How That Anonymous Prepaid Card You Have in Your Wallet Makes You A Target

After weeks of searching, you finally found a way to score a prepaid, reloadable Visa or MasterCard. Maybe it’s a Swiss TravelCash card, maybe it’s an FBME world card, maybe it’s one of those Polish card with an IBAN. Perhaps you found one that complies with basic international KYC regulations, or maybe you settled for some guy on a forum whom you paid in BitCoins. It might even have been a .onion website. Whatever it is, you got one now. No one will ever find you out. You beat the game. Top of the line.

Not so fast, Timmy. Let me tell you about some of the risks of using these cards.

Preface

Over the last couple of weeks and months, I have had the opportunity to attend conferences and events where I have spoken to representatives from FIUs, tax authorities, and financial crime authorities from all over the world. One subject of discussion has been money laundering through anonymous payments instruments, an example of which is that no-name prepaid offshore card you have in your wallet.

Everyone I spoke to is aware of the problem with money laundering through these types of cards. While most are merely at an information-gathering stage right now, they are expecting to take a aggressive actions in 2014 and 2015.

You’re Not A Tourist

Tourists might use prepaid cards with no name. These types of card are fairly common in some countries, where they are marketed as a safe and cheaper alternative to using regular debit and credit cards abroad.

Tourists, however, don’t stick around for more than a few weeks. The same anonymous prepaid card being used over and over is reason for suspicion.

You’re A Creature of Habit

One way users of prepaid cards are caught is because they follow a pattern and form a habit. By using the same card in the same area, you become easy to track. Even if you travel a bit to get to a more faraway ATM, you are still going to be in more or less the same area.

Big Brother is Watching

All ATMs have cameras and most of them are in use. Thinking about wearing a Guy Fawkes mask to your local ATM? You will look extremely suspicious before you even reach the ATM.

In winter you might get away with covering your face in a hat and scarf; if you live in a cold climate.

Putting The Pieces Together

If we combine suspicious use of a prepaid card over a long period of time in the same area and ATM footage, you suddenly become quite easy to catch. An increasing amount of the data gathering can be automated, especially with facial recognition software.

What is the Real Risk?

If you are using your prepaid card, which is probably more expensive than a regular debit or credit card, for such low amounts that you do not think you will be of any interest to any authorities, the risks attached to using a regular card are likely not considerably higher.

It is also worth noting that most FIUs, tax authorities, and similar competent authorities already have several years’ worth of backlog, making small fish unlikely targets.

Although, as always, you will live a more peaceful life if you ensure that whatever you’re doing is legal and compliant with tax codes.

This post is not meant to state that anonymous cards are insecure and useless. They are, however, not as good as many sellers try to hype them up to be.

20 thoughts on “How That Anonymous Prepaid Card You Have in Your Wallet Makes You A Target

  1. Hello Streber,

    Very interesting and informative post you have there! Great work! I have a question for you,

    I used the Polish IBAN card which is limited to 2500 eur per year, and I have used 3 up to the limit now (3×2500). Do you think this poses an issue if I go to the ATM every day and withdraw 150 eur at a time (max daily limit)? One of the cards I used for shopping a round the world, 2 of them for ATM operations.

    These cards are legal after all and the source of funds is legit (freelance) and I still delcare the cash. What are the chances of me getting into trouble for this, it’s a small amount, 7500 eur over 2 year term.

    Regards,
    hc

    • Hi HC,

      Thanks for your comment!

      Hitting the maximum of a specific ATM every day is something that risks making you interesting to authorities. It depends on where you live and whether 150 EUR is a significant sum of money. 150 EUR wouldn’t raise an eyebrow in Luxembourg but would in some Eastern European countries.

      However, as long as your funds are legitimate and declared, I don’t see how it would be a problem. Any investigation into you should reveal that your spending habits match your declare income. If they still go ahead and hassle you, it should be a relatively quick process to just show them your paperwork.

