August 10, 2016
In 2011, amid a crackdown on international money laundering, the U.S. Treasury Department tried to close a loophole that authorities said allows drug cartels to move bulk cash across borders on gift and other prepaid cards. The department’s Financial Crimes Enforcement Network (FinCEN) proposed that money stored on these cards count toward a U.S. requirement to report cross-border movement of cash of $10,000 or more.
But FinCEN later withdrew its proposed rule after pushback from the prepaid card industry, according to law enforcement sources. The move has not been previously reported. The lack of a rule has stymied efforts to crack down on cross-border crime, including drug trafficking and money laundering, law enforcement officials said. The U.S. Department of Justice estimated in 2009 that up to $24 billion in cash is smuggled into Mexico each year, some of it on prepaid cards.