Joint industry press release on AMLR regarding low-value gift cards

An industry association coalition of electronic money issuers, distributors, and retailers strongly calls on the European Parliament and the Council to keep the use of popular and everyday low-value, low risk e-money products such as e-money gift cards and vouchers and to abstain from introducing a mandatory customer identification for such products.

Both consumers and retailers greatly benefit from the current e-money exemption in the Anti-Money Laundering Directive. The associations estimate that in 2022, 50 to 70 million consumers in Europe made use of an e-money product that is offered under the e-money exemption.

The associations are very concerned that these products will no longer exist if the co- legislators adopt the European Commission’s proposal for an Anti-Money Laundering Regulation (AMLR). Currently, Article 12 of the Anti-Money Laundering Directive allows low- value prepaid products to be sold and used without customer identification, provided there is a proven low risk of money laundering and terrorist financing. That widely used and well- working exemption no longer exists in the Commission’s proposal for the new AMLR.

The exemption has played an important role in driving innovation in the e-money sector, as it enables uncomplicated access to these vouchers and gift cards and supports privacy of personal data. Furthermore, it has been instrumental in fostering financial inclusion by providing access to electronic money services for a broad range of users, particularly underbanked or underserviced people. The possible disappearance of these gift cards or vouchers will have a major, negative impact on local economies consumer choice and the value chain of such products.

The industry and concerned value-chain actors have a distinct need for such an exemption to be able to offer low-risk e-money products in a legally secure way. The AMLR should ensure that the continued existence of the exemption is clearly reflected in its final text, providing much-needed planning and legal security. Otherwise, these gift cards and vouchers in shops are likely to disappear to the detriment of customers and the fintech location Europe, without actually contributing to fulfilling the goals of the legislation, given that the risk of such products is low anyway.

The proposal to remove the exemption is not necessary and disproportionate. There is a very low risk of such products being misused for illicit purposes. The regulatory regime governing the issuance of these products is already very strict and issuers comply with various statutory requirements. Today’s spending and loading limits are extremely low, with a limit of 50 euros for online transactions and 150 euros for offline transactions, and the issuers of such products carry out sophisticated measures to prevent any misuse,” says Nickolas Reinhardt, Head of the EPIF Secretariat.

Consumers are very reluctant to give their personal data. If the buyer of an e-money gift card would have to provide identification details, e.g. at the supermarket checkout, such products will no longer be used by citizens and will vanish from the supermarket shelf”, say Atze Faas from EuroCommerce and Alexis Waravka from Independent Retail Europe.

Without the exemption, retailers selling such gift cards would be obliged to store customer’s personal information in a GDPR compliant way. For many points of sale, this would be hard to implement and could drive up costs disproportionately, keeping in mind that 95% of retailers are SMEs, so that these products could no longer be offered.

Depriving citizens of the ability to purchase or offer as a gift to friends and family e-money products of limited value is simply unjustified,” says Thaer Sabri, chief executive of the Electronic Money Association. “On the contrary, such e-money products should be actively supported by future regulation given that they come with many benefits for the users, e.g. in terms of privacy or financial inclusion. Abolishing the exemption would also lead to an encroachment on fundamental rights of European citizens. We therefore support the European Parliament’s proposal to retain the exemption for such products from mandatory customer identification. At the same time, we still see room for improvement and hope that the co-legislators will be able to find a compromise to the benefit of many regular customers.”

Download the press release here