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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