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June 11, 2012 – A company that distributes and sells network-branded, reloadable and non-reloadable prepaid cards may not always be exempt from the Financial Crimes Enforcement Network's money services business regulations, FinCEN said in a ruling released Friday.

If the cards can be used before the customer's identification is verified, or if the provider sells prepaid access to funds exceeding $10,000 for any person in one day and hasn't taken measures to prevent such sales, the company selling them is subject to the MSB regulations, the ruling says. It would be required to register as an MSB.

If, on the other hand, the bank or other institution issuing the cards maintains principal oversight and control over the prepaid program, the company distributing the cards is not considered an MSB.

The ruling is important in determining who in a prepaid card program is directly responsible for compliance with currency transaction reporting under the Bank Secrecy Act. FinCEN has written its BSA regulations to address different types of financial service providers, not all of them depository institutions.

No company or financial institution was identified in the ruling text released Friday. The document just notes the card issuer in this case is a national bank supervised by the Office of the Comptroller of the Currency.

The ruling was requested in November and issued last month.