Sources to NBC News are reporting Samir Khan, editor of Inspire Magazine, is another American citizen that was killed in the air strike in Yemen, along with Anwar al-Awlaki. NBC's Bob Windrem reports.
By Pete Williams, NBC News justice correspondent
Is it legal for the federal government to kill a U.S. citizen overseas, someone who has never been charged or convicted of a crime? Civil liberties groups are condemning the killing of Anwar al-Awlaki, but many legal scholars say it is justified.
No U.S. court has ever weighed in on the question, because judges consider these sorts of issues exclusively matters for the president.
Anwar al-Awlaki's father, Nasser, with the help of the ACLU, sued President Barack Obama, Defense Secretary Robert Gates and CIA Director Leon Panetta a year ago, when it became clear that the U.S. was targeting the younger al-Awlaki. But U.S. District Judge John Bates threw the case out, ruling that federal courts were in no position to evaluate whether someone was a terrorist whose activities threatened national security and against whom the use of deadly force could be justified.
"This court recognizes the somewhat unsettling nature of its conclusion -- that there are circumstances in which the executive's unilateral decision to kill a U.S. citizen overseas is 'constitutionally committed to the political branches' and judicially unreviewable," Bates said, quoting an earlier decision on a similar issue.
The ACLU lawyer who handled the case, Jameel Jaffer, said Friday that the U.S. program that targeted al-Awlaki was a violation of both U.S. and international law.
"The government's authority to use lethal force against its own citizens should be limited to circumstances in which the threat to life is concrete, specific and imminent. It is a mistake to invest the president, any president, with the unreviewable power to kill any American whom he deems to present a threat to the country," Jaffer said.
President Obama says the killing of radical, American-born cleric Anwar Al-Awlaki in Yemen is a "major blow to al-Qaida's most active operational affiliate."
But Kenneth Anderson, an international law scholar at American University's Washington College of Law, said U.S. citizens who take up arms with an enemy force have been considered legitimate targets through two world wars, even if they are outside what is traditionally considered the battlefield.
"Where hostiles go, there is the possibility of hostilities. The U.S. has never accepted the proposition that if you leave the active battlefield, suddenly you are no longer targetable," Anderson said.
In early 2010, the director of national intelligence, Dennis Blair, told a congressional hearing that the U.S. was prepared to kill Americans affiliated with al-Qaida, without mentioning al-Awlaki by name.
"If we think that direct action will involve killing an American, we get specific permission to do that," by which he meant authority from the executive branch, not the courts.
Blair said the military and intelligence agencies had authority to kill U.S. citizens abroad who were engaged in terrorism if their activities threatened Americans. Since then, U.S. officials have said that al-Awlaki's role in al-Qaida in the Arabian Peninsula (AQAP) had shifted from propagandist to operational tactician and strategist.
The State Department's senior legal adviser, Harold Koh, plainly stated last year the Obama administration's view that it had authority to undertake drone attacks in countries where al-Qaida operatives were located.
"The U.S. is in armed conflict with al-Qaida as well as the Taliban and associated forces in response to the horrific acts of 9-11 and may use force consistent with its right to self-defense under international law," Koh said in a speech to a Washington legal symposium.
Though he did not specifically address the issue of targeting Americans, many legal scholars believe his speech was an implicit statement that U.S. citizens could be legitimate targets.
One of al-Qaida's most influential leaders - Anwar al-Awlaki - has been killed, according to officials in the United States and Yemen. Authorities have confirmed that the radical Islamist cleric died in an airstrike this morning in Northern Yemen. ITN's Sejal Karia reports.
Robert Chesney, an expert on international law at the University of Texas School of Law, concluded in a recent law review article that al-Awlaki could be legally killed "if he is in fact an operational leader within AQAP, as this role would render him a functional combatant in an organized armed group."
Anderson, of American University's law school, said it's important to note that al-Awlaki was not targeted because of his role as an al-Qaida propagandist.
"The U.S. is not justifying this on the basis that it's going after him for incitement. He was being targeted because he had gone operational," Anderson said, adding that he believed the killing was entirely legal.
"My view of this targeted killing is straightforwardly, congratulations, Mr. President," he said.
The Department of Homeland Security has a reputation among journalists and other government officials for being hard to get a straight answer from. For instance, there was its highly publicized refusal, in the face of repeated attempts by reporters and state and local governments, to say one way or the other whether local authorities could opt out of an immigration program called Secure Communities.
