Unlike Cash, Prepaid Debit Cards Do Not Have to Be Reported When Entering or Exiting the U.S., Helping Drug Cartels Move Money Across the Border and Allowing Terrorists to Finance Overseas Operations Undetected
Legislation Would Prevent Criminals from Operating Under the Radar By Requiring Prepaid Debit Cards to Be Reported When Crossing U.S. Border
Washington, DC
- U.S. Senators Amy Klobuchar (D-MN), Tom Udall (D-NM) and Jeanne Shaheen (D-NH) today introduced legislation to prevent drug cartels, terrorists, and other criminals from using prepaid debit cards as money laundering tools to finance their illegal operations. Prepaid debit cards - which can carry tens of thousands of dollars and, unlike cash, do not have to be declared to authorities when crossing the U.S. border - are increasingly used by criminals to move large amounts of money undetected by law enforcement officials. The legislation Klobuchar, Shaheen, and Udall introduced would crack down on this practice by requiring all prepaid debit cards totaling more than $10,000 to be declared to officials when entering or exiting the United States.
"This is commonsense legislation that would put an end to this money-laundering tactic that drug cartels, terrorists, and other criminals are using to finance illegal activities," said Klobuchar. "As a former prosecutor, I know we need to give our law enforcement agencies the tools they need to track and crack down on criminal activity that puts our safety and national security at risk."
"Billions of dollars in drug money is smuggled across our southern border each year only to finance the flow of drugs back into the United States. This bill would plug the loopholes in our financial reporting laws that drug cartels exploit in order to fuel the increasingly dangerous trade of narco-trafficking," said Tom Udall, a member of the Senate Caucus on International Narcotics Control.
"It's clear the tactics of transnational criminals and terrorists are continuing to evolve," Shaheen said. "We have a responsibility in Congress to provide our law enforcement agencies with the legal tools to remain nimble and able to respond to these emerging threats and I remain committed to that goal."
Prepaid debit cards have become an increasingly common tool for criminals to finance their operations outside the traditional banking system and have therefore escaped detection by law enforcement agencies. Most cards do not require connections to names or bank accounts and can be used with complete anonymity - money can be loaded onto the cards by using cash or a PayPal account, and extracted at an ATM across the U.S. or in another country. Many cards can process tens of thousands of dollars every month.
According to a report by the Associated Press, in the past year, prepaid debit cards have become the "preferred means" for drug cartels to pay smugglers who transport drugs across the U.S. border. In one recent case, Colombian drug traffickers used prepaid cards to move at least $7 million from the U.S. to Medellin in just three months. Senior U.S. Immigration and Customs Enforcement agent John Tobon said: "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."
Terrorist cells could also use prepaid debit cards to finance terrorist plots and avoid capture. The Associated Press reports that after the September 11th terrorist attacks, law enforcement officials were able to identify the 9/11 hijackers and their overseas contacts by using bank and wire-transfer records - records that do not exist for prepaid cards. A U.S. Treasury report states: "Had the 9/11 terrorists used prepaid (stored value) cards to cover their expenses, none of these financial footprints would have been available."
Klobuchar, Shaheen, and Udall's legislation would help put an end to criminal use of prepaid debit cards by requiring stronger documentation of prepaid card use. While travelers need to declare cash totaling over $10,000 when entering or leaving the United States, this policy currently does not apply to prepaid debit cards. Klobuchar, Shaheen, and Udall's bill would close this loophole and treat prepaid cards like cash, making it mandatory to declare cards totaling more than $10,000 at U.S. border crossings. The reports would include the name of the person carrying the money across the border, thwarting criminals' attempts at financial anonymity.
The bill would give prosecutors another tool to arrest criminals before they can strike again. The senators emphasized that in order to prevent the next terrorist attack or drug smuggling operation, the United States needs to be a step ahead of its enemies' tactics.
