DRUG, TERROR RINGS FIND NEW WAYS TO LAUNDER MONEY

Report: Prepaid ATM Cards, Internet Help Move Cash Out of USA

WASHINGTON -- Drug traffickers and suspected terrorists are using
prepaid ATM cards and Internet-based payment systems to help launder
billions of dollars each year, the Treasury Department reported
Wednesday in what it called the first government-wide analysis of
money laundering in the USA.

The analysis described security weaknesses throughout the U.S.
financial system that enable criminals to hide illicitly obtained
money, and to sneak it out of the country. The report, which included
contributions from 16 federal agencies, will be used to help
officials devise a national strategy to fight money laundering,
Treasury Undersecretary Stuart Levey said.

Smuggling cash in bulk remains criminals' favorite method for moving
money out of the USA, said Marcy Foreman, investigations director for
U.S. Immigration and Customs Enforcement. The report also detailed a
dozen other money-laundering methods used by criminals, including
what it called the increasingly prevalent use of prepaid cash cards
that can be purchased anonymously at retail and check-cashing stores
across the nation.

Such cards are designed to make things easier for students,
immigrants and others among the estimated 75 million people in the
USA who do not have bank accounts, the report said. Those buying the
cards can have a certain value recorded on them, and then the
cardholders can use the cards to withdraw the money from automated
teller machines around the world.

However, the cards also allow foreign drug traffickers to move money
to their home countries without having to sneak bundles of cash past
Customs agents -- or use bank accounts that leave paper trails, the
report said. It noted that companies that issue cash cards outside
the USA do not have to comply with U.S. anti-money-laundering laws,
but that such cards can be used at ATMs in this country.

"The volume of dirty money circulating through the United States is
vast, and criminals are enjoying new advantages with globalization,"
the report said.

Levey said it's unclear how much money in the USA is made from
criminal enterprises. The White House Office of National Drug Control
Policy estimates sales of illicit drugs in the USA produce $65
billion a year for traffickers. The United Nations estimates illicit
drug revenue in the USA, Canada and Mexico to be $142 billion a year.

"The key to ending drug trafficking is to wipe out the money side,"
Drug Enforcement Administration chief Karen Tandy said. The DEA
seized $2 billion in 2005, up from $500 million in 2003, she said.

Recent arrests by U.S. agents reflect the complexity of some schemes.
Last week, Mohummed Islam Uddin, 39, of Hamtramck, Mich., pleaded
guilty to running an unlicensed money-services business that sent $3
million to Bangladesh with little or no documentation of the transactions.

Uddin used U.S. currency from local people who wanted money
transferred to Bangladesh. He then would buy prepaid phone cards, an
ICE report said. The cards then were resold in Bangladesh for local
currency by a merchant who distributed the proceeds to the intended
recipients of the money transfers, ICE said. The scheme allowed Uddin
to avoid paying transfer fees and to convert U.S. dollars to
Bangladeshi currency.