Gift Cards are being identified as an advantageous resource for organized crime and terrorists who are required to move currency to conduct their activities. Both store specific and muti-merchant gift cards have been identified by the Drug Enforcement Agency as a money laundering threat. Both the RCMP and the FBI are concurring with the DEA assessment.
The Canwest News Service reported on Boxing Day that the RCMP has stated that gift cards are now accepted as valid currency between crime syndicates. Instead of a suitcase of cash, operatives might show up for a drug deal with a fistful of gift cards.
The story quoted Stephane Sirard, an intelligence analyst with the RCMP’s criminal-intelligence directorate who stated:
Let’s just say a kilo of cocaine is sold for $30,000 on the market. Well, you come in with 15 cards loaded with $2,000, and you pay for that commodity. The cards are also useful for transferring money across the border, because they don’t qualify as “monetary instruments” and aren’t subject to reporting limits, he said. Individuals crossing the border with $10,000 or more must file a report with Canadian border authorities.
Sirard also said that internet-savvy crooks could also launder money by converting it into gift cards, then sell the cards online for less than the value stored on the card.
General Cash Cards and Remittance Cards have also been identified as potential risks as these cards provide anonymous cross border access to funds for purchases or cash. Both of these cards can be preloaded allowing the holder to access cash at foreign ATM’s. It appears that little is being done in North America to prevent abuse of these cards and as was identified by the DEA, the ability of foreign businesses and banks to offer these cards may not adequately permit the risk presented by cards to be managed by internal policies or legislation adopted within North America.
According to Canwest, MasterCard Canada offers a gift card that can be loaded with up to $2,500. A website that promotes the card said applicants require no credit check, security deposit, employment or income verification.
For further information see the U.S. Money Laundering Threat Assessment.
