Saturday, May 18, 2013

Privacy World's May 2013 Newsletter Issue 3May


Subject: Privacy World's May 2013 Newsletter Issue 3May


> Privacy World - The WORLD'S SHREWDEST PRIVACY NEWSLETTER
> 
> With Aggressive Lobbying, Visa Puts Prepaid Card Reader Plans in
> Good Stead
> 
> UPDATE: Adds statements by spokespersons for Visa and ICE in the
> eighth, ninth and tenth paragraphs.
> 
> Lobbying by the world's largest stored value payment facilitator has
> indefinitely delayed, and perhaps permanently blocked, a plan to give
> customs officials the ability to read prepaid cards, say sources.
> 
> Under a project outlined in June 2011 documents drafted by the
> U.S. Department of Homeland Security, the Obama administration
> was slated to deploy mobile readers and software that would allow
> investigators to read the monetary values stored on prepaid cards
> found while executing search warrants or transported through
> U.S. border crossings, airports and other ports of entry.
> 
> The anticipated deployment complemented ongoing efforts by the
> U.S. Treasury Department's Financial Crimes Enforcement Network
> (FinCEN) to finalize an October 2011 proposed rule that would
> require individuals to declare when they are entering or leaving
> the United States with more than $10,000 stored on prepaid products.
> 
> Those plans hit a potential dead end last year, after representatives
> of the department's Financial Management Service (FMS), which
> oversees federal payments and is the government's largest distributor
> of prepaid cards, told other U.S. officials that Visa would cease
> processing all payments for the United States government if the
> readers were deployed, multiple sources with knowledge of the
> matter said.
> 
> "Visa has threatened to cut off all government links to their
> networks if we use the readers," said a person familiar with
> discussions, who spoke on the condition of anonymity. "FMS are
> reiterating Visa's position and they've made themselves an obstacle
> to the process."
> 
> Because the Foster City, CA-based company effectively dominates the
> prepaid card market, efficient use of the readers is predicated
> on Visa's willingness to cooperate with law enforcement, said
> the person.
> 
> The threat has angered an influential, bipartisan group of lawmakers,
> including Sens. Dick Durbin (D-IL) and Dianne Feinstein (D-CA), and
> Rep. John Carter (R-TX), according to multiple sources. Staffers
> in the lawmakers' offices either declined to comment or did not
> return calls and e-mails.
> 
> In an e-mail sent Wednesday night, a Visa spokesperson said that
> the allegation of a threat by the company to U.S. officials was
> "baseless" and that the Treasury Department is a "valued Visa
> stakeholder." The spokesperson also outlined the company's support
> of investigations but noted that they can be accomplished without
> undermining personal privacy.
> 
> "Visa has discussed the current prepaid proposal within Treasury,
> as it does not address the significant privacy concerns raised for
> Visa cardholders and other consumers, including those under the Right
> to Financial Privacy Act," the spokesperson said, in the e-mail.
> 
> A spokesperson for the Department of Homeland Security's Immigrations
> and Customs Enforcement (ICE) declined in an e-mail Thursday to
> comment on the state of the plan to deploy prepaid card readers
> and said that the agency "will comply with the Right to Financial
> Privacy Act, and plans to continue working with the National Branded
> Prepaid Card Association to alleviate its concerns."
> 
> *'A hill worth dying for'*
> 
> The card readers, which have already been purchased for a total of
> at least $400,000, were designed to be used by ICE agents during
> cross-border smuggling investigations, according to sources. The
> mobile devices can distinguish credit and debit cards and prepaid
> products, displaying the total value of the latter and allowing
> law enforcement, in exigent circumstances, to temporarily freeze
> and hold the value.
> 
> But beginning last year, representatives of Visa told U.S. officials
> that using the prepaid card readers at the border "would ruin the
> customer experience," said a second individual familiar with the
> matter. "Visa, for whatever reason, feels that this is a hill worth
> dying for," said the person.
> 
> FinCEN's border declaration rule, which would require relevant
> border crossers tos="MsoPlainText"> > In a December 2011 letter to then-Direclass="MsoPlainText"> he
> bureau to reconsider its fv class="MsoPlainText"> > 
