1

FDIC Advisory Committee 

on Economic Inclusion 

Prepaid Program 

Regulatory Requirements 

Lisa D. Arquette 

 Associate Director 

 Federal Deposit Insurance Corporation 
2

Prepaid Access Program 

Covered

 Closed Loop>$2,000

 Open Loop>$1,000

 Open Loop with 

international capabilities, no 

minimum

 Open Loop with person to 

person capabilities, no 

minimum

 Open loop with nondepository loads, no 

minimum

Non-Covered

 Closed Loop≤$2,000

 Government Funded

 Flexible Spending and 

Dependent Care Funded

 Open Loop ≤ $1,000 with no 

international capabilities, or 

loads from non-depository 

sources

 Employment wages with no 

international capabilities, 

person to person, or loads 

from non-depository source

The illustrations utilized in this presentation are intended to depict how FinCEN’s regulations might 

apply to a possible situation, not a binding determination on any actual program or set of transactions.
3

Regulatory Requirements 

Banks

 Develop and implement a 

BSA/AML Compliance 

Program

 Report Suspicious Activity 

 Customer Identification 

Program

 Maintain Transactional 

Records

“Providers” and “Sellers” 

of “Covered” Prepaid 

Access 

 Develop and implement a 

BSA/AML Compliance Program

 Report Suspicious Activity

 Collect & Verify Customer 

Information

 Maintain Transactional Records

“Providers” of “Covered” 

Prepaid Access

 Register as a Money Services 

Business with FinCEN
4

“Covered” Prepaid Access 

arrangement/device 

Open loop card that allows non-depository 

loads (i.e., through a retail store) is a 

“covered” device under the BSA

Verification of customer identity is 

required prior to use of the card

$250

Consumer

Transactions

ABC Company 

“Provider”

Retail Store is not considered a “Seller” 

under the BSA in this scenario

ABC Company agreed to be the “Provider” 

of prepaid and is therefore subject to BSA. 

Regulatory requirements would apply.

Does BSA Apply?

Reload

$500

Retail Store has reasonably adapted 

procedures to prevent sale > $10,000

Activate card: 

Online or by calling

Apply funds:

Online or by calling 

ABC Company

Transactions

Retail Store

Retail Store
5

“Covered” Prepaid Access 

arrangement/device 

Open loop card that allows non-depository 

loads (i.e., through a retail store) is a 

“covered” device under the BSA

Verification of customer identity is 

required prior to use of the card

Consumer

Retail Store is not considered a “Seller” 

under the BSA in this scenario

The issuing bank has primary oversight of 

prepaid program. The bank is not a 

“provider” of prepaid. The issuing bank is 

subject to BSA requirements.

Does BSA Apply?

Reload

$500

Retail Store has reasonably adapted 

procedures to prevent sale > $10,000

Activate card: 

Online or by calling 

and provide customer 

identification

Apply funds:

Online or by calling

Issuing Bank

Parties to this Prepaid Program

Retail Store

Prepaid Program

$200

XYZ Company

Retail Store

Retail Store

XYZ Company

XYZ Company
6

“Covered” Prepaid Access 

arrangement/device 

Verification of customer identity is required 

prior to use of the card

Consumer

Transactions

“Provider”

Retail Store is not considered a “Seller” of 

prepaid under the BSA in this scenario

Does BSA Apply?

Reload

$500

Retail Store has reasonably adapted 

procedures to prevent sale > $10,000

Apply funds:

Online or by calling

Applies online and 

provides customer

identification information

An open loop card that allows nondepository loads (i.e., through a retail store)

and person to person transfers is a 

“covered” device under the BSA

DJA Company agreed to be the “Provider” 

of prepaid and therefore is subject to BSA. 

Regulatory requirements would apply.

Employer: direct 

deposit paycheck

Transfer funds to 

another person’s card

DJA Company

Retail Store

DJA Company

$700