. Even in a 
forum such as a shopping mall or a university campus, closed loop 
prepaid access offers the consumer only goods or services.
    For some retailers, such as coffee vendors or fast food 
restaurants, convenience was the reason for offering closed loop 
prepaid access. The product array they offer is often limited to items 
retailing for just a few dollars, with conservative caps set on the 
maximum value available on the closed loop prepaid access they offer. 
They asserted that their closed loop prepaid access served consumers' 
needs when making repeat, low-dollar ticket purchases when the only 
other option would be cash; and it worked to the merchants' advantage 
for speedy transactions as well as encouraging repeat business and more 
liberal ``spend per ticket.''
    Other retail segments, such as furniture sellers, pointed out that 
closed loop prepaid access was used as a form of voucher in situations 
where a big-ticket item was returned, and that the limitations 
established in the NPRM were unworkable. Rather than returning cash in 
amounts of several hundred or thousand dollars, often exceeding the 
amount of cash maintained on hand, the merchant wanted the option to 
provide closed loop prepaid access as an accommodation to the customer 
and a convenience to the merchant itself. The furniture retailer was 
assured of repeat business and the customer was not burdened with the 
prospect of theft or loss of a large sum of cash. We believe that, for 
this segment of the closed loop prepaid access market whose inventory 
is comprised of mostly high-dollar merchandise, we have drawn a 
suitable compromise. As discussed below, FinCEN revised the threshold 
of closed loop in the final rule. Closed loop prepaid access sold in 
amounts of $2,000 or less is exempted, which will accommodate this 
practice of returns.
    Based on comments received in response to the NPRM specifically 
with regard to closed loop prepaid access, FinCEN understands that a 
requirement to collect customer identifying information may necessitate 
changes in the way that businesses escheat funds to states if those 
funds are not claimed by their owners, depending on the differences 
between escheat laws for funds belonging to identifiable persons and 
for anonymous funds. As discussed herein, the final rule significantly 
limits the scope of closed loop prepaid access covered under the 
definition of a prepaid program. Accordingly, the final rule should 
have minimal effects, if any, on businesses in connection with state 
escheat laws.
    The most common theme underlying the varying objections in the 
comment letters was that closed loop prepaid access products were used 
by retailers to pre-sell goods and services, not to serve as a medium 
through which the funds paid can later be recovered in the form of 
cash. If an individual is seeking to launder funds, closed loop prepaid 
access is a cumbersome and ineffective method to accomplish such; funds 
placed in closed loop prepaid access do not offer withdrawal or 
transfer options. Retailers commented that a closed loop gift card that 
is redeemed for cash rather

[[Page 45408]]

