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ARTICLE · 13 APRIL 2016

New Guidance On Customer Identification In Prepaid And Other Card Programs

Jones Day
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Prepaid cards are recognized, mainstream financial products, used by individuals and private- and public-sector entities.

United StatesFinance and Banking
Jones Day
Jones Day
Chip MacDonald
Chip MacDonald
Lisa Ledbetter
Lisa Ledbetter
Albert Rota
Albert Rota
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The U.S. federal banking regulators and the Financial Crimes Enforcement Network ("FinCEN") recently released guidance (the "Guidance") clarifying the applicability of the "know-your-customer" or "customer identification program" regulations (the "Regulations") under Section 326 of the USA PATRIOT Act to prepaid cards deemed issued by banks, thrifts, credit unions, and branches of foreign banks ("banks"). The Guidance applies, effective March 21, 2016, to cards that are sold and distributed by banks or by third parties that design, manage, and operate prepaid card programs for banks. Noncompliance could result in material adverse regulatory action, especially where anti-money laundering compliance is affected.

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