M-payment: a Threat to Anti-money Laundering
comes the potential for criminal misuse. M-payment technology, if unchecked, can be exploited by money launderers and terrorists. Presently, the United States is ill prepared to handle the dark side of m-payment. As the INCSR acknowledged, “The United States has few safeguards against abuse of m-payments.” Moreover, the report also warns that the only applicable federal reporting requirement to providers of stored value cards is the Currency Transaction Report (CTR) rule. A CTR must be filed for all cash transactions greater than ,000 per day. However, the CTR can be filed up to fifteen days after the transaction has occurred, giving terrorists and criminals enough time to disappear. Although almost all U.S. m-payment service providers are registered as Money Services Businesses (MSB) with the Financial Crimes Enforcement Network (FinCEN), the regulations do not have specific provisions pertaining to them.
New legislation is needed to regulate m-payment service providers. Legislation can include requirements that service providers monitor accounts, enhance suspicious activity reporting, require maximum transaction limits (e.g, ,000.00 per day), require the registration of pre-pay cell phones with m-payment, and development of new, m-payment specific software to detect suspicious activity.
With m-payment projected to grow to 52 percent by the year 2011, there is ample time to put the necessary safeguards and regulations in place to combat the threat to anti-money laundering.
H. Paul Leyva, J.D., is Certified Anti-Money Laundering Consultant (CAMC) and a student at Thomas Jefferson School of Law, Walter H. & Dorothy B. Diamond, Masters of Law (LL.M) International Tax Program. Per the request of the distributor, this article was published without footnotes or references. The original version of this report with all footnotes and references is available upon request.
H. Paul Leyva is a Certified Anti-Money Laundering Consultant (CAMC) and currently a law student at Thomas Jefferson School of Law, Masters of Law (LLM) Diamond International Tax Program.