than merchandise is of little economic benefit to them.
    As a result of the many, diverse comment letters we received that 
addressed this aspect of the NPRM, we now better appreciate that closed 
loop prepaid access differs from open loop prepaid access in a very 
material way, both in operation and purpose. Closed loop prepaid access 
has evolved in its present form from the paper ``gift certificate'' 
that has existed for many years in the traditional retail environment. 
The migration to a card bearing a magnetic stripe reflects 
technological improvements that allow the merchant to track the 
remaining balance, the goods or services purchased, demographic data 
and other valuable marketing information. But, fundamentally, the 
closed loop prepaid access remains limited to its defined merchant and 
it is not redeemable in cash.
    In our analysis of the appropriate treatment of closed loop prepaid 
access in the final rule, we have attempted to reconcile the 
perspectives of the commenting public with the cautions we continue to 
receive from law enforcement. Law enforcement has stressed to us that, 
in very large dollar amounts, closed loop prepaid access remains 
vulnerable to use by criminal enterprises for laundering funds through 
merchandise and trade, particularly for the purchase of consumer 
electronics and technology hardware.
    Accordingly, FinCEN has chosen to set a dollar threshold of $2,000 
for closed loop prepaid access, which helps address the concerns of 
both retailers and law enforcement. We believe that law enforcement 
presents legitimate concerns about potential for abuse in a limited 
segment of the closed loop prepaid access market. Of equal importance, 
however, is FinCEN's objective to facilitate legitimate commerce. As 
discussed below, we have determined that the limits to exclusions we 
had proposed for closed loop pertaining to international use and third-
party transfers are not necessary at this point; all closed loop 
prepaid access that is issued in amounts of $2,000 or less will be 
excluded from the definition of prepaid program. This dollar level 
should encompass the bulk of retail sales of closed loop prepaid access 
for most consumer goods and services, and mitigate the potential for 
abuse by those who might otherwise seek to intermediate significant 
amounts of value outside of regulatory controls under the premise of 
the closed loop exclusion.
3. Government Funded Prepaid Access
    In the NPRM, we discussed the increasing use by the Federal 
government of open loop branded prepaid access as a means of delivering 
various types of benefits and assistance, such as Social Security, 
disability and disaster relief payments. We also noted that state and 
local governments were increasingly interested in using prepaid access 
to deliver regular payments, such as unemployment benefits or child 
support, in a more efficient way than the traditional issuance and 
mailing of a check.
    The available market research indicated that both government 
entities and recipients were receptive to this migration to prepaid 
access.\31\ For the government payor, prepaid access offered a lower-
cost, more secure payment method. For the payee, security features and 
the immediacy of the funds were considered very positive 
characteristics.
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    \31\ U.S. Department of the Treasury, Financial Management 
Service Direct Express[reg] Debit MasterCard[supreg] Survey (July 
21, 2009). See https://www.godirect.org/media/release/half-million-choose-direct-express/.
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    In the NPRM, we asked whether the use of prepaid access for the 
payment of government benefits posed any identifiable vulnerability. We 
had generally concluded that adequate controls were in place for 
government-administered prepaid access programs to safeguard against 
illicit use. But we believed that we could benefit by posing specific 
questions to the commenting public for issues or recommendations worthy 
of attention.
    We received only a handful of comment letters that addressed this 
issue. All of these commenters strongly supported the use of prepaid 
access by government agencies. We also heard from a government agency 
at the Federal level charged with responsibility for establishing and 
operating prepaid access programs, with a very thorough explanation of 
the controls and safeguards in place.
    Given these factors, we believe that our initial stance in the NPRM 
remains correct, and that these prepaid access programs are 
appropriately excluded from coverage under the final rule. As noted 
below, the exclusion will not be limited in the final rule. We have 
expanded the regulatory text to capture all facets of government at the 
Federal, state and local level, to include Tribal governments and U.S. 
Territories and Insular Possessions. The revised language is consistent 
with our intent in the NPRM and with other BSA regulations.
4. Flexible Spending and Dependent Care Funded Prepaid Access
    We have retained the exclusion for prepaid access to flexible 
spending and dependent care funds in the final rule. As noted below, 
there will be no limitations on this exclusion. The wording of the 
regulatory text used in the final rule differs slightly from that in 
the NPRM, due to recommendations offered to us by the IRS. The addition 
of the regulatory citations is not intended to broaden or limit the 
scope of this exclusion from that proposed in the NPRM.
    We received significant public comment on this section of the 
proposed rule. Most commenters approved of this specific exclusion, and 
many recommended a broadening to include any type of employer-sponsored 
reimbursement account, such as fitness/wellness programs and commuter 
benefits programs. Additionally, some commenters urged us to expand the 
exclusion to include Health Savings Accounts (``HSAs''), which allow 
the commingling of health and non-health related funds.
    We have chosen to retain our original scope of reimbursements as 
proposed in the NPRM. With respect to HSAs, we have consulted with the 
IRS and understand that funds in these types of accounts are not 
required to be earmarked for health care. Because the strict 
limitations inherent in health reimbursement arrangements (``HRAs'') 
are not present with HSAs, it is not prudent to allow any prepaid 
access associated with their use to be excluded from the definition of 
a prepaid program. We have also determined that it would not be 
appropriate to exclude prepaid access issued by various employer-
sponsored reimbursement programs from the definition of a prepaid 
program. The operation of these private programs can vary greatly, and 
they also do not meet the same strict standards that apply to HRAs.
5. Limited Exclusions
    In the NPRM, the limitations applied to all of the exclusions from 
the definition of a prepaid program. In the final rule, by contrast, we 
have identified only two categories of prepaid access that may present 
vulnerabilities to criminal use, but at the same time offer 
considerable benefits to American commerce and to the individual 
consumer. Under the final rule these two categories of prepaid access 
may remain outside the definition of a prepaid program but only if the 
use of the prepaid access is restricted in ways that limit the risk of 
misuse.

