Is a restaurant that issues gift cards (i.e. T.G.I. Friday’s, Cheescake Factory, Burger King, etc.) considered an MSB?

I read a letter FinCen issued in August of 2003 stating that a seller of mall-wide gift certificates would not meet the stored value requirement. I cant seem to find any further comments on this and was wondering how others were addressing this matter?

The mall doesn't have to register as MSB for selling gift cards, but are MSBs who must have an AML program. Issuers, sellers or redeemers of stored value products are excluded from registration requirements.

Ok, so following your logic, those examples in my question would require an AML program as well. So, does the Bank have to review and determine if that AML policy is is acceptable?

You have to access the risk of doing business with an MSB such as looking a the types of services offered, whether it is a principal (with a fleet of agents) or an agent itself, whether it is new or established business and whether the money services is the primary part of the business, what locations/markets it serves, anticipated account activity, and the purpose of the acct. There is a great guide on FinCEN (dated 4-26-05) for assessing risk on MSBs.

Here's the link for the guidance.

http://www.msb.gov/pdf/guidance04262005.pdf

Thanks ahou.

ACBbank: The restaurant would not be an MSB if it stayed below the $1000 per person/per day limit.

Ted I thought the same thing once I read some things off the FinCen website. I then called FinCen and the person I spoke too send they are not considered a MSB b/c the stored value is in a closed end system. He also commented that 1M per person/per day thing would not be applicable to the restaurants.

I thought this contradicted what I read, but it is coming from a FinCen MSB specialist.

That may be due to the definition of "stored value" at §103.11(vv):

(vv) Stored value. Funds or monetary value represented in digital electronics format (whether or not specially encrypted) and stored or capable of storage on electronic media in such a way as to be retrievable and transferable electronically.

Perhaps FinCEN understands a closed-system card as not being transferable.

There is also FinCEN ruling #2003-4, which specifically addresses "closed system products such as a mall-wide gift card program."

Thats exactly what I was referring in my earlier post John. Ultimately, I think I am going to review that, along with some other documentation before making any final decisions.

Thanks for the input.

Mary Beth Guard is presenting a webinar on Stored Value Cards on March 14, 2007.

John, there are many seminars I see on BOL that I would like to attend, but unfortunately, my FI is small and doesnt like to pay for anything. Sad, but true.