Gift cards and the obligation to identify and verify customers under Section 7(3) of the Anti-Money Laundering and Anti-Terrorist Financing Act

Answer:

Gift cards can qualify as electronic money, in which case the Wwft applies. If the total monetary value exceeds €150, the user must always be identified and verified. If an online gift card payment exceeds €50, identification and verification of the user is also required. This follows from European legislation (Anti-Money Laundering Directive – AMLD) that has been implemented into Dutch legislation. However, this obligation also depends on the type of gift card. In general there are four types of gift card:

1. Gift card from one specific store

It follows from the definition of electronic money that if the value can be spent exclusively at the issuer, this does not involve electronic money. As this is the case with closed-loop payment cards, they are not considered to be electronic money. An example is cards that are issued by a specific store and the value of which can only be spent at this store. This means that Section 7(3) of the Wwft does not apply. Consequently, no identification and verification is required for these cards, even if the monetary value exceeds €150 or the online payment is €50 or more (please note: provided the threshold values of Section 37(2) of PSD2 are not reached).

2. Cards covered by the limited range of goods and services

In certain cases of the “issuance of electronic money”, the Financial Supervision Act (Wet op het financieel toezicht – Wft) does not apply (Section 1:5 in conjunction with Section 1:5A(2) under (k) and (l) of the Wft. Please note: provided the threshold values of Section 37(2) of PSD2 are not reached.). In these cases, no licence will be required to carry out the activities and the electronic money institution is not bound by the legal requirements of the Wft or the Dutch Civil Code (Section 7:514 of the Dutch Civil Code).

One of these exceptions in the Wft is the issuance of electronic money with a limited spending scope, including gift cards covered by the limited range of goods and services according to the exception in the Wwft (e.g. a cinema voucher) (Section 1:5 in conjunction with Section 1:5A(2) under (k) and (l) of the Wft; Section 1a(3) under (e) of the Wwft.).

For the use of these cards you do not need to identify and verify the user either.

3. Cards issued by exempt electronic money institutions

Exempted electronic money institutions must comply with the Exemption Regulation under the Wft (Vrijstellingsregeling Wft). These exempted electronic money institutions are listed in DNB's register and are governed by the Wwft (Section 1:1 of the Wft in conjunction with Section 1a(3)under (e) of the Wwft). If such a party has issued a gift card, the user has to be identified and verified if the gift card has a monetary value of more than €150 or the online payment exceeds €50.

4. Cards issued by authorised electronic money institutions

Finally, electronic money institutions that are not excluded or exempted from the authorisation requirement must comply with both the Wft and the Wwft requirements (Section 1:1 of the Wft in conjunction with Section 1a of the Wwft). If such a party issues a gift card and the monetary value exceeds €150 or if the online payment exceeds €50, the user must be identified and verified.