Now, Federal Times, a newspaper and website devoted to covering the workings of the federal government, reports that DHS won't even give it the work phone numbers and email addresses of its public affairs officers — the people it pays to deal with the press and the public. The only information it will give out is the number of the main public affairs switchboard.
The reason? In a response to a Freedom of Information request for public numbers and addresses, DHS said revealing the information — which would simply allow citizens and journalists to reach spokesmen for the government at their government offices — would be an invasion of privacy. Federal Times said DHS cited the provision of FOI law that is supposed to protect medical records.
Tales of a DHS FOIA (Federal Times)
FBI via Reuters
FBI wanted poster for Sirajuddin Haqqani, leader of the so-called Haqqani Network on the Pakistan-Afghanistan border.
By Amna Nawaz, NBC News producer, Islamabad
Over the last two weeks, increased U.S. pressure on Pakistan to go after the Haqqani network has laid bare the complicated relationship that Islamabad maintains with this particular militant group – a link some Pakistani officials argue is necessary for their national interests.
The U.S. request that Pakistan crack down on the Haqqanis – believed to be operating from the tribal agency of North Waziristan and attacking U.S. and NATO forces in Afghanistan – has long been understood to be a fundamental point of disagreement in private discussions.
In June 2011, following the raid on Osama Bin Laden’s compound in the Pakistani city of Abbottabad and subsequent flurry of high-level meetings between the two stated allies, press speculation was rampant that a Pakistan military operation in North Waziristan was imminent. Pakistan’s army commander in the region, Lt. Gen. Asif Yasin Malik, denied that, maintaining that Pakistan “will undertake operations when we want to do it, when it is militarily and otherwise in the national interest to undertake such operations.”
To this day, North Waziristan remains the only one of the seven tribal agencies in which the Pakistan military has yet to carry out any operation against Islamic militants. But the Sept. 13 attack on the U.S. embassy in Kabul pushed the Haqqani issue back to the headlines, and forced the debate out into the public.
NBC News' Richard Engel joins Chris Jansing to discuss the attack in Kabul on the U.S. Embassy. American and Afghan officials blamed a Taliban group, the Haqqani network, for the attack.
State Department officials said the attack “changed the nature of the meeting” between U.S. Secretary of State Hillary Clinton and Pakistan Foreign Minister Hina Rabbani Khar when the two met on the sidelines of the U.N. General Assembly this month. The Haqqanis, they said, were the first and last issue discussed.
Just days after the attack, in an interview with Radio Pakistan, U.S. Ambassador to Islamabad Cameron Munter claimed the U.S. had “evidence linking the Haqqani network to the Pakistan government,” but did not share specifics.
Less than one week later, Adm. Mike Mullen, chairman of the U.S. Joint Chiefs of Staff and long characterized by Pakistani officials as “a friend of Pakistan,” dealt what many here saw as the harshest blow, when he testified before the Senate Armed Services Committee that the Haqqani network acts as a “veritable arm” of Pakistan’s Inter-Services Intelligence Agency, known as the ISI.
Mullen’s comments sparked a firestorm in Pakistan. The country’s powerful Army Chief Gen. Ashfaq Parvez Kayani, denied the accusations as “unfortunate” and “not based on facts,” and Pakistani politicians struck back, accusing the U.S. of making Pakistan a scapegoat for its failures in Afghanistan.
Though Pakistan’s military spokesman, Maj. Gen. Athar Abbas, denied that the spy agency facilitated or supported the Haqqani network, he did acknowledge his country’s contact with the group, saying, “Any intelligence agency would like to maintain contact with whatever opposition group, whatever terrorist organization … for some positive outcome.”
Privately, Pakistani military and intelligence officials tell NBC News that means protecting their country’s national interests for stability in the region and good relations across the western border. While they do not rule out targeted military operations in North Waziristan to clear our elements deemed a threat to the state, specific action targeting the Haqqani network, they say, is not necessarily a mission they share with the U.S.
“We have strategic convergence with the Americans on two points -- a stable, safe Afghanistan and the eradication of al-Qaida in the region,” said one Pakistani intelligence official, speaking on condition of anonymity. “That’s it.”
