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Prepaid Cards: The Cleanup

New industry guidelines aim to crack down on money laundering

The world's oldest profession is using one of the newest financial products. At high-end escort service Hush Hush in Charlotte, N.C., prepaid cards were the preferred method of payment. Hush Hush madam Sallie Wamsley-Saxon, who pled guilty in federal court to charges of prostitution and money laundering in early February, used the cards to transfer funds to her "Southern Belles," as she called the escorts, or collect money from clients who paid up to $700 an hour.

With many of the features of a standard debit or credit card and far more anonymity, prepaid cards have become a vital link in the money-laundering chain. They work pretty simply: At a store or online, consumers load cash onto plastic that can legitimately be used at retailers and ATMs. It's that ease of use, in part, that has attracted criminals. "[Prepaid] cards provide a compact, easily transportable way, and potentially anonymous way to store and access cash," warns a federal government report on money laundering.