Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Prepaid cards and the EU anti-money laundering directive

Prepaid cards and the EU anti-money laundering directive

Michael McDowell warned his fellow senators in February to think twice before rubber-stamping the EU’s latest anti-money laundering (AML) directive.
Even though Ireland was more than a year late in putting the directive on the statute books, a delay that is likely to cost €2 million in fines from Brussels, legislators wanted urgent action in the fight to prevent infiltration of the financial system by criminals and terrorists.

McDowell was worried, however, about special requirements in the directive for “politically exposed” people, including the denizens of Leinster House and their families.

He recounted how a bank that gave him a mortgage to build a holiday home 18 years ago is now citing AML requirements as the reason for requiring proof of the source of his personal wealth and that of his wife and children.

“Some of the forms we were asked to complete go far beyond what is reasonable,” he told the Seanad. “There must be some degree of proportionality as to the capacity of people to gather together all of these records, especially when they are in the 18th year of a 20-year mortgage.”

The requirement was “a nonsense”, he added, that did not serve “any useful purpose”.

Despite McDowell’s fears of regulatory overkill, Ireland signed the directive into law on March 18. Yet it has been only in the past two weeks that the full consequences of falling foul of AML regulations has come to general attention.

On May 13, the Central Bank of Ireland raised concerns about money laundering defences at PFS Card Services, triggering a suspension of trading in the shares of its Australian parent, EML Payments, followed by an immediate 40 per cent price collapse when trading resumed.

The regulatory intervention could temporarily halt PFS’s e-money operations throughout Europe, threatening about 27 per cent of EML’s group revenues and exposing it to a potential hostile takeover. The episode was a swift reversal of fortune for PFS, hailed as an Irish fintech success story only a year earlier when it was sold to EML in a deal worth up to A$341 million (€215.5 million) for its founders, Noel and Valerie Moran.

The growing alarm as news of the Central Bank’s action filtered back to EML’s headquarters in Brisbane can be sensed from filings made by EML with Australia’s ASX stock exchange last week. Because of the time difference, it was after midnight on Friday May 14 when senior management, including EML’s chief executive Tom Cregan, became aware of what was happening in Ireland. They spoke with PFS management at a hastily arranged 6:30am meeting, followed by urgent consultations with lawyers in Dublin later that day.

EML’s directors were briefed over the weekend and, after a dawn board meeting on Monday morning, they decided to request a temporary suspension of the company’s shares before the ASX opened for trading. The resumption of trading two days later sparked the investor rout that EML had tried to stall.

The Central Bank’s investigation continues, with PFS due to make a submission to the regulator by last Thursday.

Previous regulatory crackdowns by the Central Bank inflicted considerably less damage on the financial institutions whose AML precautions were deemed unsatisfactory. Investors in Bank of Ireland and AIB largely shrugged off AML fines of €3.15 million and €2.3 million respectively in 2017. These followed a fine of €3.3 million on Ulster Bank the previous year, and the Central Bank has also penalised money transfer provider Western Union and a number of credit unions over AML shortcomings.

The AML concerns are likely to centre on PFS’s core prepaid cards business, although neither the company nor the Central Bank will elaborate on the details of the regulatory concerns.

The risks posed by prepaid cards were well aired when the Dail debated the AML legislation last September. Frequently associated with gifting, prepaid cards also have more sinister uses, warned Fianna Fail’s James O’Connor, the Dail’s youngest TD.

“Fraud experts are increasingly concerned about the potential for abuse, from petty scams to money laundering by drug lords and terrorists,” he said. “The global market is anticipated to reach €3.5 trillion in value by 2022 and there is no sign of this trend stopping.”

Prepaid cards came to the attention of law enforcement in the 1990s when the Mexican drug cartel led by Joaquin Guzman, El Chapo, began using them as a cash alternative. They gained notoriety in 2015 and 2016 when terrorists used prepaid cards as an untraceable means of financing attacks in Paris and Brussels.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
×