The case for financial institutions to directly issue prepaid debit cards just got stronger at the expense of program managers. The FDIC's June 5 consent order against The Bancorp Bank requires more regulatory compliance and signals new challenges for prepaid debit card program managers. Bank issuers are facing a heightened level of regulatory scrutiny in order to comply with Bank Secrecy Act rules aimed at stemming anti-money-laundering activities on prepaid cards. The order hold's issuers responsible for their program manager partners' compliance with OFAC and AML rules. Program managers, which market the cards primarily through retailers, will be forced to step up compliance initiatives or get out of the business.
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Ahead of the move to shorten the settlement cycle in Europe as part of the Central Securities Depositories Regulation (CSDR), many firms in Europe are worried about the October 6, 2014 deadline. The move from trade date plus three days (T+3) to T+2 for equities and exchange-traded fixed income securities will likely include a host of operational and market practice changes. And, according to last week's panel discussion at SWIFT HQ in London, a number of regulatory ambiguities could throw a spanner in the works of firms' CSDR projects.