Ask HN: Is it money laundering?
6 comments
Allowing people to buy pre-loaded cards with credit cards is a very, very high-risk business to be in, regardless of whether your local authorities approve or disapprove of the idea.
Well, whether or not you actually allow cash withdrawals is of secondary importance. The fact is that these cards can be used as payments. It's money laundering if the authorities decide that it is, then it's up to you to prove that it isn't.
The best way forward for you would be to consult a lawyer from the place you're going to register your corporate entity in, and then the same thing with every place where you intend to do business with.
That's so you don't end up like mr. David Carruthers.
You're on the right track by looking at the ways in which the system can be abused. Things to watch out for: regular users (you're aiming for travellers, so a person that uses this year long should stand out), volume purchases (extraordinary amounts / numbers of cards) and so on.
Establish what you think are reasonable parameters and ruthlessly prune whatever lies outside that. (aka the paypal method).
The best way forward for you would be to consult a lawyer from the place you're going to register your corporate entity in, and then the same thing with every place where you intend to do business with.
That's so you don't end up like mr. David Carruthers.
You're on the right track by looking at the ways in which the system can be abused. Things to watch out for: regular users (you're aiming for travellers, so a person that uses this year long should stand out), volume purchases (extraordinary amounts / numbers of cards) and so on.
Establish what you think are reasonable parameters and ruthlessly prune whatever lies outside that. (aka the paypal method).
It's not clear from the app description what you mean with "get a swipe card loaded with credit cards issued in another country" - are you issuing Visa or MC cards to your customers? Or are you "renting" card data registered to some other person/company to your customers?
Take a look at both your local legislation and Visa/MC (whatever you'll be using) guidelines. It might be that you'll have handle know-your-customer provisions like requesting physical ID's to verify their names. And you will be liable for any fraud/laundering where people fill "your card" from a stolen card, spend the money, and 2-3 months later the chargebacks start coming.
Cash doesn't need to be involved - if you can make payments "on behalf" of someone else, in someone else's name, then that's directly relevant to money laundering.
Take a look at both your local legislation and Visa/MC (whatever you'll be using) guidelines. It might be that you'll have handle know-your-customer provisions like requesting physical ID's to verify their names. And you will be liable for any fraud/laundering where people fill "your card" from a stolen card, spend the money, and 2-3 months later the chargebacks start coming.
Cash doesn't need to be involved - if you can make payments "on behalf" of someone else, in someone else's name, then that's directly relevant to money laundering.
Not sure about it being money laundering or this being your only worry - what strikes me is that you appear to be able to obtain credit card numbers from other countries with which you are proposing to use in substitute for the persons actual credit card.
In any case my credit card is valid in all countries where I see a VISA or Mastercard sign, and I have never heard of ever receiving discounts for using it. If anything some places charge a premium just for handling it, even in my own country.
This just seems like you trying to look for a problem to fit your idea. Sorry about being blunt.
In any case my credit card is valid in all countries where I see a VISA or Mastercard sign, and I have never heard of ever receiving discounts for using it. If anything some places charge a premium just for handling it, even in my own country.
This just seems like you trying to look for a problem to fit your idea. Sorry about being blunt.
What does step one "Invite family members or friends in the country you're travelling to." have to do with the app? Are the cards registered in the names of family members or friends?
Is this money laundering if - there's mutual consensus? - money only processed for payments and never for cash withdrawal? - we don't handle cash?