sexual exploitation of children over the internet - Meldpunt ...

upon the burgeoning industry of digital currencies: the lack of regulation of digitalcurrencies by any government entity, domestic or foreign. Digital currencies that dobusiness in the U.S. are not subject to any of the U.S. banking requirements. This hascreated a dangerous loophole in commercial transactions occurring on the Internet withvirtually no accountability. It is imperative that the U.S. and other countries address therise of digital currency and begin to subject this industry to some form of oversight andregulatory consistency. As of now, operations such as e-Gold are available to individualswho wish to transfer money anonymously for any purpose, whether legal or illegal.The third panel focused on the efforts of acquiring banks or merchant processingcompanies to prevent commercial child pornography merchants from having access to atraditional method of online payment, such as a credit card, to offer on their site. Thewitnesses included Chase Paymentech and Bank of America, which are both acquiringbanks, and NOVA and First Data, which are merchant processors. 24 As the witnessesexplained at the hearing, before an acquiring bank or merchant processor can conductmerchant processing, that merchant must first be approved by the bank. The acquiringbank or processing company will first determine whether the merchant’s business isconsistent with its credit policies, as well as the association’s policies. Bank of America,First Data Corporation, and NOVA each testified that their credit policies forbid themfrom approving any merchant who engages in certain types of businesses, including anyillegal activity, such as child pornography, as well as certain legal activity, such as adultpornography.After the merchant bank concludes that the merchant’s business is consistent withits credit policies and the credit card association’s policies, the merchant bank will thenconduct an underwriting and risk review. Most institutions conduct a more rigorousreview of Internet merchants, as opposed to brick and mortar merchants, because Internetmerchants are a greater credit risk. For example, Bank of America and Chase revieweach page of a prospective Internet merchant’s website to determine that the links on thesite are operational, that they do not link to illegal or prohibited content, and that themerchant has appropriate customer service and product information. Once a merchanthas been approved, the acquiring banks or processors then conduct varying levels ofongoing review to ensure that the merchant does not begin to offer banned products orservices, such as adult content or child pornography. According to the witnesses, thisreview is primarily automated and involves monitoring trends in sales volume andaverage sales ticket size in order to identify patterns that may indicate illegal activity. Ifunusual activity is noted, the acquirer will conduct a more extensive review of themerchant’s business. In addition, some acquirers, like Bank of America, attempt to visitthe websites of Internet merchants at least one time a year, even if abnormal activity isnot present; other acquirers, such as First Data, will revisit a merchant’s website only ifcertain risk factors are triggered during its ongoing review. Finally, MasterCard andAmerican Express acquiring banks are required to check the prospective merchant24 First Data and NOVA are not banks; various acquiring banks may contract out certain of their merchantbanking functions, such as performing due diligence on prospective merchants and other functions, to thesecompanies. Therefore, given the large size of their portfolio of merchant banks, much of the due diligenceon the merchant side is frequently done by merchant processing companies like First Data or NOVA30