Prepaid Cards Attract Money Launderers

Frank Bajak, Associated Press

BOGOTA, Colombia (AP) — Forget bulk cash. Heavy and hard to hide, it's simply not the most convenient cross-border conveyance for a 21st-century money launderer.

A safer and increasingly attractive alternative for today's criminal is electronic cash loaded on what are called stored-value or prepaid cards. Getting them doesn't require a bank account, and many types can be used anonymously.

U.S. crimefighters consider the cards a burgeoning threat that regulators haven't adequately addressed.

In the past year, said John Tobon, a senior U.S. Immigration and Customs Enforcement agent, the cards have become the preferred means of paying couriers who transport illicit drugs across the U.S.

No one knows how big a role the cards play in moving the more than $20 billion in drug earnings that U.S. authorities estimate crosses from the U.S. to
Mexico annually. Yet while anyone crossing that border with $10,000 or more in cash must declare it, prepaid cards are legally exempt.

"Law enforcement loses lives all over the world trying to keep (major criminals) unbanked, and these prepaid cards are offering them a great alternative to sneak into our financial system," said Tobon.

It was bank and wire-transfer records that enabled law enforcement to identify the Sept. 11, 2001 hijackers and their overseas cells. "Had the 9/11 terrorists used prepaid (stored-value) cards to cover their expenses, none of these financial footprints would have been available," a U.S. Treasury Department report observed.

Visually, the cards are barely distinguishable from credit or debit cards and the most versatile let users reload them remotely without having to reveal their identity, using cash, moneygrams, PayPal and other online payment services.

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