E-money: opportunities for quick payments and risks of their use for illegal purposes

Abstract

E-money is widely used in cross-border commercial relations. It can increase the speed and cut cost of payments for business. At the same time e-money can be used for laundering funds gained by criminal ways and for terrorism financing. FATF member-states use provisions of the legislation about fighting criminal incomes’ legalization in respect to e-money issuers. These countries also underline that special risk for criminal incomes’ legalization can be caused by anonymous money and pre-paid cards. Therefore, many countries fix in their national laws measures that ensure realization of risk-oriented approach directed at minimizing risks of money laundering and terrorism financing. For example, the EU develops amendments to the directive aiming at elimination of risks dealing with use of e-money and pre-paid cards for legalizing criminal incomes. The authors propose measures aimed at improvement of legislation about fighting money laundering and terrorism financing to minimize respective risks in using e-money. At the same time the necessity to develop conditions for extending possibilities of remote identification was pointed out, as it was envisaged by the program ‘Digital Economics of the Russian Federation’.

Keywords

• money laundering
• e-money
• pre-paid cards
• fatf