The cards, operate similarly to a debit card and enable consumers to deposit money to a local Australian bank account for later withdrawal or transfer to another Virtual Money cardholder anywhere in the world.
The decision to end the sale of these cards follows concerns about the operation of Texas-based Virtual Money Inc in Australia. ASIC determined that the company was selling cards to retail consumers without an Australian financial services licence (AFSL) as required by the Corporations Act.
According to ASIC, products like the Virtual Money ATM card are classified as non-cash payment facilities. People who deal in such products with Australian consumers must hold an AFSL.
Virtual Money Inc and its Australian arm, Virtual Money Pty Ltd, co-operated with ASIC’s investigation. At ASIC’s request, the companies have instructed their Australian agents not to sell any more cards and have taken steps to avoid the registration and deposit of funds onto cards in Australia. Existing cardholders are still able to withdraw their remaining funds.
ASIC’s executive director of enforcement, Jan Redfern, said that it was important for foreign companies intending to operate in Australia to familiarise themselves with local licensing requirements before they commenced operations.
"In some cases, the foreign company may itself have obtained an Australian financial services licence. In other cases, the local agent may need to obtain one. Both parties need to familiarise themselves with our licensing requirements and ensure they adhere to them," Redfern said.
She also warned local agents to ensure they had complied with the law.
ASIC wipes out Virtual Money ATM cards in Australia
By Staff Writers on Dec 20, 2007 2:09PM