Canada and allies consider crackdown on prepaid cards in illicit cash fight

Canada and its closest allies are eyeing restraints on prepaid currency cards and looking at even greater intelligence sharing as a means of combating transnational organized crime, newly disclosed documents show.

RCMP Commissioner Bob Paulson floated the proposals in Ottawa during a June meeting of justice ministers from Canada, the United States, Britain, Australia and New Zealand.

The ever-popular prepaid cards offered by retailers are a convenient form of currency for consumers, but organized criminals have taken advantage of the fact many can be used around the world to “smuggle and launder proceeds of crime,” says a briefing note prepared for the meeting.

Police in the five allied countries have “limited powers” to deal with the exploitation and abuse of prepaid cards, says the note.

“The most significant limitation is that prepaid cards cannot be seized by law enforcement or border officials in member countries, as these cards are not defined as monetary instruments in any anti-money laundering legislation.”

Paulson attended the meeting in his role as 2012 chairman of the little-known Strategic Alliance Group, which comprises federal law enforcement officials from the five countries to jointly tackle organized crime.

The strategic alliance’s working group on proceeds of crime has also identified “specialist money launderers” who control, direct and manage illicit movement of funds through money service businesses, as well as other informal exchange systems that exist around the world, says the note.

The working group is looking into specialists from several “jurisdictions of risk” including the United Arab Emirates, Iran, Pakistan and China, the note adds.

Canadian privacy commissioner Jennifer Stoddart has expressed concern about proposals to give the federal anti-money laundering agency broader powers to scrutinize electronic funds transfers entering or leaving Canada.

Stoddart said that would mean examining large numbers of harmless transactions — such as money transferred by parents to children studying abroad.

She has also taken issue with proposals to collect more information about people who purchase prepaid gift cards and to allow the anti-laundering agency to increase sharing with law enforcement and intelligence agencies.

The briefing note prepared for Paulson’s presentation, however, says exchanging information and criminal intelligence is becoming a key element of strategies to fight organized crime.

Police are trying to move to a “need to share” mindset from one of “need to know,” while respecting partners’ privacy regimes, says the note. “This is a philosophy that also needs to be encouraged in departments/ministries that co-ordinate international information sharing.”

Information exchanges with international partners has been a sensitive issue in Canada since a commission of inquiry found faulty data provided by the RCMP was likely to blame for the U.S. sending Ottawa engineer Maher Arar to Syria, where he was tortured over false terrorism suspicions.

More recently, Canada was embarrassed when naval intelligence officer Jeffrey Paul Delisle sold secrets — including material from the allies — to Russia.

Still, the briefing note says sharing of “bulk data” among the friendly nations, though not formalized, is conducted ad-hoc “and has proven to be extremely useful in uncovering previously unknown criminals.”

It stresses the importance of working to remove “any impediments to the flow of information,” such as the European’s proposed directive on data protection, “which can negatively affect investigations.”

At the June meeting, Justice Minister Rob Nicholson held discussions with U.S. Attorney General Eric Holder and the attorneys general of Britain and New Zealand, as well as the home affairs and justice minister of Australia.

They talked about options for stepping up the fight against cybercrime, including through mutual legal assistance treaties.

Nicholson also led his counterparts in a discussion about intelligence and evidence in legal proceedings.