It is official: the German Bundestag has
passed its anti-money laundering (AML) laws – which put a
restriction prepaid business opportunities in Europe’s largest
economy.

The implementation of the laws follows a
critical report by the Financial Action Task Force (FATF) in
February 2010, which had criticised Germany’s AML laws.

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Under the regulation, any e-money product
distributor will need to apply and comply with Know Your Customer
(KYC) standards, for instance, seeing proof of identidy.

Although the strict legislation looks likely
to curb money laundering, its provisions also mean that
prepaid cards can be reloaded up to a maximum of €100
($133.82). For amounts above that, a full KYC procedure needs to
take place every time the card is reloaded with credit above
€100.

The issuer then needs to archive that
information for five years.

In an official document published on 1
December, the German Bundestag argued it had “carefully analysed”
the deficits in the local AML law found by FATF and that a “brisk
elimination” of these was “necessary” in order to protect Germany’s
economy from money laundering and the financing of terrorism.

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But prepaid is still a tiny fraction within
the e-payments markets, according to Michael Mueller, Group CEO and
Co-Founder of paysafecard.com and member of the Prepaid Forum
Deutschland.

According to Mueller, e-payments crime has risen from 64
instances to 90 in the year-end to 2010.

This pales in comparison to the rise of money
laundering crime for the same period, which soared from 11,000
instances to 40,000 by the end of 2010.

 

Read the full article on the threat
to prepaid in Germany.