Answer:
You have found an area where the law "lags" technology; there are no record retention requirements for the sale of gift cards. They definitely do not fall within the definition of a "monetary instrument."
Regulators refer to these as "stored value cards" and understand that these are a far more efficient and robust tool for the movement of funds than checks, they simply have yet to devise a BSA compliance requirement. If you search the current examination procedures using that term, you will find several references. However, there is little or no guidance there, just acknowledgements that this version of "E-cash" can be used to launder money and facilitate terrorist financing.
Basic suggestions would be along the lines that they only be:
- sold to existing customers (perhaps those that have banked with your institution for a period of time) and
- allowed to carry balances reflective of "consumer" activity; i.e. it should be apparent that their most likely use would be for gifts. (Selling one or more cards to the same person for $3500 would not meet that test, in my opinion.)
If you decide to sell them to non customers, engage in transactions of significant size, or allow the cards to be refilled I suggest you develop voluntary record retention requirements.
First published on BankersOnline.com 10/09/06
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