Quote:
Originally Posted by Chris
1) What bank is issuing the card product
CHOICE BANK of BELIZE. Before people start bashing us for using an offshore bank the answer is simple:
No USA bank will allow to setup MasterCard to non US residents. We spent 2 years in negotiations but none agreed. So we had to fall under MC international jurisdiction for that.
2) What is the method for funds storage at the card product level or a
general ledger account (i.e. is each card a "registered" account for the
cardholder or a number only account attached to a general ledger or wash
account)?
The account is under Paxum Inc. There is separate security deposit account that was setup by us with the bank, as per our agreement with MC and the bank. That is standard way to operate an e-wallet.
3) Does the company's and the bank KYC procedure comply with banking
regulations and is there a positive statement to that effect in the
terms and conditions as well as the cardholder advisements?
We fully comply with KYC requirements set forth by MC and the Bank. We are issuing the cards only to verified accounts since we don't want to play with fake card users. We don't want to be accused of Laundering Money. Better safe then sorry in our opinion.
4) Although we understand that the bank's and the company's joint AML
efforts must remain proprietary, are there clearly defined velocity
limits (amount of transfer, frequency of transfer et al) defined in the
terms and conditions?
Limits for transfers between paxum current accounts are set by us. We are the ones who have the last word on them. Paxum MasterCard has limits set by MasterCard International and the bank. We were negotiating for a long time to get webmasters usable limits. I think we succeeded in that, $2500 per day is way more then Epass and others offer.
5) Does the bank issuing the product have the appropriate measures in
place to support SAR (Suspicious Activity Reporting) for transactions as
required by banking regulations
We are regulated by Belize banking laws. We fully comply with them.
6) If the cards have a direct account attached to them, are those funds
guaranteed by the FDIC or the issuing bank's country's regulatory authority?
The cards are issued by a Belize Bank. FDIC has no jurisdiction in Belize. The funds that are held in the bank by Paxum Inc.
7) Is the bank aware of the nature of the clients utilizing P2P (i.e. adult)
p2p is within paxum ewallet account
card to card (witch will be activated at a later date) is from master card to mastercard and the bank is fully aware and we have no restriction for ADULT. the only restriction we have and don't accept is GAMBLING.
8) Is the company issuing the product and managing the wallets
independently audited and are those audits made public
We have been audited by the Bank and Mastercard. We do plan to get audited at least once a year. Whether it will be made public or not is something that will be decided later.
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Chris:
Thanks for the timely response!
So just for some further clarification:
1) Choice Bank of Belize - cards are issued using their charter w/Mastercard and administered by Metavante then? (plastic issuance, customer support, et al)?
2) To clarify the funds storage method, funds stored at the wallet are at Montreal Bank and funds to be made available to individual cardholders are pushed to Choice Bank of Belize into the Paxum, Inc. account. So a daily sweep would occur from the wallet to Choice Bank of all funds requested released to the card product daily?
Balances at both the wallet and the card are maintained by Paxum's internal systems. At no time is there a report to either financial institution of the value of individual wallets or funds available to cardholders via the card product? There's simple a "gross balance" at each account representing the value of the wallets and the cards?
3) Can you give us more information on how the KYC is handled? Is that transmitted to the bank prior to card issuance for verification or is Paxum the verifying entity? If Paxum is the verifying entity, how does the bank conduct its due diligence to ensure compliance prior to issuing the Mastercard product?
Are the cards issued directly to the individual program participants by the bank/platform? Or is Paxum handling card issuance directly? In either event, once KYC is complete, is the card embossed with the owner name and magstriped with cardholder detail or is it a generic?
4) Just to clarify, transfers that occur between affiliate programs and webmasters (as an example) are done internal to Paxum's operating systems and are in effect an internal wallet to wallet transfer. Limits and controls on these transactions or internal to your network. Funds availability demands to the cards are pushed from the "wallet" account to the "card" account (Paxum, Inc), and individual cards can access their balances (up to $2500 per day) based on a funding report you provide the platform that essentially says: "Card X for Paxum, Inc. has a total available draw down of, say $7,000 with a daily limit of $2,500."
5) There is a .pdf of the CBB (Central Bank of Belize) guidelines regarding AML and Combating Financial Terrorism available. I would assume that Paxum is adhering to these based on that statement.
6) Thank you for that answer. The cards are not individual accounts, but are attached to the Paxum, Inc. account as the owner of the deposit then based on your response. Choice Bank is, of course, not subject to the FDIC but the CBB does utilize the U.S. Treasure OFAC (Office of Foreign Asset Control) "best practices" concerning money transfer businesses according the documentation reference above. Are these transactions subject to that scrutiny since all transfers are done internal to Paxum's system and all funds are held by one entity, Paxum?
7) & 8) Thank your for clarifying that the bank (and I assume the card platform) know the nature of the client base and are only restricting gambling. With regards to your statement, yes, an initial assessment by the bank and Mastercard would have been necessary to approve the launch of the service. A comprehensive published audit of the company's operations, risk management and financial strength on an annual or, better yet, a semi-annual basis would seem to be a prudent step since Paxum, if working properly would be holding a significant amount of 3rd party funds for your clients.