Posted on February 10, 2012

http://www.jckonline.com/2012/02/10/new-anti-money-laundering-rules-apply-to-gift-cards

If you issue gift cards to customers, you may subject to new anti-money laundering rules issued by Treasury agency FinCEN.

“The law enforcement agencies that report to FinCEN have highlighted the use of gift cards in money laundering for some time,” JVC president and CEO Cecilia Gardner tells JCK.

The new rules, which go into effect on March 31, require retailers who issue store cards for $2,000 or more to take precautions to ensure these products are not being used to launder money. These precautions include gathering customer identification information, maintaining records of the transactions, and implementing an anti-money laundering program.

The rules also apply to retailers whose cards can be used in outside stores, of if they issue cards to a customer in the amount of $10,000 or more in one day.

Retailers who issue gift cards in the amount of $2,000 or less do not have to comply, unless this card can be used internationally or reloaded remotely.

Retailers must also report any suspicious activity using an IRS form called a “Suspicious Activity Report.” 

The definition of suspicious activity is “vague, very open-ended,” Gardner notes. “They leave it that way intentionally. They want people to over-submit reports.”

She notes the provision is different than the current one in the Patriot Act.

“Under the Patriot Act, dealers didn’t have to file suspicious activity reports but they are urged to,” she says. “Here they can help liable. That’s a big difference.”