The Haqqanis, officials here say, do not pose an immediate internal threat, and attacking them would only force the group to turn their sights on the Pakistani state.
“Why would we shoot ourselves in the foot?” said the intelligence official. “After 2014 (and the U.S. troop withdrawal from Afghanistan), we’ll be left right where we were after the Afghan jihad.”
Pakistani officials base that approach on the widely held belief that the Haqqanis are simply too powerful a group for any future government in Kabul to ignore. But besides wanting to maintain a good relationship with forces in power in Afghanistan, they are also reluctant to lose one of their strongest links to the myriad militant groups operating in North Waziristan.
The Haqqanis first established themselves as key players in the region during the war against the Soviet Union after the 1979 invasion of Afghanistan, when the strength of Jalaluddin Haqqani’s relationships at a geographically strategic point allowed the group to operate as a nexus player. Jalaluddin’s son, Sirajuddin, today operates on the strength of his father’s credibility as operational commander of the group, playing the same influential role, tying together diverse actors in the region.
According to a recent report by The Combating Terrorism Center (CTC) at West Point, “For the past three decades, the Haqqani network has functioned as an enabler for other groups and as the fountainhead of local, regional and global militancy.”
In an area largely abandoned by the Pakistani state, maintaining a link with the Haqqanis provides Pakistan’s agencies a conduit to groups that actually do carry out attacks within their own borders, like the Tehrik-e-Taliban Pakistan (TTP).
The Haqqani network, according to the CTC, has played the role of “local conflict mediator over multiple decades,” and now functions as “a central diplomatic interface between the TTP and the Pakistani state when important issues need to be discussed.”
Former Ambassador Ayaz Wazir, who established Pakistan’s consulate in Mazar-i-Sharif during Taliban rule in Afghanistan and has met with the Haqqanis, says that bringing the group into the reconciliation process is the only way forward.
“I don’t know why this big difference between the Taliban and the Haqqani network is being drawn,” said Wazir. “Jalaluddin Haqqani was part of the Taliban right from Day One, I would say. Haqqani and Taliban are one and the same thing.”
In an interview with Reuters last week, Sirajuddin Haqqani echoed that sentiment, pledging allegiance to the Afghan Taliban leadership, and saying he “would support whatever solution” they suggested “for the future of Afghanistan.”
U.S. officials, however, argue that the group is separate and distinct, and remains among the most dangerous threats to both the U.S. and Pakistan. A series of high-level meetings have been held in recent days in an attempt to defuse tensions and ensure cooperation on this issue between the two countries.
In an interview Wednesday night with an English-language Pakistani news channel, the U.S. special representative for Afghanistan and Pakistan, Ambassador Marc Grossman, hailed those meetings as a sign of strength and resilience in the relationship, but reiterated the U.S. request for “joint action” against the Haqqani network.
“It’s very, very important that the government of Pakistan and the government of the United States and the people of the two countries recognize that terrorism – and that includes the Haqqani Network – is a threat to both of us,” said Grossman. “The question is not whether we will work together, but how we’ll work together to try to deal with these issues.”
Mushtaq Yusufzai contributed reporting from Peshawar, and Fakhar Rehman, from Islamabad.
The Obama administration has closed public access to its database of disciplinary action against doctors and other medical professionals, basically because reporters were getting too good at using it.
The Department of Health and Human Services compiles a National Practitioner Data Bank to centralize reports on malpractice cases and licensing board actions against individual doctors and health care companies. The idea is to make it harder for practitioners who've been hit with disciplinary actions or malpractice judgments to move to other states and get new licenses.
Four times a year, HHS has published a version of the database to the public. Because the database is supposed to be confidential, it's scrubbed of names, addresses and other information that patients, lawyers and reporters could use to identify who's in it. Still, because it provides a wealth of aggregate information, the quarterly summary has been a regular source of medical stories for a quarter-century. (As recently as June, the database was generating stories like this one, reporting that half of U.S. malpractice payments involve patients seen outside a hospital.)
Or at least it did until this month, when HHS' Health Resources and Services Administration added this sentence to the databank's Web page:
The NPDB Public Use Data File is not available until further notice.
The Kansas City Star says it's largely to blame, reporting that HRSA took the action "shortly after it learned The Kansas City Star planned to use its reports" for a story on doctors who have frequently been accused of malpractice but who have escaped the attention of the Kansas or Missouri medical boards.
