WASHINGTON The Treasury Departments Financial Crimes Enforcement Network warned bankers Wednesday of a growing trend among money launderers: using companies that sell prepaid phone cards as vehicles for dirty money.
In a letter to the financial services industry, Fincen Director James F. Sloan said his agency has gotten more than 160 suspicious-activity reports linking phone card companies to possible money laundering. He urged banks to be sensitive to transactions involving such businesses.
Banks and certain other financial services companies are required to file suspicious-activity reports when transactions fit certain patterns common to money laundering. These include unexplained increases in cash deposits or a series of cash deposits of less than $10,000 each, which is the amount that automatically requires the filing of a Currency Transaction Report.
Mr. Sloan outlined a number of cases in which phone card companies had rapid increases in their cash deposits that far exceeded their expected cash flow. One institution reported a phone card company that made 370 cash transactions, totaling $3 million, in three months.
Fincen has gotten such reports from 14 states; the activity is concentrated in New York, New Jersey, Texas, California, and Florida.