CBP is the lead federal agency charged with securing our nation’s borders while facilitating legitimate travel and commerce. To meet the Secretary’s March 2009 mandate that CBP conduct inspections of traffic leaving the U.S. for Mexico at all 25 land ports of entry on the southwest border, CBP expanded or initiated inspections of outbound travelers, including those leaving by foot, private vehicle (see fig. 1), or commercial trucks. CBP’s effort to stem the flow of bulk cash is part of a larger counternarcotics strategy to secure the southwest border. CBP has three main components that have border security responsibilities. First, CBP’s Office of Field Operations is responsible for inspecting the flow of people and goods that enter and leave the country through air, land, and sea ports of entry. Second, CBP’s Border Patrol works to prevent the illegal entry of persons and merchandise, including contraband, into and out of the United States between the ports of entry and at checkpoints located in major traffic routes away from the border. In doing so, the Border Patrol is responsible for controlling nearly 7,000 miles of the nation’s land borders between ports of entry and 95,000 miles of maritime border in partnership with the United States Coast Guard. Third, CBP’s Office of Air and Marine helps to protect the nation’s people and critical infrastructure through the coordinated use of an integrated force of air and marine resources and provides mission support to the other CBP components. For fiscal year 2010, CBP had a $11.4 billion budget, of which $2.7 billion was for border security and trade facilitation at ports of entry. For outbound operations, CBP’s budget was about $109 million in fiscal year 2009 and is an estimated $145 million for fiscal year 2010. In carrying out its responsibilities, CBP operates 327 ports of entry, composed of airports, seaports, and designated land ports of entry along the Northern and southwest border. While CBP does not know the number of travelers that leave the United States through land ports of entry, it estimates that it inspected over 360 million travelers who entered the country in fiscal year 2009 through land, air, and sea ports of entry. In total, the number of travelers who entered the country through land ports of entry represented over 70 percent of all travelers entering the country. The process used by CBP to inspect travelers leaving the country differs from the inspection process for those entering the United States at land ports of entry. CBP centers attention, among other things, on the citizenship and admissibility of the travelers for those who seek to enter or reenter the country through land ports of entry. In contrast, CBP officers ask a different set of questions of travelers leaving the country. To determine whether travelers are in compliance with the reporting requirements for the international transport of currency and monetary instruments, officers may ask travelers whether they (1) intend to leave the country by asking where they are going (i.e., Mexico on the southwest border and Canada on the Northern border), (2) are carrying more than $10,000 in currency, checks, money orders, or any other type of monetary instrument, and (3) are transporting any weapons or ammunition into Mexico or Canada. While carrying more than $10,000 in currency or other type of monetary instrument across the border is legal, failure to report the currency or monetary instrument with the intent to evade the reporting requirement is illegal. Further, it is illegal for an individual to knowingly conceal more than $10,000 in currency or other monetary instruments and transport or attempt to transport such currency or monetary instruments into or out of the United States with the intent of evading the reporting requirements. In addition to the interview process, CBP officers may also inspect, among other things, the content of car trunks, vehicle compartments, and packages in the vehicle. Figure 2 shows CBP officers querying outbound travelers at a land port of entry. When conducting outbound operations, CBP officers may refer travelers for a more detailed inspection—called secondary inspection. Secondary inspections generally involve inspections of vehicles in a separate area from the primary inspection. They can include more in-depth interviewing of travelers, checking the traveler’s identifying information against law enforcement databases, or inspecting containers and boxes (see fig. 3). While smuggling cash is one method of taking illegal proceeds out of the country, criminals have also begun using other means to move proceeds from illegal activities across U.S. borders. One such method is the use of electronic media called stored value. This method can involve a broad range of technologies, including the use of prepaid cards, prepaid telephone cards, and financial transactions carried out through a cell phone. Money services businesses play a key role in issuing, selling, and redeeming stored value. FinCEN, a bureau within the Department of the Treasury, is responsible for the administration of the Bank Secrecy Act (BSA)—a statute that authorizes