[[Page 45409]]

    The limited exclusions under the final rule only apply to prepaid 
access to: (1) employment benefits, incentives, wages or salaries; or 
(2) funds not to exceed $1,000 maximum value and from which not more 
than $1,000 maximum value can be initially or subsequently loaded, used 
or withdrawn on any day through a device or vehicle. Such prepaid 
access is not entitled to exclusion, and therefore is a prepaid 
program, if it permits (1) funds or value to be transmitted 
internationally; (2) transfers between or among users of prepaid access 
within a prepaid program; or (3) loading additional funds or the value 
of funds from non-depository sources.
    The use of prepaid access to deliver employment benefits, 
incentives, wages or salaries is a popular and widespread application. 
In many instances, it is a cost minimizer for the employer, who no 
longer must issue paper checks that may be lost, stolen or altered, and 
that often carry attendant postage costs. Instead, the employer 
appreciates the ability to assign payment electronically to prepaid 
access with a minimum of effort and cost; the employee is equally 
pleased with the efficiencies and cost savings, and the ability to 
access funds immediately with no need to cash a paper check. In 
addition, the use of prepaid access offers a solid audit trail that 
equals and sometimes exceeds that of paper instruments.
    Commenters also pointed to the attributes of prepaid access over 
some payment situations where wages are paid out in cash, for example, 
to seasonal or migrant workers. Under these circumstances, the wage 
earner may not have access to traditional banking services or may be 
unable to transact business in a traditional setting, due to language 
or cultural barriers. The use of the prepaid access can serve as a form 
of ``mainstreaming'' for this individual.
    Unfortunately, for all of the attributes that prepaid access 
presents for the payment of wages and salaries, it is also one of the 
areas of greatest law enforcement concern. Repeatedly, we have heard 
that payroll schemes involving prepaid access are growing in breadth 
and dollar volume, and that criminal actors continue to thrive in this 
environment. Where prepaid access to wages and salaries can be used to 
move significant amounts of money, on a repeated basis, to many 
different individuals, we believe that it is appropriate to require 
reasonable regulatory protections against misuse.
    The final rule provides such protection by retaining the qualified 
exclusion for the use of payroll prepaid access that was proposed in 
the NPRM, under which prepaid program status is triggered if funds can 
be transmitted internationally, transferred to others, or reloaded at a 
non-depository institution. Businesses that provide payroll prepaid 
access will either tailor their prepaid access programs to the 
limitations or subject their prepaid program to the regulatory 
requirements associated with prepaid program status. Although this 
decision to keep payroll prepaid access subject to these limitations 
runs counter to the majority of the opinions expressed in the public 
comments, we believe that the better view is to exercise caution with 
respect to this type of prepaid access, especially because law 
enforcement has strongly warned about its vulnerability to money 
laundering.
    Similarly, we have chosen to retain the three limitations with 
respect to prepaid access to funds that can exceed $1,000 in load, use 
or withdrawal capability at any time through a device or vehicle. We 
have done so based on the same continuing concerns about the 
vulnerability to money laundering of unlimited low denomination prepaid 
access that we have with respect to payroll prepaid access. We have, 
however, eliminated the requirement in the NPRM for a dollar limit to 
be clearly visible on the prepaid access device or vehicle in response 
to the many comments that this was not practicable and that it 
discriminated against those technologies for which it was impossible to 
manifest such a dollar limit on the prepaid access device or vehicle.
    If payroll cards and prepaid access products below the $1,000 
threshold do not permit international use, person-to person payments, 
or non-depository source loads, then such prepaid access is excluded 
from BSA regulation. In this construct, FinCEN wishes to clarify that 
we do not intend to sweep back into the scope of the rule prepaid 
access that might be used in conjunction with another prepaid access 
device that permits such activities, when the first prepaid access 
device does not. In that regard, status as a prepaid program is 
determined by the functionality of the product(s) within that program, 
not by the functionality of other products or services which they can 
purchase. Thus, a prepaid product that could be used to reload another 
prepaid product might not necessarily trigger the scope of the 
regulations, but such a prepaid product that was reloaded might itself 
be part of a program subject to the regulations if it can, for example, 
be used internationally. With respect to the limitations to the 
exclusions pertaining to transfers between or among users and 
reloadability by non-depository institutions, the same construct 
applies.
    FinCEN also wishes to clarify that the limitation on international 
transmission is specifically intended to cover prepaid access devices 
that can be directly used outside of the United States. For example, 
while a network branded prepaid card with an initial and maximum load 
limit of $500 would generally be excluded, if it can be used to 
withdraw cash or purchase goods and services directly from foreign ATMs 
or merchants (via the Internet, in person, or otherwise) the limitation 
would apply and providers and sellers of such cards would be subject to 
the prepaid access rules. The limitation does not apply to prepaid 
access products that cannot be directly used for such foreign 
transactions. An example of such a product would be a network branded 
prepaid card with controls in place to prevent it from being used to 
withdraw cash or purchase goods and services directly from foreign ATMs 
or merchants (via the Internet, in person, or otherwise).
    With respect to Internet transactions, the relevant issue is the 
foreign location of the merchant rather than the location of the person 
using the prepaid access product or the location where products are 
delivered or services rendered. Thus, for example, a prepaid card that 
permits an individual visiting a foreign country to make Internet 
purchases from a U.S.-based merchant would not be covered under the 
international use limitation by virtue of that functionality because 
the card cannot be used as a vehicle for moving money outside the 
United States. Additionally, if a prepaid access product can be used to 
fund a U.S.-based bank or other account or to purchase a different 
prepaid access device that permits international use, the original 
product does not trigger the international use limitation by virtue of 
that functionality.