An HRSA spokesman told the Star that while the agency was bound by federal law to keep the data confidential, reporters had been able to "triangulate on data bank data" to put names to reports.
Journalism and health care advocacy groups said they were troubled by what they characterized as a retreat from government openness by the Obama administration.
Three of them — the Association of Health Care Journalists, Investigative Reporters and Editors and the Society of Professional Journalists — fired off a letter to the administration (.pdf) protesting removal of "a data resource that has been available for years to the general public, the media and researchers" and what they characterized as HRSA's "intimidation" of a Star reporter, citing a letter the agency sent to the paper (.pdf).
HRSA told the St. Louis Post-Dispatch by e-mail that it is reviewing its procedures for "disclosing information in a form that does not permit the identification of any particular health care entity, physician, other health care practitioner, or patient." It said public access could resume after "a thorough analysis of the data fields" to ensure confidentiality.
A news report about a Saudi family that disappeared from their home in Sarasota, Fla., just two weeks before the 9/11 attacks has brought an angry response from the co-chair of a congressional Sept. 11 committee.
Bob Graham, who was a senator from Florida when he co-chaired the panel, tells msnbc tv he contacted President Barack Obama's terrorism adviser after hearing about the news report, which documented that the family had had contact with three of the 9/11 pilot hijackers.
"I ... urged him to pursue an investigation of these matters, both in Sarasota and elsewhere ... and then hopefully release that information to the American people," Graham said Monday on The Dylan Ratigan Show, suggesting that other Saudi families in the U.S. might have also had contact with the terrorists, most of whom were Saudi.
Anthony Summers and Bob Graham discuss the Sarasota mystery on The Dylan Ratigan Show.
Reuters reported that the FBI office in Tampa issued a statement Monday saying the Sarasota case was one of many leads that "were resolved and determined not to be related to any threat nor connected to the 9/11 plot."
Graham said he had no reason to doubt the news report, which said the couple and their two children abruptly abandoned their luxury home, leaving behind a full refrigerator, clothes, furnishings and a new car in the driveway.
The report was published by BrowardBulldog.org, a nonprofit news site, and was simultaneously published on the Miami Herald website.
If true, it reveals another Saudi terrorism connection that the FBI never disclosed to the public or to the 2002 joint Congressional intelligence committee investigating the attacks, said Graham.
Reuters quoted Graham as calling the Sarasota case "eerily similar" to the FBI's failure to tell the intelligence committee about a former Saudi civil servant, Omar al-Bayoumi, who supported two hijackers while they were living in San Diego.
Graham said an investigator for his committee independently unearthed the information about al-Bayoumi.
"Why did the U.S. government go to such lengths to cover up the Saudi involvement?" Graham said.
The Democrat has long been critical of the administration of former President George W. Bush for refusing to release 28 pages of the intelligence committee's report, which allegedly included information about Saudi financial support of terrorists.
Information about the Saudi couple in Sarasota was reported by Anthony Summers, an independent journalist and co-author of "The Eleventh Day: The Full Story of 9/11 and Osama bin Laden," and Dan Christensen, editor of the BrowardBulldog.org.
Summers said on msnbc tv that a hushed-up inquiry found that "three of the (9/11) pilot hijackers had all been in touch with the Saudis in that house."
Abdulazzi al-Hiijjii, his wife Anoud and their two children resided in a home owned by Anoud's father, Esam Ghazzawi, in the gated Sarasota subdivision called Prestancia, according to the report.
The news report said the FBI learned of the couple from a suspicious neighbor on the day of the attacks.
According to the report, the FBI connected the couple to more than a dozen terrorists through telephone records and through their car license tags and driver's licenses as they passed through the subdivision's security gate.
Among the terrorists who visited the home or called the couple was 9/11 leader Mohamed Atta, the report said.
The news report was based on information from an unnamed counterterrorism official, a neighbor, subdivision administrators, the subdivision security guard and the subdivision lawyer, who said the FBI tried to get him to lure the homeowner back to the United States.
According to the report, the Sarasota couple returned to Riyadh, Saudi Arabia, with Anoud's father after abandoning their home.
Eduardo Sencion is shown in this driver's license photograph. Authorities say he opened fire with an AK-47 in Carson City before killing himself.
