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Bills aims to snip cash-card money smuggling

With advances in technology, drug cartels no longer need to smuggle truckloads of cash across the border. Thousands of dollars can be carried across on "stored value cards," prepaid cards or smartphones that can act like credit cards.

U.S. Rep. Gabrielle Giffords announced a bill Friday that aims to slow the flow of money from drug and human smuggling operations.

The "Stored Value Device Registration and Reporting Act of 2010" will close a loophole that has treated stored value cards differently than cash, money orders and traveler's checks.

"This is a critical step in cracking down on drug cartels," said Giffords at a press conference at the Evo A. DeConcini U.S. Courthouse, 405 West Congress.

The bill has three main provisions:

• Money stored in electronic devices would be considered the same as currency for regulatory purposes. Prepaid cards, cell phone chips and other electronic devices would be covered.

• Stored value devices loaded with more than $10,000 would have to be registered with the Treasury Department.

• The flow of money via stored value devices would be tracked. "There's no current data on how stored value devices are currently used" to smuggle funds, said Giffords.

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Failure to declare a cross-border transfer of more than $10,000 could result in a five-year stint in prison.

"It's taken way too long to close this extraordinary loophole," said Arizona Attorney General Terry Goddard, who joined Giffords and Pima County Sheriff Clarence Dupnik at the conference.

"There's a wave of violence - actual violent warfare" just over the U.S.-Mexico border, Goddard said. "Cutting down the illegal flow of funds is a national security issue. Our national interest is in cutting these profits to zero."

"Don't trivialize this by calling these gift cards," Goddard said. "These devices can hold hundreds of thousands, if not millions of dollars. We need to get ahead of technology."

"It's a no-brainer to acknowledge that stored value devices are money," said Giffords. Giffords is co-sponsoring the bill with Rep. Brian Bilbray, R-Calif.

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Dylan Smith/TucsonSentinel.com

U.S. Rep. Gabrielle Giffords announces a bill to stem the flow of cash south of the border, flanked by Pima County Sheriff Clarence Dupnik (left) and Arizona Attorney General Terry Goddard.

Read the law

Stored Value Device Registration and Reporting Act of 2010