Sectoral guidelines for electronic money issuers

Sectoral guidelines for electronic money issuers

This chapter provides guidelines for electronic money issuers (e-money issuers) as defined in Article 2(3) of Directive 2009/110/EC. The level of ML/TF risk associated with electronic money26 (e-money) depends primarily on the features of individual e-money products and the degree to which e-money issuers use other persons to distribute and redeem e- money on their behalf.

Sectoral guidelines for electronic money issuers

114.

Firms that issue e-money should consider the following risk factors and measures alongside those set out in Title II of these guidelines. The sectoral guidelines for money remitters in Title III, Chapter 4, may also be relevant in this context.

Sectoral guidelines for electronic money issuers – Risk factors 

Product risk factors

E-money issuers should consider the ML/TF risk related to:

• thresholds;
• the funding method; and
• utility and negotiability.

116.

The following factors may contribute to increasing risk:

• Thresholds: the product allows

i.high-value or unlimited-value payments, loading or redemption, including cash withdrawal;

ii.high-value payments, loading or redemption, including cash withdrawal;

iii.high or unlimited amount of funds to be stored on the e-money product/account.

• Funding method: the product can be loaded anonymously, for example with cash, anonymous e-money or e-money products that benefit from the exemption in Article 12 of Directive (EU) 2015/849; funded with payments from unidentified third parties;

iii. funded with other e-money products.

Utility and negotiability: the product

1. allows person-to-person transfers;
2. is accepted as a means of payment by a large number of merchants or points of sale;
3. is designed specifically to be accepted as a means of payment by merchants dealing in goods and services associated with a high risk of financial crime, for example online gambling;
4. can be used in cross-border transactions or in different jurisdictions;
5. is designed to be used by persons other than the customer, for example certain partner card products (but not low-value gift cards);
6. allows high-value cash withdrawals.

• Thresholds: the product

1. sets low-value limits on payments, loading or redemption, including cash withdrawal (although firms should note that a low threshold alone may not be enough to reduce TF risk);
2. limits number of payments, loading or redemption, including cash withdrawal in a given period;
3. limits the amount of funds that can be stored on the e-money product/account at any one time.

1. is accepted as a means of payment for limited types of low-risk services or products.

Sectoral guidelines for electronic money issuers – Customer risk factors

118.

The following factors may contribute to increasing risk:

• The customer purchases several e-money products from the same issuer, frequently reloads the product or make several cash withdrawals in a short period of time and without an economic rationale; where distributors (or agents acting as distributors) are obliged entities themselves, this also applies to e-money products from different issuers purchased from the same distributor.
• The customer’s transactions are always just below any value/transaction limits.
• The product appears to be used by several people whose identity is not known to the issuer (e.g. the product is used from several IP addresses at the same time).
• There are frequent changes in the customer’s identification data, such as home address or IP address, or linked bank accounts.
• The product is not used for the purpose it was designed for, for example it is used overseas when it was designed as a shopping centre gift card.

119. The following factor may contribute to reducing risk:

• The product is available only to certain categories of customers, for example social benefit recipients or members of staff of a company that issues them to cover corporate expenses.

Sectoral guidelines for electronic money issuers – Distribution channel risk factors

120.

The following factors may contribute to increasing risk:

• Online and non-face-to-face distribution without adequate safeguards, such as electronic signatures, electronic identification documents meeting the criteria set out in Regulation (EU) No 910/2014 and anti-impersonation fraud measures.
• Distribution through intermediaries that are not themselves obliged entities under Directive (EU) 2015/849 or national legislation where applicable, where the e-money issuer:

relies on the intermediary to carry out some of the AML/CFT obligations of the e-money issuer; and has not satisfied itself that the intermediary has in place adequate AML/CFT systems and controls.

• Segmentation of services, that is, the provision of e-money services by several operationally independent service providers without due oversight and coordination. Country or geographical risk factors;

121.

The following factors may contribute to increasing risk:

• The payee is located in, or the product receives funds from sources in, a jurisdiction associated with higher ML/TF risk. Firms should pay particular attention to jurisdictions known to provide funding or support for terrorist activities or where groups committing terrorist offences are known to be operating, and jurisdictions subject to financial sanctions, embargoes or measures that are related to terrorism, financing of terrorism or proliferation.

Sectoral guidelines for electronic money issuers – Measures

122.

National legislation may provide for an exemption from identification and verification of the customer’s and beneficial owners’ identities and assessment of the nature and purpose of the business relationship for certain E-money products in accordance with Article 12 of Directive (EU) 2015/849.

123. Firms should note that the exemption under Article 12 of Directive (EU) 2015/849 does not extend to the obligation to conduct ongoing monitoring of transactions and the business relationship, nor does it exempt them from the obligation to identify and report suspicious transactions; this means that firms should ensure that they obtain sufficient information about their customers, or the types of customers their product will target, to be able to carry out meaningful ongoing monitoring of the business relationship.

124. Examples of the types of monitoring systems firms should put in place include:

• transaction monitoring systems that detect anomalies or suspicious patterns of behaviour, including the unexpected use of the product in a way for which it was not designed; the firm may be able to disable the product either manually or through on- chip controls until it has been able to satisfy itself that there are no grounds for suspicion;
• systems that identify discrepancies between submitted and detected information, for example, between submitted country of origin information and the electronically detected IP address;
• systems that compare data submitted with data held on other business relationships and that can identify patterns such as the same funding instrument or the same contact details;
• systems that identify whether the product is used with merchants dealing in goods and services that are associated with a high risk of financial crime.

Compliance & Geldwäschebeauftragter – Sectoral guidelines for electronic money issuers

Unsere Praxisseminare Geldwäsche und Fraud – Basisseminar, Geldwäsche und Fraud – Aufbauseminar, Geldwäsche & Fraud – Update und Geldwäsche & Fraud – Forum verschaffen Ihnen einen umfassenden Überblick zu den aktuellen gesetzlichen Neuerungen und unterstützen Sie dabei, Geldwäsche- und Betrugsstrukturen zu erkennen, zu bewerten und rechtzeitig zu verhindern. In den Compliance-Seminaren wie Compliance, Compliance für Vertriebsbeauftragte, Neue Compliance-Funktion gemäß MaRisk oder auch Compliance im Fokus der Bankenaufsicht werden Ihnen die Ausgestaltung der Schnittstellen zwischen Compliance, Datenschutz, IT, Zentrale Stelle und Interner Revision näher gebracht. Auch die Mindestanforderungen zum Aufbau eines Gesamt-IKS werden hier beispielsweise näher erläutert.

Zudem haben Sie die Chance, nach Teilnahme der Seminare die Zertifizierungslehrgänge zum Compliance Officer, zum AML & Fraud Officer oder zum Geldwäsche-Beauftragter zu absolvieren.