Bank Technology News  |  November, 2010

http://www.americanbanker.com/bulletins/-1028934-1.html

As mobile person-to-person payments start to take hold, the risk of crimes such as money laundering also increases, and it’s time for regulators to weigh in with AML standards, according to The Federal Reserve Bank of Atlanta.

In calling for action, the Atlanta Fed says the same risk inherent in all retail payments—money laundering, consumer protection, fraud and liquidity and credit risks—also apply to mobile payments.

The Atlanta Fed says the emergence of nonblank players in the market, such as telecom firms, may create added risk considerations for payment regulators. And since mobile payments do not require face-to-face interaction, there’s an anonymity that creates opportunity for crooks.

Writing in a Atlanta Fed blog, Cindy Merritt, assistant director of the Atlanta Fed’s retail payments risk forum, says payments regulators have limited expertise and experience in identifying electronic payments crime in communication systems—so the potential for abuse is real.
 She said regulators from the financial services and telecom sector need to ensure they communicate with a collective eye toward the potential need to establish new regulatory concepts of electronic money regulation.

The Atlanta Fed also used its blog recently to call for domestic action on EMV payment protocols, saying the U.S. risk becoming an isolated target for international card fraud if it didn’t adopt the chip and pin standard widely used in Europe.