Prepaid Regulatory Changes and How to Effectively Prepare for Upcoming Examinations John ReVeal Partner Bryan Cave, LLP

Mabel Wilson Vice President, Compliance Blackhawk Network

Wednesday, June 26, 2013 Workshop D

Jeanette Barraza Director of BSA and Nondepository Supervisory Processes Conference of State Bank Supervisors

Marilyn Barker Chief Regulatory Counsel Senior Vice President The Bancorp

Janath Gode Senior Consultant Sightspan Inc.

© 2013 Network Branded Prepaid Card Association

Thank You To Our Sponsors

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Presenting Sponsors

Supporting Sponsor Welcoming Reception Sponsor

Associate Sponsors

Founding Sponsors

The Basics – Exam Types

• Bank Exams

– Federal, State or Joint Exams • Safety and Soundness

• Compliance

– Consumer Financial Protection Bureau (CFPB)

• Non-Bank Exams

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The Basics – Parties in the Prepaid Value Chain

• Issuer – usually a Bank, but may be a Non-Bank

• Program Manager – may also be a Provider of Prepaid Access/MSB

• Retailer, Distributor or Agent

• Processor

• Network

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How can we best prepare for an upcoming Exam?

• Risk Assessments

• Keep current with regulatory developments

• Ensure you have timely access to information

• Ongoing monitoring and testing

• Organization

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What should we expect during the Exam?

• Different examiners, different styles

• Exam targeted towards your specific role/business model

• Educate and translate

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What are some specific areas we should be prepared to address?

• Final FinCEN prepaid access rule – how did you implement?

• AML and Fraud monitoring – system used, has it been independently tested and verified?

• Third party oversight, including agent location visits

• Fee disclosures

• SAR filings

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Concluding the Exam

• Examiner’s process steps in concluding exam

• Exit meetings and what to expect

• How to respectfully disagree

• When to call Counsel

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What are you seeing as Exam Trends?

• Third Party Payment Processor considerations

• Bank exams extending to the program manager

• Focus on agent location visits

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What Challenges are Facing the Industry from an Exam Perspective?

• Education of examiners

• Multiple roles

• Cooperation between all prepaid parties

• Negative media

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BREAK-OUT SESSION

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Scenario One

• Your institution (an issuer) offers both gift card, LAP, payroll and GPR programs. The examiner doesn’t understand why your monitoring processes differ by program, and is especially concerned about how you monitor gift card purchases and usage.

• How can you best explain this to your examiner?

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Scenario Two

• Your company (a Provider of Prepaid Access/MSB) offers its prepaid products through retail. Your examiner wants to apply a traditional agent model to the exam.

• How can you help the examiner understand the differences between prepaid retailers and a traditional agent model?

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Scenario Three

• Your company is a newly registered Prepaid Provider/MSB. You have never been through an examination before.

• How would you best prepare? Discuss what regulations apply to you and specific items to prep.

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Scenario Four

• Your company sells its card programs through retails agents. Your examiner did on-site visits of agent locations during the exam and discovered one Agent who refuses to put up signage required by the State. This agent represents 20% of your sales.

• How will you handle this situation?

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Questions?

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