By Pete Williams, NBC News chief justice correspondent
The assault rifle used in the deadly shooting at a Nevada IHOP restaurant came from a Chinese company whose weapons imports have been banned since 1994, authorities say, but it’s unclear how the gunman acquired the AK-47 rifle.
Law enforcement officials say the man who fired the shots Tuesday in Carson City, Eduardo Sencion, had three weapons: two AK-47-style rifles and a handgun.
The officials say the actual shooting was committed with a Norinco Arms AK-47. Norinco, the Chinese company, is a global supplier of firearms and military weapons.
Since 1994, the United States has banned all imports of Norinco weapons into the United States (other than shotguns), but dealers were allowed to sell any stock they acquired before the import ban went into effect.
An attempt to trace where and how Sencion acquired the weapon has not come up with an answer. The dealer who originally sold the weapon has since gone out of business, which complicates the tracing effort.
The gun could have been legally purchased. It could have been imported before the Norinco ban. The Clinton-era assault weapons ban applied to weapons like it, but the law expired in 2004. When Barack Obama first came into office, the administration suggested it would ask Congress to reimpose the ban, but that idea was quickly abandoned.
Officials say Sencion had two other weapons with him, apparently in the van he drove to the restaurant — a handgun and a second AK-47. The other AK-47 was a Romarm Cugir, made by a Romanian weapons company. The handgun was a Colt .38 revolver.
Four people are dead after a gunman opened fire on customers eating at an IHOP restaurant in Carson City, Nev. NBC's Kristen Dahlgren reports.
Msnbc.com's Alex Johnson explains why pre-paid cash cards make tracing terrorists' money trails extremely difficult and how it could have hindered 9/11 investigations.
As the federal government tells it, the money men behind the Sept. 11, 2001, hijackers would never have been identified had they not been lousy bankers:
"The 9/11 hijackers opened U.S. bank accounts, had face-to-face dealings with bank employees, signed signature cards and received wire transfers, all of which left financial footprints. Law enforcement was able to follow the trail, identify the hijackers and trace them back to their terror cells and confederates abroad."
That's from a Treasury Department assessment of financial security threats in 2005. It went on to warn that the terrorists could have quietly moved large sums of money into or out of the U.S.:
"Had the 9/11 terrorists used prepaid ... cards to cover their expenses, none of these financial footprints would have been available."
Six years after Treasury identified that vulnerability, concern that drug smugglers and terrorists are exploiting it is driving the federal government to change the rules for issuing and using prepaid cards, particularly high-value reloadable cards like the cash cards you might take with you on vacation.
By making it harder to get prepaid cards without subjecting buyers to government scrutiny, regulators and lawmakers hope to make it easier to detect patterns of money movement that could signal something nefarious. But card issuers and some business experts warn that the expense and paperwork involved in the new restrictions, which require issuers to keep records on who bought how much for five years, could drive smaller card operations out of the market.
A problem that's hard to quantify
When the government refers to "prepaid debit cards," it's not talking about the standard bank debit card you probably have in your purse or wallet. Because such cards are attached to bank accounts, they're already closely monitored my numerous federal agencies. If you gave a bank debit card to someone to do something bad with, it and you would be easily traceable.
One of the new rules, in fact, is to rename prepaid debit cards, which also used to be known as "stored-value cards," to avoid confusion.
They're now called "prepaid access cards" because they're not tied to a bank account. They're just pointers to a sum of money you've already paid up (or been given) in advance. The money itself can be anywhere, including accounts outside the reach of government monitoring.
"The distinction actually makes good sense," said James Angel, a business professor at the McDonough School of Business at Georgetown University.
"You don't have that much risk of terrorism through a (bank) debit card," he said in an interview. "There's a problem with a prepaid card because it can begin with cash — the trail is broken, and you can't track where the money came from."
Jim Schlegel, a senior product manager at ACI Worldwide of New York, which creates and manages electronic payment systems for banks and major retailers, said the new rules are well-intentioned, but he questioned just how big a problem money laundering through prepaid cards really is.
It's "such a small percentage of the overall problem, and attempts to propose very heavy legislation and requirements around it put a drag on an otherwise growing and profitable sector," he said in an interview.
Law enforcement agencies and banking regulators acknowledge that there's no way to know how much money is being moved undetected across U.S. borders through the cards — that's the point of money laundering, after all.
