Money Transfer in Cyberspace MTRA 16th Annual Conference November 13 15, 2006 Presented by Joseph Ca - PowerPoint PPT Presentation

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Money Transfer in Cyberspace MTRA 16th Annual Conference November 13 15, 2006 Presented by Joseph Ca

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... Transfer in Cyberspace. MTRA 16th Annual Conference. November 13 15, 2006. Presented by Joseph Cachey III. SVP, Global AML Compliance. The Western Union Company ... – PowerPoint PPT presentation

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Title: Money Transfer in Cyberspace MTRA 16th Annual Conference November 13 15, 2006 Presented by Joseph Ca


1
Money Transfer in CyberspaceMTRA 16th Annual
ConferenceNovember 13 15, 2006Presented by
Joseph Cachey IIISVP, Global AML ComplianceThe
Western Union Company
2
Money Transfer in Cyberspace
  • What is Cyberspace?
  • A term coined by William Gibson in Neuromancer
    (1984)
  • A metaphor for the Internet
  • The opposite of Meatspace
  • A virtual reality which represents the Noosphere
    / Popperian Cosmology both inside computers and
    on computer networks
  • All of the Above

Source Wikipedia (from cyberspace) 2006
3
Money Transfer in Cyberspace
In terms of Money Transfer, Cyberspace is Use
of the internet for purposes of facilitating
movement of funds or conducting a money transfer.
These include
  • Consumer to Consumer transfers (C2C)
  • Consumer to Business transfers (C2B)
  • Business to Consumer transfers (B2C)
  • Business to Business transfers (B2B)

4
Money Transfer in Cyberspace
Typical Transaction Flow
5
Money Transfer in Cyberspace
Typical Cyberspace Money Transfer Methods Money
Transmitter (MSB) Websites
  • Credit / Debit / Prepaid Card to MSB Payout
  • Bank ACH to MSB Payout / MSB Funding to Bank
    ACH
  • Bill Payments
  • Staged Transactions
  • Prepaid Card top-ups and Virtual Account Funding

6
Money Transfer in Cyberspace
Source of Funds for Internet Money Transfer
  • Common
  • Banking Accounts
  • Credit Cards
  • Debit Cards
  • Prepaid Cards
  • Emerging
  • Virtual Accounts / Virtual Prepaid
  • Staged Online then funded by Cash
  • Digital Currencies / Electronic Cash

7
Money Transfer in Cyberspace
Benefits of Cyberspace Money Transfer
  • Consumer Benefits
  • Convenience
  • Speed
  • Costs
  • Privacy
  • Ease
  • Security
  • Money Transmitter Benefits
  • Low Costs of entry
  • Low Overhead
  • Speed
  • Widespread Access
  • Consistency
  • Revenue

8
Money Transfer in Cyberspace
Risks with Cyberspace Money Transfers
Consumer Risks
Money Transmitter Risks
  • Receiver Fraud
  • Rogue Websites
  • Account Takeovers (Identity Theft)
  • Undisclosed Fees
  • Limited Consumer Protection (Emerging Sources)
  • Possible Limited Recourse
  • Security Phishing
  • Customer Identification and Verification
  • Transaction Authorization and Merchant Liability
  • Sender and or Receiver Fraud
  • Account Takeovers (Identity Theft)
  • Money Launderers
  • Terrorist Organizations
  • Website Compromises
  • Disasters

9
Money Transfer in Cyberspace
Steps to controlling your programs risk
  • Sever links between your products and unapproved
    transfer methods
  • Police the internet and protect your brand
  • Impose limits and velocity checks on amounts that
    can be transferred
  • Enhance your customer authentication remember
    international!
  • Enhance your transaction authorization process
  • Develop a robust monitoring and early warning
    program

10
Money Transfer in Cyberspace
Risks from Regulators Perspective
  • Rapid Proliferation with low barriers to entry
  • Lack of Regulation (Emerging Sources)
  • Unregistered Companies
  • Money Laundering and Terrorist Financing
  • Borderless

11
Money Transfer in Cyberspace
Risks from Regulators Perspective (cont.)
  • Offshore Website Hosting
  • Stopping illegitimate websites
  • Stopping links between legitimate and
    illegitimate transfer methods
  • Consumer Protection
  • Who Regulates?
  • What / who do you regulate?

12
Money Transfer in Cyberspace
Current Regulatory Environment
  • PCI Compliance Rules (Dual Factor
    Authentication)
  • Regulation E (Transaction receipts and account
    statements)
  • MSB Registration Required?

13
  • New Product Examples

14
Money Transfer in Cyberspace
Prepaid Cards A card or device with stored
value that is used for payment in the form of
electronic cash. Often referred to as Stored
Value Cards.
15
Money Transfer in Cyberspace
16
Money Transfer in Cyberspace
Virtual Accounts / Virtual Prepaid A prepaid
card or account number with stored value that
exists in cyberspace only. Mainly used for online
transactions or card to card money transfers.
17
Money Transfer in Cyberspace
Staged Online then funded by Cash Prearranging a
purchase online or possibly a money transfer then
funding via a cash remittance at a money
transmitter.
18
Money Transfer in Cyberspace
Electronic Cash is a digital form of money. Can
be stored electronically or held virtually. Can
be denominated in an official currency or a
derived artificial currency. New section in the
2006 FFIEC BSA/AML Examination Manual. Pages 202
204
19
Money Transfer in Cyberspace
Current Regulatory Environment (cont.)
  • State Laws are virtual accounts monetary
    instruments?
  • International Regulations
  • Reporting Requirements
  • AML Programs for Offshore sites?

20
Money Transfer in Cyberspace
A world of Electronic Cash awaits you
21
Money Transfer in Cyberspace
How digital currency works
Source FATF / GAFI Report on New Payment
Methods, 13 October 2006
22
Money Transfer in Cyberspace
Popular Examples
e-bullion
e-gold
23
Money Transfer in Cyberspace
Typical Cyberspace Money Transfer Methods Bank
Websites
  • Account to MSB Payouts
  • Prepaid Card Purchases
  • Other
  • Bill Payments
  • ACH Payments
  • Account to Account

24
Money Transfer in Cyberspace
Sample Bank Money Transfer Website
25
Money Transfer in Cyberspace
Sample MSB Money Transfer Website
26
Money Transfer in Cyberspace
Non-Typical Cyberspace Money Transfer Methods
  • Anonymous Accounts and Products
  • Accounts or products which do not require
    customer ID or provide
  • anonymous ways to transfer money.
  • Digital Currency transfer services
  • Allows movement of funds between
    alternative forms of
  • electronic cash

27
Money Transfer in Cyberspace
  • Sample of a Fully Anonymous Prepaid Card

28
Money Transfer in Cyberspace
Cards Tied to Numbered Accounts with No ID
Required
29
Money Transfer in Cyberspace
  • What loading methods are appropriate?

30
Money Transfer in Cyberspace
Phishing the bait
31
Money Transfer in Cyberspace
Phishing the hook
32
Money Transfer in Cyberspace
The End
Cyberspace Contact joseph.cachey_at_westernunion.com
Meatspace Contact 720-332-4642
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