Mar.18, 2010

Mobile phones, prepaid cards, online games. In the cat-and-mouse game of smuggling illicit money over international borders, criminal organizations are early adopters of new technology.

Speaking at the 15th Annual International Anti-Money Laundering Conference in Hollywood Wednesday, law enforcement officials admitted they're scrambling to keep up with the changes.

In particular, criminal gangs are increasingly using stored-valued cards to move cash. The cards, which look and act like ATM or credit cards, can be used all over the world, require no bank account and can be activated online.

While the law requires banks to report suspicious activity, and those entering the country to declare cash in excess of $10,000, the cards are unregulated. ``We have made it very difficult for bad guys to walk into a bank with $200,000 in cash in a bag,'' said Duncan Levin, an assistant U.S. attorney in New York.

"But if you can transfer that money onto a card, you are staying a step ahead of us.''

Deborah Morrisey, a supervisory special agent with the U.S. Department of Homeland Security, recently busted the money-laundering arm of a Colombian drug cartel that had operations in Miami.

Over the course of nine months the group moved more than $4 million using stored-value cards, she said. The ring operated undetected until it was discovered by an undercover investigator.

Morrisey also said her office is growing concerned about mobile phones that can be used as virtual bank accounts. Apple's iPhone, for example, allows users to transfer money between two PayPal accounts by bumping the handsets together.

"The more mobile we get, the better it is for business and the harder it is for us,'' she said.

No one's sure how much dirty money is sloshing through the market. In a 1996 study, the International Monetary Fund estimated that laundered money accounted for 2 percent to 5 percent of global gross domestic product. If those figures still hold true, money laundering represents at least a $1.3 trillion industry -- equivalent to the economy of South Korea or Spain.

Levin said his office also has heard of cartels using online multiplayer games, such as Second Life, where users can buy virtual goods and services with real cash to transfer funds.

The technological arms race is inevitable, as today's youth become tomorrow's bag men, said Edward Rodriguez, an anti-money laundering consultant from Bethesda, Md., who attended the conference.

"As we evolve, and the younger generations take over the operations, we are going to see them using these technologies,'' he said. "Do you see what kids are doing on FaceBook these days?''