There is apparently a loophole that allows this to be done.
In 2011, amid a crackdown on international money laundering, the U.S. Treasury Department tried to close a loophole that authorities said allows drug cartels to move bulk cash across borders on gift and other prepaid cards, reports Reuters.
The department's Financial Crimes Enforcement Network proposed that money stored on these cards count toward a U.S. requirement to report cross-border movement of cash of $10,000 or more.
But FinCEN later withdrew its proposed rule after pushback from the prepaid card industry, according to law enforcement sources, says Reuters.
The move has not been previously reported.
In response to questions from Reuters, FinCEN spokesman Stephen Hudak said the rule was being reworked and would be resubmitted, possibly by 2017.
"It's not dead," Hudak said.
"Implementing onerous requirements on reloadable prepaid cards could disproportionately harm vulnerable consumers, who rely on these products as their sole means of access to the financial services system,” said Brad Fauss, President and CEO of the Network Branded Prepaid Card Association.
In March 2013, two years after FinCEN proposed amending the Bank Secrecy Act with the new rule, industry representatives met with officials from FinCEN and the Department of Homeland Security at the Office of Management and Budget, which reviews regulations, according to a record of the meeting topic, date and attendees published on a White House website.