The evolution under way in the payment system has drawn attention to the possibility of electronic money being used for money-laundering purposes.4 The positions developed at European level and the guidelines of the Bank of Italy5 call for specific precautions to be adopted both in defining the characteristics of the payment instrument and as regards the procedures for its use within the circuit of reference.
These precautions need to be identified having regard to the operating schemes actually used, which are subject to continuous technology-driven change, and can involve, for example: ceilings on the value of purchases; the impossibility of transferring sums from one electronic device to another, or, where this is possible, the traceability of such transfers;6 value limits for an individual electronic device (e.g. for an individual card) in line with the highest-denomination banknote; controls on the distributors of payment cards and businesses that accept them for the conclusion of transactions carried out using such instruments; keeping records of requests for refunds of e-money balances that are anomalous by frequency or amount.
4. The reporting procedure
4.1 Intermediaries’ internal notification procedure
Every intermediary shall establish, and formalize in its internal rules and regulations, a procedure for the notification of suspicious transactions in order to provide guidance for employees, uniform behaviour and generalized application throughout the organization.
The internal notification procedure shall provide for a two-stage assessment of suspicious transactions; it shall be structured in accordance with the banks’ traditional operating model and interpreted in the light of the technical evolution of banking and the modi operandi typical of other intermediaries.
The procedure established by each intermediary shall provide for a small number of steps before notifications reach the “company anti-money-laundering officer ”, specified in the law as the “head of the activity, his legal representative or his delegate”; it is necessary to ensure that an employee whose suspicions are aroused can have prompt, confidential and easy access to such person.
Provision may be made in the internal procedure for verification and control, possibly with the assistance of internal support and advisory functions, without this being prejudicial to the confidentiality and efficiency of the procedure.
4 Electronic money consists in a monetary value represented by a credit on the issuer, memorized on an electronic device, issued upon receipt of corresponding funds and accepted as a means of payment by businesses other than the issuer. There are two basic types of e-money: card-based money (stored on a payment card with or without a microprocessor) and software-based money (stored in the memory of a personal computer). Electronic money is a substitute for cash that operators, possibly protected by guarantees of anonymity, can exchange even at a considerable distance, establishing themselves in countries lacking adequate controls.
5Contained, respectively, in the European Central Bank’s Report on Electronic Money (1998) and the Bank of Italy’s White Paper on Payment System Oversight (1999).
6Such transfers may be allowed, for example, so as to permit utilization of the balance on an e-money device, which could be insufficient to conclude a new transaction. Even in this case it is still necessary to adopt safeguards to prevent the loading of value without limits onto an electronic device. One such measure could be to make it impossible to effect a new transfer of sums before exhausting the balance on another device.