Thread: Prepaid credit cards move funds to Mexico, and it's legal

Published: 09.14.2009

Prepaid credit cards used to move funds to Mexico, and it's legal
By Chris McDaniel
THE YUMA SUN
Smugglers have found an easier way to export illegal funds to Mexico: prepaid credit cards.
Arizona Attorney General Terry Goddard said there are currently no federal laws regulating such cards, allowing money to be laundered with incredible ease and without violating the law.
"This trend has been around for a long time, and our anti-money-laundering program, as far as I'm concerned, is just full of holes," Goddard said. "One of the biggest holes is what we call stored-value cards. Most people think of them as gift cards, but these are gift cards on steroids. Users can put millions of dollars on them if they have a financial institution that is willing to honor them, and easily take them into Mexico."
Goddard said most of the cards are issued by offshore banks in countries such as the Dominican Republic, the Cayman Islands and Panama.
"I can say safely there are not many of these cards that are actually involving United States-regulated financial institutions," he said. "They are issued offshore, but loaded up in this country. These cards have a service where people can go to a 7-11 and load a certain amount of money on a card and then have it withdrawn in Mexico. There is nothing to stop them from taking that card into Mexico."
Goddard said there is almost no accountability with these cards, because nobody sees who is doing it.
"One of the most important parts of money laundering is anonymity," he said. "The thing that bothers me most about these cards is they can be loaded anonymously or by using a pseudonym. This is another way to facilitate the illegal movement of cash across the border."
Goddard said a person possessing a prepaid card doesn't have to declare whether the card is worth more than $10,000, which he would have to do if he were carrying hard currency.
"You would think it would come under the $10,000 limit imposed under federal law, but it doesn't because the Treasury has never determined a stored-value card to be a monetary instrument under federal regulations," he said. "They can take a million dollars on one of those little cash cards across the border, and even if they are stopped and law enforcement discovered it was a million-dollar card, it would not be in violation of anything. It is totally legal."
Goddard said it's much easier to find and seize cash at the border.
"There has been a lot of southbound traffic of hundred-dollar bills, but that can be circumvented by simply loading the hundreds into a cash card and carrying the card across. Taking $100,000 in bills is illegal, while taking $100,000 in a cash card is not."
Goddard said law enforcement should focus on ways to stop this form of money laundering.
"It seems our goal should be to do everything in our power to stop it," he said. "The cartels are not operating because they love the work, but because it is really, really profitable. Anything we can do to cut off the cartels' source of money is a way to stop violence in Mexico and violence that comes across the border."
Goddard said he would like to create a regulation making prepaid cards a monetary instrument under the law.
"That would mean taking more than $10,000 across the border into Mexico (on a prepaid card) would be illegal. I would also like to make the cards accessible to law enforcement."
http://www.azstarnet.com/sn/printDS/308907

Interesting! So they don't have to carry cash across border! MORE reasons to hate Card Companies.