      7,500 EUR over two years is unlikely to draw any attention, though. That amount would lead me to believe that you likely reside in a country with relatively low incomes and tax authorities in those countries tend to be far too disorganized to actively pursue small-time tax evaders or money launderers. (Not that you are one, but that’s what an investigation into you would be based on.)

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  3. Very interesting! If I understood your comments correctly – you don’t believe that normal “named” debit cards (for example linked to an offshore private account) provide any extra privacy benefit in comparison with these anonymous cards?

    Specifically – do you have experience with Sovereign cards? Or better phrased – are they the source of those cards or should one go through the originating bank directly (do you know which one it is?)? In theory they seem pretty attractive – can’t imagine that ATM withdrawals of up to 4k monthly in irregular patterns would ever draw any attention.

    • There is a small degree of heightened privacy but it is in many cases balanced out by being seen as a higher-risk financial instrument and EOI treaties allow for probing issuer for the name of the person to whom the card belongs.

      I don’t know what a Sovereign card is. If you’re referring to one of the dozens upon dozens of companies that resell prepaid cards – no, I don’t know them, but they’re all pretty much the same. Most of them just resell cards issued by Choice or Heritage Bank in Belize or some other Caribbean Mickey Mouse bank, or the Swiss TravelCash cards. A rare few have owned or leased BINs,

      4,000 a month would probably not draw attention, unless there is a probe specifically into no-name cards because they are deemed risky. An irregular pattern isn’t sufficient if your opponent is determined enough, since you will have at least two things in common: the same card number and circa 4,000 every month (spanning various ATMs and amounts).

        • I can’t comment on whether they are legit or not. I get wary whenever someone use the word “gold” in their brand name, though. Lots of brands called something-Gold or Gold-something have vanished over the years. There have also been numerous Sovereign This and Sovereign That. But that’s not really reason enough to validly dismiss them.

          I think you might have better luck visiting TalkGold.com and seeing if anyone there has used them.

  4. Hi Streber, another very interesting post!
    How risky do you suppose is using one of those anonymous cards to pay for things like lunch/dinner, some shopping (retail, never internet and less than,e.g., 500), but never, ever using it to withdraw cash. Most restaurants/shops only keep video records for a couple of days – when I asked at a local restaurant they told me their cameras run in a 24-hrs loop.
    Also: I think it might even be less suspicious if it’s a company card registered to a company in a reputable jurisdiction such as HK and to which you have an official connection (working as a consultant or freelancer). This company could have a representative office in your location but not a real branch office (to avoid taxation).

    • Risk is a fickle thing to quantify and measure. Do you quantify it by probability from 0% to 100% of a single transaction being flagged, reviewed, and investigated? Or some other way? What unit of measurement is used? Risk is really just as assessment of parameters – known, estimated, and unknown.

      Now, CCTVs are a fairly small parameter in all of this. The raids that have happened against offshore card usage have been by inspecting card purchases. When you swipe your card or stick it into an EMV-enabled POS terminal, that transaction is logged with the merchant, with at least one middle-man (usually two – three), the card scheme (Visa, MasterCard), and finally the issuing bank. That’s a significant paper trail.

      If you buy something with your pseudo-anonymous card at a shop which collects your name and ID, provided the right legal mechanisms and circumstances are in place, that is a very weak link and an authority can suddenly find out who you are. Signature is another potential risk, if it is legible.

      Unless you are on someone’s list of priorities or you have done something bad enough to stand out in a crowd of people, currently, it is unlikely that much will happen. Petty tax evasion is easy to get away with. But if you do get caught (whether it’s through a tax audit or a financial crime investigation), it’ll hurt a lot and for a long time.

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  6. Can you elaborate by what you mean on ‘aggressive action in 2014 or 2015’?
    if someone has withdrawn huge amounts of cash from the same few ATM’s, how do you think things will play out?
    thanks

    • It really depends on your country and how much resources they will invest. From what I’m told, while these cards have until recently received little to no attention, more resources are going to be assigned to investigate and identify the people behind the cards.