> Mandated to be finalized no later than February 2010 under the
> Credit Card Accountability Responsibility and Disclosure (CARD)
> Act of 2009, the proposed regulation has been slowed by both the
> 2012 election cycle and a mandate that the Office of the Management
> and Budget review planned rules, according to former FinCEN Director
> James Freis, who left the bureau in September.
> 
> "The regulatory process slowed down in the run-up to the election,
> so nothing was going to be issued in the fall," said Freis, in an
> interview. "Now that process has just started back up again."
> 
> *Differences of opinion*
> 
> In a December 2011 letter to then-Director Freis, Visa urged the
> bureau to reconsider its forthcoming rule, in part, because there is
> "little evidence that bank-issued Visa prepaid cards are in fact
> being used in connection with any money laundering and terrorist
> financing activities."
> 
> The "potential law enforcement benefits of the cross-border reporting
> proposal are far outweighed by its overly burdensome and unmanageable
> requirements," Visa said, in the comment letter.
> 
> Pleasanton, CA-based Blackhawk Network, one of the largest
> distributors of prepaid cards in the world, largely mirrored
> Visa's arguments in a separate letter to FinCEN, claiming that
> the rule would "confuse and inconvenience law-abiding travelers"
> and possibly "stigmatize a great many of them" with little benefit
> to law enforcement officials.
> 
> But the fact that the rule has not been finalized nor the readers
> deployed has created a "Catch-22" for investigators, who can't
> prove that prepaid cards are being exploited by drug cartels until
> they have a way to assess their values, said a U.S. law enforcement
> official who has investigated cross-border money laundering tied
> to Mexico.
> 
> "At mail facilities, there are tons of cards that are being mailed
> out, and we're finding cards hidden and comingled with bulk currency
> in the same voids in vehicles that have always been used," said the
> person, who asked not to be named. "The problem is that, most of
> the time that we find stacks of these loaded cards on criminals,
> it's by accident."
> 
> Concerns about the usefulness of the planned CMIR rule miss the mark,
> said Freis.
> 
> "ICE's goal here isn't to scan everybody that's coming across the
> border," he said. "ICE wants the declaration requirement so they can
> have the authority to seize the cards and freeze the value on them."
> 
> *Congressional concerns*
> 
> Prior to proposing the rule, FinCEN finalized regulations in July
> 2011 that require providers and sellers of prepaid value products
> to implement know-your-customer programs and file suspicious
> activity reports on certain purchases and transactions. Like the
> CMIR proposal, the rule was mandated under the 2009 CARD Act.
> 
> In a March 2011 hearing of the Senate Caucus on International
> Narcotics Control, lawmakers grilled FinCEN Associate Director
> for Regulatory Policy Jamal El-Hindi over the bureau's delays in
> finalizing rules mandated by the law.
> 
> "As a rule of thumb, there's no regulation that can keep up with our
> free market economy," Sen. Charles Grassley (R-IA) told El-Hindi,
> during the hearing. "So you better get something out there today
> and worry about tomorrow tomorrow, or you're never going to get a
> regulation written."
> 
> The increasing adoption of prepaid cards, including so-called
> "closed-loop" gift cards that can only be used at specific outlets
> and "open-loop" cards that function much like ATM cards, has outpaced
> efforts to mitigate the risks of their abuse by financial criminals,
> according to an October 2010 U.S. Government Accountability Office
> report.
> 
> Prepaid card transactions constipore bank account. Included excellent Internet banking and a
> debit card. Email for details by placing "Tax-Free" in your
> subject heading.
&class="MsoPlainText"> > Reserve Payments Study. Users loaded over $28 billion onto open loop
> prepaid cards in 2009, a figure that could exceed $200 billion by
> the end of this year, according to the report.
> 
> Calls and e-mails to a FinCEN spokesman went unreturned, and a
> Treasury Department spokesman declined to comment.
> 
> The above article by Colby Adams
> 
> Until next issue, stay cool and remain low profile!
> 
> Privacy World
> 
> PS - AAA rated tax free-non reporting offshore company and
> Singapore bank account. Included excellent Internet banking and a
> debit card. Email for details by placing "Tax-Free" in your
> subject heading.
> 
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