New Regulations on Tangible Prepaid Access Devices (TPADs)
Over the past few days, I’ve immersed myself in the vibrant atmosphere of downtown Panama City, Panama, speaking at an offshore conference.
My departure from the United States was relatively hassle-free. But I’ve learned that the Treasury’s Financial Crimes Enforcement Network (FinCEN) plans to add another obstacle to leaving (or entering) the United States: declaring the value of any “tangible prepaid access devices” (TPADs). In case you’re wondering, TPADs are otherwise known as stored value cards.
US Border Declarations
US law has long required you to declare the value of cash or other monetary instruments you carry across a US border if the value exceeds $10,000. FinCEN Form 105 is used for this purpose.
While there’s the possibility of a five-year prison sentence for failing to comply with the law, along with forfeiture of the “monetary instruments,” enforcement of these requirements is inconsistent.
When entering the United States, you must complete Customs Form 6059B, which explicitly asks if you are carrying more than $10,000 in cash or monetary instruments. Leaving the United States, I’ve only seen one or two warnings red-flagging this requirement.
How to Ship Gold Internationally
Shipping gold overseas from the US might sound straightforward. But it can be quite a process. If you’re thinking about it, here’s what you need to know: how to ship gold internationally.
Personal Experience with Border Checks
But one time several years ago, I was boarding a flight in Baltimore bound for Paris. On the jet way, several men in suits confronted me. They identified themselves as Treasury agents and asked me how much cash I was transporting. I told them I wasn’t sure but that it was less than $200. They insisted on rifling through my carry-on, presumably to search for undeclared cash, and going through my wallet. After a relatively brief interlude, they allowed me to board my flight.
Implementation of New TPAD
To enforce the new rules to declare tangible prepaid access devices (TPADs), the Department of Homeland Security is developing high-tech card readers to deploy at US ports of entry. The readers will identify whether the cards in your wallet are credit cards, debit cards, or TPADs. Only the value stored on a TPAD need be declared, assuming the total value of monetary instruments carried across the US border exceeds $10,000.
As is usual in efforts of this type, FinCEN’s efforts to expand the definition of cash will only inconvenience law-abiding travelers. A real criminal–or anyone seeking financial privacy–will use the “brainwallet” concept to silently move value across increasingly irrelevant national frontiers. (A brainwallet requires that you memorize a unique passphrase to gain access to an online store of value, such as Bitcoin.) Indeed, The Department of Homeland Security has proposed to FinCEN that:
“[B]order declaration should not apply to codes, passwords and other intangibles…The structure of the currency and monetary instruments declaration regime, hinges on the existence of a physical object. The language requires something that can be passed from one individual to another in order to be presented to a third party for execution/payment.”
Alternative Methods for Asset Transfer
Bitcoin and similar digital currencies make FinCEN’s currency reporting rules, and their expansion to encompass tangible prepaid access devices (TPADs), obsolete before they’re even finalized.
But don’t assume that technological innovation will prevent the implementation of these regulations. Ultimately, public perception demands governmental action in various arenas like war on drugs, terrorism, money laundering, and immigration fraud.
The effectiveness of these measures often takes a back seat to the mere appearance of progress. Yet, it’s vital to question the necessity of these “wars” and consider whether allowing individuals to freely transfer their assets worldwide, without government intervention, is a more viable approach.
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