But in a report late last year on money laundering and cross-border currency smuggling, the Government Accountability Office cited the Treasury Department's 2005 assessment to urge action to crack down on misuse of prepaid access cards, saying it was convinced that the shuttling of criminal proceeds across the border, "whether in the form of bulk cash or stored value" (on prepaid cards), poses "a significant threat to national security."
In an examination of the threat last year, the Financial Action Task Force, an international agency established by the G-7 in 1989, said such an operation typically works like this:
A criminal organization repeatedly loads a prepaid card in increments just below the amount that would trigger a report to the government. (In the U.S., that threshold is $10,000, so if it were based here, the organization might regularly reload a card with $9,900.)
The card, or a second card linked to the same account, is sent to an associate, perhaps in another country, who withdraws the funds through ATMs. In one such operation based in Australia, more than $100,000 was laundered this way, the FATF reported.
That's how the Black Guerrilla Family, a Baltimore street gang, worked, according to a federal racketeering indictment, to which three gang leaders and accomplices pleaded guilty in April.
For more than a decade, gang members locked up in Maryland's prisons blackmailed fellow inmates and sold narcotics and other contraband, the FBI said. They then "laundered the proceeds of their illicit activities through the use of pre-paid debit cards" sold by Green Dot, the nation's largest seller of the cards in retail stores.
The U.S. would seem to be especially vulnerable, because it's the world's biggest user of prepaid cards; the FATF report projected that by 2017, the U.S. will account for 53 percent of the worldwide market.
Steve Streit, chief executive of prepaid access card firm Green Dot, told CNBC last year how the cards work.
Follow the money to find the bad guys
How is this specific roadblock to tracking transactions a threat to security, especially when authorities can't quantify it as a significant percentage of all money laundering?
In congressional testimony last year, FBI Director Robert Mueller called the use of prepaid cards a "shadow banking system" that had "impacted our ability to gather real-time financial intelligence."
The new rules not only are supposed to make it easier for the FBI and other agencies to track prepaid cards back to the original purchasers; they also require issuers to alert the government to any large or otherwise suspicious transactions, like those multiple $9,900 purchases. That can all add up to a pattern of evidence that could tip off investigators to larger plans that are in the works.
The rules take effect Sept. 27. They fill 69 pages as drawn up by the Financial Crimes Enforcement Network, a branch of the Treasury Department known as FinCEN, illustrating just how complicated the industry that manages prepaid cards really is.
There are two main types of prepaid cards. One is called "closed system"; these are usually gift cards, student meal cards or transit and phone cards. They may or may not be reloadable depending on the program, but they're usually usable only with specific merchants, so their value in moving large sums of money is limited.
Of more concern are "open-system" cards, like those issued for some electronic payroll systems and travel programs and usable at thousands of businesses across the U.S. (If they're "branded" cards — that is, if they come with the Visa or MasterCard logo — they can be used to withdraw money directly through ATMs.)
Such cards make "the challenge of smuggling heavy stacks of cash nearly obsolete," Kumar C. Kibble, the deputy director of U.S. Immigration and Customs Enforcement, told Congress in March.
Jasbir Anand, a senior consultant at ACI, said the funds represented on such cards, which you can easily buy online, could "travel across borders without limitation."
"You could have tens or hundreds of thousands of dollars associated with that card," Anand said in an interview, calling that "obviously a glaring exception" to current anti-money-laundering laws.
‘They've got to find somebody' to regulate
The new rules, in effect, shift the focus of regulation from where and how a card is used to where and how it is sold, Schlegel said.
"How do you investigate the funds related to a particular product ... when that card is merely an access point to a larger system?" he asked in an interview.
To put it another way, Anand said, the card itself is just a worthless piece of plastic. It's a token representing money that's being held somewhere else, very much like your checkbook.
In the same way that a husband can give his wife his checkbook, "I can give you the card, and that's not a financial transaction," Anand said. And "since that cannot be governed and controlled," the new rules target transactions the government can plausibly regulate — the actual initial loading of value onto the card.
"They've got to find somebody" to monitor, said Angel, of Georgetown University.
The rules include numerous exemptions to make issuing lower-value cards easier for those merchants, by excluding closed-loop cards — that is, gift cards and the like that can be used only at particular stores or service providers — of less than $2,000. They also exempt government-issued cards and many prepaid health care cards. The Treasury doesn't consider any of those to be a significant money-laundering threat.