III. Section-by-Section Analysis

 A. Definition of Provider of Prepaid Access

1. In General
    Section 1010.100(ff)(4)(i) defines a provider of prepaid access as 
the one participant among the entities engaged in offering a particular 
prepaid access program that agrees to serve as the contact and source 
of information for FinCEN, law enforcement and regulators for the 
particular program. The participants in a particular prepaid program 
should determine the single participant that serves as provider of 
prepaid access. As discussed above, this change was made because we 
were

[[Page 45410]]

persuaded of the value of the ability to clearly identify the provider 
by the mutually-determined decision, which offers other members of the 
program and law enforcement instant identification and expedient access 
to the entity in the transaction chain that will serve as ``the 
principal conduit of access to information.'' The provider must 
register as an MSB with FinCEN and will be subject to BSA regulations. 
The provider will be subject to oversight and examination for these 
obligations which include maintaining an AML program, reporting SARs, 
and recordkeeping and customer identification requirements.
2. Considerations for Provider Determination
    Section 1010.100(ff)(4)(ii) provides factors for determination of 
the provider of prepaid access in the event that no participant in the 
prepaid program registers as the provider. Determining the provider of 
prepaid access in such a situation is a matter of identifying the 
participant with ``principal oversight and control.'' The determination 
of which participant in the prepaid program has principal oversight and 
control will be a matter of facts and circumstances. We recognize that 
there may be situations in which no single participant engages in all 
of the factors listed in 1010.100(ff)(4)(ii). However, there will be an 
identifiable participant in the prepaid program with the principal 
oversight and control, which will be in the best position to serve as a 
conduit for information for regulatory and law enforcement purposes. 
The rule lists the following five factors, each not dispositive on its 
own, which may indicate ``principal oversight and control'' and which 
FinCEN will use to identify a provider of prepaid access when there has 
been a failure by the parties to do so:
    a. Organizing the prepaid program.
    ``Organizing the prepaid program'' includes the initiation and 
establishment of the prepaid program. This may involve actions or 
activities as diverse as identifying the need for a prepaid program, 
developing a business plan, obtaining financing, and contracting with 
other principals. A participant that organizes the prepaid program 
demonstrates oversight and control.
    b. Setting the terms and conditions of the prepaid program and 
determining that the terms have not been exceeded.
    This factor concerns the technical specifications involved in 
establishing and operating the prepaid program. Setting the terms and 
conditions encompasses a range of decisions concerning sales locations 
for prepaid access, fees assessed for activation and reloading, 
providing customer service, and other aspects of the program. A 
participant that sets the terms and conditions of a prepaid program 
demonstrates oversight and control.
    c. Determining the other businesses that will participate in the 
prepaid program, which may include the issuing bank, the payment 
processor, or the distributor.
    This factor addresses the participant that identifies and recruits 
the other participants involved in the prepaid program. The provider of 
prepaid access may choose other participants based on geographic 
proximity, specialized expertise in a particular line of prepaid access 
such as payroll programs, market expertise, or other considerations. 
Regardless of the reasons other participants are chosen, a participant 
that determines the other entities involved demonstrates oversight and 
control.
    d. Controlling or directing the appropriate party to initiate, 
freeze, or terminate prepaid access.
