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Prepaid gift cards: terrorist tool

Law enforcement officials say thieves, drug rings -- even terrorists – can skirt money-laundering rules to fund their crimes.

By BusinessWeek

It's the holiday season, which means that many shoppers will solve their gift-giving dilemmas by buying prepaid gift cards from retailers such as Neiman Marcus and Starbucks. But there is a darker aspect to the prepaid card boom, which involves a new kind of card that can be used almost anywhere -- including ATMs worldwide.

Law enforcement officials say these newer cards, many of which can be reloaded online or at checkout counters, are an ideal tool for credit-card thieves, drug rings, and even terrorist cells. "It is a great concern to DEA and the FBI because of the terrorist financing angle," says Don Semesky, chief of the office of financial operations at the Drug Enforcement Administration.