DiSanto aims to track
the development of the SVC industry to provide a historical context for its rise and an understanding of the present state of the industry. Present SVC legislation is evaluated, and the role of state legislatures, Congress, federal regulatory agencies, and the courts in the its creation is considered. In exploring present regulation, the article focuses on the problems with consumer protection statutes and regulations, and then turns to the challenges of creating legislation that adequately protects national security by limiting criminal and terrorist activity. Subsequently, the potentially negative influence of private lawmaking by payment networks on enacting effective legislation is addressed. Finally, the article explains why effective federal legislation is critical in establishing domestic and foreign policy.She comments that
In addition to resolving the confusion caused by state consumer protection initiatives, the federal government also needs to impose tighter regulations on the SVC industry to protect national security. Due to the prevalence of SVCs in the marketplace, eliminating them is unlikely and impractical. The ability to exploit SVCs turns on the anonymity of the user and diverse practices of merchants and entities selling SVCs.
The hidden identity of the card user is more problematic, as national security issues are raised because a person can engage in transactions anonymously. Many possible solutions exist, and some are fairly simple to implement. At a minimum, the person using the prepaid bank card should be required to provide identification.
Another way to reduce the risks of SVCs is to stop the sale of nameless cards or log the identity of the purchaser.One might question whether such logging will simply be a matter of garbage in, garbage out. DiSanto refers to national security concerns, arguing that
current federal laws are designed to require banks to exercise due diligence in documenting consumer identification and transactions, but may not be effective because of the difficulty of international enforcement and SVCs’ exemption from some of the key provisions of the BSA. The PATRIOT Act and the BSA have been somewhat effective in reducing domestic risks of fraud or money laundering facilitated by SVCs, but enforcement in foreign countries is significantly more challenging.
For example, if both parties holding cards linked to a payroll account live in the United States, banking officials would not likely encounter much difficulty implementing the procedures requires by the PATRIOT Act and BSA to identify the account owners. However, if one of the cardholders is residing in a foreign country, tracking the person’s identity becomes much more difficult.
Unfortunately, these transactions involving unidentifiable figures are most easily exploited by wrongdoers and pose the greatest threats to national security. Without appropriate regulation of the SVC industry, the potential uses of the cards further undermine national security, as funds can be transferred anonymously to parties in foreign countries. SVCs are often used by migrant workers or illegal aliens working in the United States to transfer their wages to their families living in their home country. Cardholders can request two cards, enabling another person in a remote location or in another country to simultaneously access the account. Use by aliens is a rather benign exploitation of the SVC industry, but use by terrorist organizations is a great concern.
Yoda the Rabbit on a frolic among the flowers
