Money Launderers Can Transport Cash On Stored-Value Cards


Large amounts of cash are bulky, heavy, and odorous. A stash of $1 million in mixed bills weighs 100 pounds. Trained dogs can sniff out bulk cash in a heartbeat. All of which helps to explain, reports Reuters, why drug cartels and financiers of terrorism are making increasing use of what FBI director Robert Mueller calls a shadow banking system. A legal loophole allows money launderers to get around the requirement that cash or “monetary instruments” over $10,000 must be declared on entering or leaving the United States. It is legal to carry $50,000 embedded in the magnetic stripes of so-called pre-paid stored-value cards.

They look like a credit or debit card but are not linked to a bank account, can in many cases be loaded anonymously, are not “monetary instruments” under U.S. law, and were labelled “the ideal instrument for large-scale drug trafficking and money-laundering operations” in a 2006 analysis by the National Drug Intelligence Center. At a congressional hearing this month, Mueller reported that “recent money laundering investigations have revealed a trend on the part of criminals to use stored-value devices such as pre-paid gift cards and reloadable debit cards in order to move criminal proceeds. If the cards are such a threat, why is there no regulation? Sens. Joseph Lieberman (I-Ct.) and Susan Collins (R-Me.) have asked Treasury Secretary Timothy Geithner but have not received an answer.

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