Gift cards new currency of crime?

A story on gift cards as 'virtual currency for bad actors' ran in December 2006. The story was apparently based on a recent organized-crime threat assessment for Canada and the United States that identified gift cards and prepaid debit cards as one of the tools in the financial-crime kit of organised crime. The assessment was compiled by the RCMP, the FBI and the U.S. Drug Enforcement Administration..

The cards that are booming business in the US are according to RCMP officers 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.

"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," said Stephane Sirard, an intelligence analyst with the RCMP's criminal-intelligence directorate.

For at least two reasons one can however question to which extent this is a genuine worry. Firstly, most cards are quite limited in their use, either by the maximum value or by the spending possibilities. For example, Visa issues gift cards with a maximum value of USD 500 and the American Express gift cards can be used only at a selected number of retail stores.

Mastercard has indeed one card in the program the Vantage prepaid Mastercard that can be loaded up to USD 10.000 and can be used worldwide. However, and that is the second reason that a widespread use of these cards for criminal business can be questioned, look at the paper trail the card leaves.

In addition, this possibility of using bank and credit cards as payment tool for organised crime is nothing new. The anonymous ATM and credit card has been around for some time. But even such cards require quite some effort to launder the ill gained proceeds first before the funds can be transferred to the card.

The anonymous cards could very well be used for example to support small operational costs at home or abroad that need to stay 'below the radar'. However, as means of payment in international transactions the question of trust becomes of importance as the funds on a card cannot as easily be checked as a suitcase full of dollars. All together a widespread use of gift cards or anonymous debit cards for international transactions by organised crime seems not very likely.