The U.S. Senate today adopted an amendment authored by Senators Susan Collins and Joe Lieberman that would direct the Secretary of the Treasury to close a loophole in the law that makes it easier for Mexican drug cartels to funnel money across the border. The amendment to the Credit Cardholders’ Bill of Rights Act mandates completion of comprehensive regulations governing the issuance, sale, redemption and international transport of stored value cards within 270 days.
The Secretary would also be authorized to require individuals transporting stored value cards worth over $10,000, either individually or collectively, to report these cards to border officials before they leave the United States. Current law requires cash and other monetary instruments that exceed $10,000 to be declared at the border. Stored value cards, however, do not have to be reported because they are not legally considered to be monetary instruments. As a result, drug smugglers use stored value cards as a tool to transfer large sums of money across the border without having to declare it.
“The violence along the Southern border is directly related to the flow of drugs coming north and cash and weapons going south,” said Senator Susan Collins. “This amendment closes a loophole that Mexican drug cartels have been exploiting to smuggle their drug money out of the United States. If enacted, this amendment would give our law enforcement officers another tool to crack down on these cartels and other criminal enterprises that use stored value to move their illicit proceeds across the border.”
Law enforcement agencies have conducted several investigations that have uncovered the use of stored value cards by drug smugglers. A Colombian narco-trafficking organization in Dallas attempted to obtain 50 stored valued cards in an effort to launder $100,000 in narcotic proceeds. Each of the cards was to have different increments of money and then be exported out of the United States to Colombia.
In another case, law enforcement agents in New York were investigating a narcotics and money laundering organization allegedly utilizing stored value cards to launder narcotics proceeds. The investigation has revealed that illicit proceeds are loaded onto stored value cards, which are then shipped to Columbia where the proceeds are withdrawn from local ATMs. Agents estimate that this cell of the organization alone has laundered $8 million, $6 million of which has been withdrawn from the same ATM in Medellin, Columbia.
This legislation will now be sent to the House of Representatives for consideration.