FinCEN to require MSBs and other financial institutions as well as nonfinancial trades or businesses and many individuals to maintain records and file reports that have a high degree of usefulness in criminal, tax, regulatory investigations or procedures, or certain types of counterterrorism investigations. FinCEN carries out this responsibility as part of its broad mission of enhancing U.S. national security, deterring and detecting criminal activity, and safeguarding financial systems from abuse by among other things, requiring financial institutions to establish anti-money laundering programs as well as file reports on large currency transactions. FinCEN has about 300 staff to carry out its analytical, administrative, and regulatory responsibilities. Within FinCEN, the Regulatory Policy and Programs Division is responsible for, among other things, BSA compliance in the financial industry and for issuing regulations for U.S. financial institutions. To carry out its mission, FinCEN supports and networks with law enforcement agencies across the federal government that may be involved in investigating money laundering and terrorism financing. For example, FinCEN works with agencies in DHS, such as CBP, ICE, and Secret Service; agencies in DOJ, including the DEA, Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the FBI; and the Criminal Investigation Division within the IRS. In addition, FinCEN coordinates its efforts with another IRS unit called the Small Business/Self Employed Division which conducts BSA compliance examinations of certain nonfederally regulated non-bank financial institutions, such as MSBs and casinos. Among the businesses that FinCEN has defined as MSBs are those that issue, sell, or redeem stored value. In some cases, such businesses may provide a variety of services in addition to offering stored value products, including check cashing, money orders, and money transmitting services. In other cases, such businesses may only issue, sell, or redeem stored value. These businesses play a key role in providing financial services to a segment of the population that may not maintain checking or savings accounts. Such businesses are common and are located in large and small communities across the country. Examples of MSBs can range from national companies with a large number of agents and branches, such as Western Union and MoneyGram, to small “mom and pop” money services businesses that may offer check cashing, money orders, and other financial services. The volume of transactions for MSBs nationwide is not known. One type of product offered by MSBs that falls under the definition of stored value are stored value cards, which include gift cards or prepaid cards. In this report, we will refer to such cards as stored value cards, the same term that FinCEN currently uses for such products. Stored value cards are a growing alterative to cash transactions and they offer individuals without bank accounts an alternative to cash and money orders. They have many legitimate uses that help consumers in a variety of ways. For example, retail establishments sell gift cards to customers as an easy and convenient way to purchase goods or services. Employers may issue cards in lieu of checks when paying salaries to employees. Consumers can also purchase cards and use them to purchase goods or services at retail stores across the country or to, in some cases, withdraw cash at automated teller machines overseas. For example, rather than paying for groceries using cash, a consumer could use a prepaid card. Also, the federal government uses prepaid cards in conjunction with its food stamp program. The two main types of stored value cards are the following. Closed system cards (see fig. 4)—These are the most common form of stored value cards and are often called gift cards. These cards are issued by major merchants and retailers, such as department stores, electronics stores, and coffee shops. They can be bought at many different types of retailers, including drugstores, grocery stores, and other businesses. Other examples include cards that students may use to purchase food on college campuses or that passengers use on subway systems or phone cards. Generally, closed system cards are limited in use in that they can only be used to purchase goods or services from a single merchant. These cards may be limited to the initial value posted to the card or may allow the card holder to add value. A study conducted for the Federal Reserve estimated that in 2006, the value of transactions for closed system cards amounted to $36.6 billion. Open system cards—These cards have greater use as a cash alternative since a single card may be used at a myriad of stores, merchants, or automated teller machines (ATM) within and across U.S. borders. Such cards are easy to buy and can be bought on-line or in person. Open system cards may not require a bank account or face-to-face verification of the card holder’s identity. Domestically, companies may voluntarily place a dollar limit on the cards. Such cards may be used to access cash from ATMs in and out of the United States and can be reloaded to add value on the card.