In a twist that has law enforcement officials scratching their head, the Arizona Daily Star reports that drug traffickers and smugglers have found a new way to move illegal funds to Mexico: prepaid cash cards.
Prepaid, stored-value cards, also sometimes referred to as gift cards, are similar to prepaid credit cards, secured credit cards, and debit cards in that money is deposited into the card account before use. However, there is one big difference between stored value cards on the one hand and prepaid credit cards and debit cards on the other. While the latter are issued in the name of an individual account holder, a stored-value card is completely anonymous. The term stored-value means the funds and/or data are physically stored on the card; rather than having the data associated with the individual card holder, the data is maintained on computers affiliated with the card issuer.
If drug cartels had written a blueprint for the perfect way to smuggle drug money across the border, stored-value cards would likely fit the bill. The cards can be loaded with hundreds of thousands of dollars on them and unloaded anywhere, completely anonymously on both ends.
According to Arizona Attorney General Terry Goddard, fraudsters mainly use stored-value cards issued by offshore banks in countries like Panama, the Dominican Republic, and the Cayman Islands. However, while the cards are issued offshore, they are loaded up in the U.S. Members of Mexican drug cartels can saunter into any 7-11 or similar store to load money on the card for later withdrawal in Mexico.
Whereas someone carrying more than $10,000 in cash across the border would have to declare it, this is not the case for prepaid cash cards. The U.S. Treasury has not designated a stored-value card as a monetary instrument, so someone, in theory, could put a million dollar on a prepaid card, carry it across the border, and not violate a single rule.
In a statement to the Arizona Daily Star, Goddard comments that the only way to foil the money laundering scheme would be to change laws in order to make prepaid cards a monetary instrument, thus forcing anyone to declare them when crossing the border. Unfortunately, even with laws regulating the transfer of money on prepaid cards, enforcing these would likely still prove difficult.