But most open-loop cards, which can be used pretty much anywhere, fall under the regulations, and the onus to do all the paperwork falls on whoever "exercises principal oversight and control" of the card program. The rules don't clearly define what businesses are in that category.
That's not an issue for banks, which are heavily regulated and have processes in place because they already monitor billions of credit and regular debit cards. But many other previously unregulated or lightly regulated businesses issue or administer prepaid card programs: online shopping services, corporate rewards card programs, third-party payment processors — even celebrities, like the Kardashian sisters, who withdrew their Kardashian Kard from the market last year after customers complained about its high fees.
"The net impact of these rules would be an increase in the overall cost of debit cards for consumers for record-keeping and storage and so on that will eventually trickle down to fees on the debit card and a limitation on features," Anand said.
That also could choke adoption of future technologies developed on the science inside the stripes on your plastic cards, he said. An example would be cashless "mobile wallets" that live in your phone and work through near-field communication wireless systems.
"It's unfortunate that we're at the cusp of taking advantage of this huge channel and trend and something like this could really stifle growth," he said.
Even as it warns about the potential money laundering threat, the Financial Action Task Force also acknowledges that tight restrictions on prepaid cards could have a significant impact on lower-income people unable to "take full advantage of mainstream financial service providers" because they have a poor credit record, for example, or because they have no permanent address and can't qualify for a bank account. That's more than 17 million Americans, the Federal Deposit Insurance Corp. says, and for them, prepaid cards can be the only way they can gain "ready access to services," the FATF said.
"It is important to recognize that public officials can sometimes take steps designed to 'protect' those who are disadvantaged when those steps may actually become barriers that actually restrict access to financial services," the task force said in a follow-up report in June. "For example, steps that add to the costs for prepaid products may make them less appealing to those living on the margin."
Customs is no barrier
There's another issue: The rules apply to transactions that take place in the U.S. Reputable overseas banks and other companies that want to continue doing business here will likely comply, but the U.S. can't impose its wishes on hundreds of thousands of merchants in other countries.
"I can walk into a country with a prepaid card that has a thousand dollars on it and add more to it," Anand said, which means that even under the new rules, a smuggler or a terrorist can easily obliterate investigators' money trail back to the source.
"Suppose I were a terrorist and I needed some money to buy some bomb-making materials locally, but my source of funding is over in Berzerkistan," Angel said. "They can have one of their operatives take a pile of cash, buy a prepaid card and get that into my possession without it being traceable back to anybody else in my terrorist cell."
And how would that operative get the card into Angel's possession? He or she would simply fly into the country with it. Prepaid access cards aren't treated like cash, which travelers are required to declare if they're carrying $10,000 or more.
"The debit card that looks, smells and tastes like (cash) — that doesn't count," Angel said.
Three senators — Amy Klobuchar, D-Minn., Tom Udall, D-N.M., and Jeanne Shaheen, D-N.H. — introduced legislation last month to close that loophole. It would require travelers to declare "prepaid cards totaling more than $10,000" when they enter or leave the U.S., just like cash.
That may sound like a common-sense approach, but card issuers and others have objections. The losers, they contend, won't be drug smugglers and terrorists — who likely wouldn't comply — but travelers and other innocent customers.
The rules could make prepaid cards less attractive to travelers, putting them at a competitive disadvantage to credit cards and other standard bank cards, which wouldn't be covered, said Kirsten Trusko, executive director of the Network Branded Prepaid Card Association.
The NBPCA, a trade group for companies that issue of prepaid cards carrying the logos of networks like MasterCard or Visa, has weighed in against similar attempts to require customs reporting of cards, calling them "unwise and impractical."
That's because you have to know the value of your prepaid card to declare it, Trusko said. And trying to determine a card's balance "while in flight or upon debarkation from a plane is burdensome and unnecessary," she said in a statement to msnbc.com.
Angel said the problem is more basic.
"I would think someone with a card with $10,000 or more on it would probably be watching it carefully and know they're over the limit," he said. But he warned that "the devil is always in the details," asking, "How are they going to catch somebody who violates?"
"If you're wearing a money belt with hundred-dollar bills in it, that's going to be kind of obvious," he said. "But if somebody's carrying a MasterCard, how are they going to know? It could get fairly invasive when they start searching people at the border."