      If you become a high priority, it is going to be increasingly likely that someone spends enough time and resources on investigating your card usage to identify you.

      But as long as you are not a high priority, the risks of getting caught remain low, whether you use an nameless card or not.

      • is there anyway to know if someone has become a high priority or if there is an active investigation under way? will any one attempt to contact you and give you a chance to explain or will it all be done secretly?

        how much higher are the risks if this activity has been taking place in the US?

        finally, do you know if it is current practice to file multiple ATM withdrawals using the prepaid cards as ‘suspicious transactions’ or something similar?

        thanks for the info, it is very helpful..

        • Investigations are secret. In many countries, it is a crime to disclose even the slightest information if the investigation is about money laundering. Tax evasion is increasingly considered a predicate crime of money laundering.

          Can’t answer if the risks are higher or not in the US, since I have virtually no connection with the US. As an American citizen or US resident, you have to take FATCA into consideration. The card might not be what alerts authorities of your activities. Instead, it might be your offshore bank that does it to comply with FATCA.

          Doing two ATM withdrawals in a row is on its own not suspicious. It happens once in a while that people do it, either due to entering too low an amount or realizing they need more cash. What is suspicious, though, is two ATM withdrawals for high values where the card is foreign and does not contain a name; especially if the pattern is repeated over time.

          ATMs are currently not in scope for Suspicious Transaction Reports with any bank that I know of, outside of specifically flagged cards/names, very high withdrawals, or attempts to use cards issued in sanctioned or embargoed countries.

          • Thanks again..a lot of good info..

            I forgot to ask about the backlog. you mentioned investigation units have several years worth of backlog. does this mean that if they were to receive a STR etc..they would not get around to it for a few years?

            and at what general price point does someone go from ‘little fish’ to possible ‘high priority’?

            • All STRs are received and reviewed by someone. That person then decides whether it should be sent for investigation or just filed away in a backlog somewhere.

              What this means is that if they were to go through all STRs, including the filed-away ones, it would take years.

              However, if an STR about you is considered likely enough to lead somewhere, you will be investigated right away.

              There is no value affixed to whether you go from being a little fish to being a big fish. As an example, transferring a 100,000 USD wire from an onshore jurisdiction to the Cayman Islands is probably not going to cause any STR. However, for a 100 USD transfer to Syria with the recipient being someone on a sanction’s list, an STR will be filed.

              Banks and FIUs take what’s called a risk-based approach, which is based on multiple factors.

              In the scope of these anonymous prepaid cards, it’s more or less the same. While you’re more likely to get on someone’s radar if you are dealing with high amounts, it is also your pattern that matters. If you take out 1,000 EUR every Thursday at lunch from the same two or three ATMs, that may be reason enough to become suspicious.

              Ultimately, though, this all becomes quite hypothetical. I was lucky enough to get what I have out of contacts at FIUs and tax authorities. Their exact procedures are more safely guarded than Fort Knox.

              • Thanks for all the excellent info..

                To sum this up, in your opinion, if someone withdrew 6 figures from the same two to three ATM’s over a period of two weeks, would you classify this person as low risk, medium risk or high risk?

                • Unless these are ATMs near an adult entertainment establishment in the most high-end part of a major city and all withdrawals are late at night, it’s highly suspicious. Right now, you’re probably going to get away with it unless there is an inquiry into your finances for other reasons, but this is likely to change in the near future.

                  • one last question and then I’ll stop bugging you…how risky does this behavior become if the card has offshore company name on the magnetic stripe but is for only a few thousand?

                    thanks again..

                    • How risky it is ultimately depends on what the local tax authority is looking for. If someone is after you – they will find out, unless you are hiding behind an extremely convoluted structure.

                      In terms of assessing whether the pattern you describe is suspicious, ask yourself this: how many company cards are ever used in ATMs? And how often are they used for high amounts? The answer is: rarely, if ever. Company cards are used to paying for goods and services, not withdraw cash.

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