    The ability to affect the movement of funds is a very important 
factor in determining the provider of prepaid access. We understand 
that a participant in a prepaid program may exercise this authority 
alone, in tandem with other participants or at the direction of law 
enforcement or judicial authority. A participant that either moves or 
suspends funds or directs another participant to move or suspend funds 
demonstrates oversight and control.
    e. Engaging in activity that demonstrates oversight and control of 
the prepaid program.
    This factor is intended to capture situations where oversight and 
control may be evidenced by activities that do not fit squarely within 
items (a) through (d), preceding. To the extent that both the prepaid 
industry and our understanding of it continue to evolve, this criterion 
provides the flexibility needed to ensure reasonable longevity for the 
rule.
3. Prepaid Program
    Section 1010.100(ff)(4)(iii) defines a prepaid program as an 
arrangement under which one or more persons acting together provide(s) 
prepaid access. There are circumstances, however, where particular 
arrangements involving prepaid access may be organized in such a way 
that they do not fall within the definition of a prepaid program. 
Arrangements whose operations fall squarely within one or more of the 
exclusions described below in (a)-(d) present such a low risk of money 
laundering or other illicit behavior that they do not justify 
regulation under the BSA and are therefore, not deemed to be a prepaid 
program under the rule. An arrangement is not a prepaid program if:
    a. It provides closed loop prepaid access to funds not to exceed 
$2,000 maximum value that can be associated with a prepaid access 
device or vehicle on any day.
    An arrangement that provides closed loop prepaid access to funds 
not to exceed $2,000 is not defined under this rule as a prepaid 
program. The effort required to use closed loop prepaid access for the 
placement, layering or integration of funds makes them unattractive and 
unlikely vehicles for moving large sums of money efficiently. Closed 
loop prepaid access is only used for particular goods or services, 
which limits the ability to use it to move money quickly and easily in 
large amounts. The limitation to an identifiable merchant (which is an 
element of the definition of ``closed loop prepaid access,'' as 
discussed below) similarly restricts the utility of closed loop prepaid 
access for money laundering purposes.
    As discussed above, the exemption for closed loop prepaid access 
has been changed in response to comments. The exemption now applies to 
closed loop prepaid access of less than $2,000 maximum value.\32\ 
Unlike the NPRM, it exempts such closed loop prepaid access even if it 
allows international use, transfers within the prepaid program, or 
loading from non-depository sources. We believe these changes more 
accurately reflect the risks associated with closed loop prepaid 
access.
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    \32\ See II. e.2 above. The threshold of $2,000 reflects a 
balancing of concerns between retailers and law enforcement and 
FinCEN's intent to assess money laundering risks while facilitating 
legitimate commerce.
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    b. It provides prepaid access solely to funds provided by a 
Federal, State, local, Territory and Insular Possession, or Tribal 
government agency.
    Various government agencies provide funds for many types of 
obligations such as salaries, tax refunds and benefits including 
unemployment, child support, disability, Social Security, veterans' 
benefits and disaster relief assistance through prepaid access. Given 
governmental oversight over these programs and the single source of the 
funds, we see minimal opportunity for the placement or layering of 
illicit funds into the financial system through prepaid access to 
government benefits.
    As discussed above, the exemption for government funded prepaid 
access has been changed in response to comments

[[Page 45411]]

