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The Evolution of Prepaid Instruments from Giftcards to Virtual Money Laundering in a Global Theatre and its Implications for Financial Inclusion Programming

Date: 
Oct 18, 2012
institutional sponsor: 
United States Agency for International Development

Information

In this presentation, the presenters will discuss the early history of prepaid cards and the importance of understanding the ecosystem of payment cards. They will also cover how payment cards operate globally, both from a practitioner’s perspective and that of the law enforcement and prosecution associated with disrupting anti-money laundering activities and combating the financing of terrorism. The presenters will discuss the transaction flow of funds across a representative payment system platform and identify the players that empower this movement of funds, and the role each plays.

The presenters will introduce various payment networks that can facilitate the movement of instructions, both in a public setting, such as Visa or MasterCard, as well as with private networks that can function outside of regulatory view and oversight. From this overview of payment cards, the discussion will look at mobile phone-enabled payment systems and transactions and the growing impact which these types of payments continue to have on remittance funds flows and commerce-based transactions more generally. The use of prepaid access accounts using plastic card, mobile device, or Internet connection all require a virtual account to empower usage, which introduces unique legal, regulatory, investigatory, and enforcement challenges for national and global authorities.

The discussion will continue to address alternative currencies that have begun to offer methodologies to move funds, ranging from SecondLife to Bitcoin. While interdiction of funds and those actors moving them can appear fruitless within these settings, risk identification and mitigation tools and process are being developed to provide law enforcement with resources needed to identify and trace illicit funds flows. The presenters will introduce one such tool, the ERAD wireless card reader, which has the capability to obtain a balance tied to a card as well as freeze or seize the funds tied to the card account in real time. With an understanding of the processing infrastructure of payment cards and mobile, law enforcement and others will be better equipped to anticipate how these payments will be used for illicit purposes, and improve on current processes to impede the flow of funds irrespective of their point of origin or destination.

Finally, the presenters will introduce practical considerations for development practitioners to consider when developing emerging payment-based programming as part of a financial inclusion promotion agenda, in an effort to introduce risk identification and mitigation strategies, concepts, and resources into that agenda.

Greenroom Interviews: Jack Williams, Susan Lea Smith and Maria Stephens

Featuring

Headshot of Susan Smith
Susan Lea Smith
United States Department of Justice
Headshot of Susan Smith

Susan Lea Smith is a Seni

Headshot of Susan Smith

or Trial Attorney with the Asset Forfeiture and Money Laundering Section, Criminal Division, United States Department of Justice. From 1994 to 2006, Ms. Smith concentrated her efforts on the Department’s international anti-money laundering initiatives. She was the Department of Justice representative to the U.S. Delegation at several multilateral anti-money laundering organizations, including the G-7 Financial Action Task Force, the Caribbean Financial Action Task Force, the Asia/Pacific Group on Money Laundering (APG), the Council of Europe Special Committee on Money Laundering Matters (PC-R-EV), the Organization of American States Group of Experts on Money Laundering, and the Summit of the Americas anti-money laundering initiative. Since 2006, her work has focused on national money laundering policy issues and she regularly teaches at various seminars, both domestic and international.

Smith began in the original Money Laundering Section November 1991, and was primarily a litigator, investigating and prosecuting money laundering cases in various districts throughout the United States. She prosecuted and investigated cases involving attorneys, accountants, and businessmen who had laundered money derived from drugs and various white collar crimes. In 2000, Ms. Smith was awarded The John Marshall Award by Attorney General Reno for her work on “Operation Casablanca,” the largest drug money laundering operation investigation conducted by the United States. Prior to coming to the Justice Department, Smith was an Assistant Criminal District Attorney in Fort Bend County, Texas and served as a member of the Judge Advocate General Corps of the U.S. Navy.

Headhsot of Jack Williams
Jack Williams
Paymentcard Services Inc
Jack Williams

Jack Williams brings over 24

Jack Williams

years of experience in credit and debt cards arena and is highly regarded as a global payments subject matter expert, having worked with many companies domestically and internationally to provide payment programs. As president of Paymentcard Services, Inc. he has designed and implemented fully operational credit, debit and prepaid card and mobile commerce programs for clients throughout the world. Williams is also a member for Texas’ Counterterrorism and Critical Infrastructure Committees dealing with post event infrastructure recovery as well as a key player in the development of the International Red Cross’ mobile disbursements effort in Haiti, post earthquake.

Previously, he was CEO of eCommlink, a core processor for branded prepaid debit cards, and oversaw the processing operation of MasterCard, Visa and Discover branded prepaid debit cards. Prior to that, Williams was Senior Vice President of National Processing Company, Senior Vice President of Stored Value Systems, and Director of Membership Services at Blockbuster Entertainment. Credit Card Management awarded Jack their Debit Executive of the Year award for his achievement in the stored value arena in 1999. He delivers a broad array of knowledge in all areas of the payments industry, from credit to prepaid as well as mobile and virtual account processing on a global scale.

Maria Stephens
Maria Stephens (Moderator)
United States Agency for International Development
Maria Stephens

Maria Stephens is a Senior Technical Adviser with

Maria Stephens

the U.S. Agency for International Development and subject matter expert in emerging payment systems risk and regulatory issues with over 18 years’ experience in microfinance and financial economics. While a Financial Economist at the U.S. Treasury Department, Ms. Stephens was selected to participate in the development of policy and regulatory position papers focusing on derivatives and other related financial products and services. From 2007-2009, Ms. Stephens provided long-term technical support to the Central Bank of China and GTZ to establish the People’s Republic of China’s first private-sector microcredit company. She is a primary author of the USAID-Booz Allen Hamilton Mobile Financial Services Matrix and related mobile financial services risk mitigation tools and documents, and continues to lead in the development of USAID’s emerging payment systems policy and regulatory agenda. Ms. Stephens holds a B.A. (Hons) in Greek, Latin, and Old Irish from the University of Massachusetts at Amherst and a M.A. in International Economics, American Foreign Policy and Mandarin Chinese from Johns Hopkins University’s Paul Nitze School of Advanced International Studies.