Fine print, Protecting yourself

Faisal Shahzad’s alleged terrorist plot paid for with cash

Jeremy Simon

Faisal Shahzad’s alleged terrorist plot — which involved detonating a homemade bomb in New York City and then fleeing to Dubai — was apparently paid for in cash.

credit-card-terrorism.jpgBased on news reports, Shahzad used hard currency to both buy a truck (which would eventually house the bomb) and pay for his Dubai-bound flight out of the country. Cash might seem an odd payment choice, considering the popularity of debit and credit cards: The most recent Federal Reserve data shows that noncash payments (including debit and credit cards) in the United States totaled $75.8 trillion in 2006, increasing at a rate of 3.9 percent per year since 2003.

However, experts say some terrorists have good reasons to prefer cash to payment cards. “I’m not surprised to the extent he chose to use cash, as that is the most anonymous and ubiquitous payment method out there,” payments expert Judith Rinearson, a partner with the international law firm of Bryan Cave, tells me. “It’s certainly more anonymous than prepaid cards,” for example, she says.

It’s not like Shahzad was unfamiliar with payment cards. Credit card receipts “left outside a Shelton home where he lived until
last year, show he made regular purchases at Burger King, Walmart,
Planet Fitness and other chains while carrying a debt of about $3,000
to $7,100,” Newsday reports. Credit card debt seemingly wasn’t his only financial burden. News reports also indicate that Shahzad’s Connecticut home had been foreclosed on.

Despite those financial troubles, Shahzad was able to fund his attempted attack. As the Christian Science Monitor reports, “he allegedly paid $1,300 in cash for the vehicle that was left in Times Square, which carried a bomb that failed to explode. ‘Where did he get the money?'” Joseph King, a professor of terrorism at John Jay College, asks the paper.

Shahzad, of course, may not have cared much about going delinquent on his bills to save up for an attack. Bruce Hoffman, a professor of security studies at Georgetown University, tells NPR that leaving “a trail of debt is not uncommon in cases of suspected terrorism. ‘Many of these individuals believe it’s entirely permissible to in essence defraud the Western societies they live in and to use whatever money they have to run up credit card debt, to take out loans that they have no intention of repaying.'”

While an alleged U.S.-based terrorist like Shahzad would have had access to money here in the United States, foreign operatives have used prepaid or other payment cards to transport funds across borders while avoiding the suspicion bundles of cash might attract.

The government has taken notice of that dangerous loophole. A section of the Credit CARD Act of 2009 directs the Treasury Department to issue rules governing the sale, international transport and redemption of stored-value card products. “The objective of the anti-money-laundering effort will be to develop, implement and maintain a program that is reasonably designed to prevent stored-value cards from being used to facilitate money laundering and financing of terrorist activities,” writes American Banker. Rinearson says industry speculation suggests those final Treasury rules will govern “prepaid access” products beyond just prepaid cards.

Even with Shahzad’s attempted attack dominating headlines, don’t expect those anti-terrorist funding rules anytime soon. The proposed rule is “not ready for publication,” says Steve Hudak, chief of public affairs for FinCen, the Treasury’s Financial Crimes Enforcement Network. As to exactly when that those rules will be finalized, “all I can say right now is soon — but that could be weeks or months,” Hudak says.

See related: The credit card-terrorism connection, Study: Terrorists pay with credit cards, Did credit cards fund — or foil — latest terror plot?

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