Couple of things I have come across. The first, I have a Dunkin Donuts which is selling pre paid dunkin donuts cards. They range from $5-$50. They can only be used at Dunkin Donuts for their products/services. I would consider the cards to be Stored Value, but I think I read some where that the closed end cards would not force the business to fall into the MSB category. Can any one confirm/deny this?

Second, I have a seperate account which in fact is an MSB. They offer Western Union, money transfers, etc. They only maintain a DDA account with my FI in order to make monthly loan payments. There are not any other transactions other then their monthly deposit, followed by the loan debit. I was able to confirm they are not registered with FinCen. Is this a SAR worthy item?

The MSB may or may not be required to register with FinCEN depending on what they do MSB-wise. If they are agents of Western Union and everything they do is under that agency agreement, they would not need to have their own registration at FinCEN. But if they also cash checks over the $1,000 trigger level, they'd be an MSB on their own, and need to register.

Stored value sales trigger MSB rules if sales to one purchaser exceed $1,000 in a day.

On both topics, you don't really have enough information to trigger a SAR. You would need to know a lot more about the business.

I know about the $1M threshold MS, but how would you I be able to verify that? I don't think any one is buying that much coffee and donuts, but there really is no way for me to be 100% certain.

That's a good point about the check cashing John. I'll have to verify that with the loan officer.

You would have to discuss it with the company: what are limits, how they monitor, etc. You don't see the cards themselves like you would with cards your bank might sell so there is really no other way. You might be able to see ACH payments for these cards that would show spikes in sales that would give you reason to question.

The risk to these cards is using them as an alternative currency (purchasing with dirty money, selling them to others to turn back into cash).

These cards cant be exchanged for anything other then the DD products or services. They arn't the same item as a VISA stored value card you could purchase at a gas station or Walmart. They can only be used to purchase coffeee, donuts, bagels, etc.

Given that, I assumed they presented less of a risk for the illegal activity you described?

They are definitely low risk, but can be sold to other individuals to use...that is about the only way they can be used to launder money.

Buy in quantity with dirty money, sell on Ebay or elsewhere for a reduced price and get clean money. The buyers would use at Dunkin Donuts. It's a crazy world.

I've taken the holiday seriously...my brain has not tried to remember anything more strenuous than the names of distant relatives for days.

Nevertheless, MSBs that only sell stored value cards (regardless of amount) are not required to register as MSBs. So, they still meet the definition of an MSB, but the primary regulatory requirement is inapplicable. Moreover, FinCEN Ruling 2003 - 4 guardedly opines that "closed system" cards do not meet the definition of stored value cards anyway. Whatever your risk classification might be, you will not enhance it by classifying DD as an MSB.

Thanks Ken. I thought I read some where that the closed end Stored Value cards didn't require any EDD. I just couldn't find the actual ruling.