to exempt all such prepaid access without regard to international use, 
transfers within the prepaid program, or loading from non-depository 
sources. These changes more accurately reflect the low risks associated 
with government funded prepaid access.
    c. It provides prepaid access solely to funds from pre-tax flexible 
spending arrangements for health care and dependent care expenses, or 
from Health Reimbursement Arrangements (as defined in 26 U.S.C. 105(b) 
and 125) for health care expenses.
    Generally administered by a central payor, these arrangements are 
pre-funded by employee and/or employer contributions to an account 
maintained by the payor. There are maximum annual dollar limits 
established for these accounts, and the funds can only be accessed as 
reimbursement for defined, qualifying expenses. We believe that these 
types of highly controlled, low risk accounts are of minimal value to 
potential money launderers as a means of placing or layering funds. For 
this reason, we have excluded these arrangements from the definition of 
prepaid program.
    As discussed above, the exemption for health and dependent care 
flexible spending prepaid access has been changed in response to 
comments to exempt all such prepaid access even if it allows 
international use, transfers within the arrangement, or loading from 
non-depository sources. We believe these changes more accurately 
reflect the low risks associated with health and dependent care 
flexible spending prepaid access.
    d. It provides prepaid access solely to (i) employment benefits, 
incentives, wages or salaries; or (ii) funds not to exceed $1,000 
maximum value and from which no more than $1,000 maximum value can be 
initially or subsequently loaded, used, or withdrawn on any one day 
through a device or vehicle, subject to certain limitations.
    Prepaid access to benefits and salaries and prepaid access subject 
to low funds limits do not fall within the definition of prepaid 
program under this final rule unless they contain certain higher risk 
features that obscure financial transparency, thereby meriting 
regulation. Specifically, arrangements limited to funding employment 
benefits, incentives, wages or salaries, and those limited to funds not 
to exceed $1,000 maximum value and from which no more than $1,000 
maximum value can be initially or subsequently loaded, used, or 
withdrawn on any day through a device or vehicle, do not fall within 
the definition of prepaid program under this final rule if they do not 
allow international use, person-to-person transfers, or loading from 
non-depository sources.
    i. Employment benefits, incentives, wages or salaries.
    In most employer-employee relationships, the necessary personal 
details regarding the employee (such as full name, address, date of 
birth and a government identification number) are known to the 
employer. In those situations, where the individual employees paid 
under the program are identified by the employer, and where this 
information is shared with (or made available to) the provider of 
prepaid access, there are sufficient checks on possible money 
laundering abuse to warrant exclusion for this type of program. These 
payroll programs, in addition to regularly scheduled wage and benefits 
payments, may also include bonus or incentive payments paid at 
intervals outside the norm. This exemption applies only to arrangements 
in which the employer, and not the employee, can add to the funds. The 
ability to co-mingle funds accessed through the payroll card from 
sources other than the employer would obscure financial transparency 
and greatly increase the money laundering risk. The payment of 
``[b]enefits, incentives, wages or salaries'' solely from the employer 
generally does not represent an opportunity for the placement of ill-
gotten funds into the financial system (at least as distinct from 
criminal activity on the part of the employer originating the payments, 
not related to the use of prepaid access).
    ii. Funds not to exceed $1,000 maximum value and from which no more 
than $1,000 maximum value can be initially or subsequently loaded, 
used, or withdrawn on any day through a device or vehicle.
    We believe that the potential for misuse is significantly lessened 
where the prepaid access is to funds limited to a $1,000 maximum 
limitation and no subsequent loading or reloading can increase the 
funds beyond the stated maximum on any day through a device or vehicle. 
We have chosen a $1,000 maximum for this provision for a number of 
reasons: (1) 2009--2010 industry research findings for average and 
maximum initial loads; \33\ (2) consistency with thresholds established 
for other MSB categories; and (3) the appropriate balance between the 
concerns expressed by law enforcement and industry.
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    \33\ FinCEN conducted research of prepaid program providers and 
reviewed the maximum daily load values of various programs available 
on public Web sites. Generally, programs reviewed through this 
research restricted cash loads or withdrawals to $950 or less per 
day.
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    This final rule differs from the NPRM in that the phrasing of the 
$1,000 maximums has been collapsed from three separate subsections into 
one because it is more concise and, we believe, clearer. It also 
clarifies that this limitation applies to a single device or vehicle, 
not across an entire prepaid program. Additionally, the NPRM included a 
requirement that the maximum value of the prepaid access product 
eligible for this exemption must be clearly visible on the product 
itself. The final rule does not include this requirement based on 
present concerns, as informed by some comments, that the requirement 
may be un-workable and may not be technologically neutral.
    iii. Limitations on the payroll and limited value prepaid access 
exemptions.
    Payroll cards and limited value prepaid access devices or vehicles 
are subject to a qualified exception under the final rule, allowing the 
programs to fall outside of the requirements unless key risk factors 
change. Specifically, th