FinCEN pushes for cross-border prepaid enforcement

A proposed new rule by the Financial Crimes Enforcement Network (FinCEN) would require travelers to declare the balances on prepaid cards at border crossings, according to the Federal Reserve Bank of Atlanta. The Oct. 29, 2012, post on the Atlanta Fed's Portals and Rails blog said that FinCEN issued a notice of Proposed Rule Making to expand the scope of its cross-border reporting requirements to include "tangible prepaid access devices."

To implement the new rule, the Atlanta Fed said the Department of Homeland Security is working on a handheld card reader that would apparently be used by border agents to discern the balances on prepaid cards.

The Atlanta Fed said the current law directs travelers to report cash and other monetary instruments that in the aggregate exceed $10,000. "The premise behind this requirement is that it prevents money laundering and criminal-terrorist financing by enabling the traceability of currency and its equivalents, and hopefully eliminating anonymous flows of money into and out of the United States," the Atlanta Fed added.

According to Homeland Security's comments, FinCEN's proposed new rule is not a divergence from the agency's enforcement challenges concerning such monetary instruments as checks, money orders and traveler checks, the Atlanta Fed said.

But the Atlanta Fed also noted that a study conducted by U.S. and Mexican officials said while the potential for stored-value and prepaid cards as money laundering tools exists, the preferred mode for the transporting of funds across the border illicitly is still cash.

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