ST. LOUIS, May 4 (Thomson Reuters Accelus) - To combat money laundering and contain the drug war raging along the U.S.-Mexico border, U.S. authorities are seeking technology to detect the hoards of cash that smugglers try to spirit abroad.
But as results come in on initial development efforts, it is uncertain whether the technology is within reach.
Right now we don't know if it's even feasible to make it work, said John Verrico, a spokesman for the U.S. Department of Homeland Security's and Technology Directorate. There is a whole lot that has to be considered before we can say we have viable technology.
The 2007 National Money Laundering Strategy, produced by the Departments of Treasury, Justice, and Homeland Security, stated that the smuggling of bulk currency out of the United States is the largest and most significant drug money laundering threat facing law enforcement.
To counter the threat, DHS would invest in research and development of non-intrusive bulk currency detection technology, the document said.
The DHS Science and Technology Directorate last year solicited firms to build a device that will search for and identify bulk quantities of currency - secreted on persons, in hand baggage and luggage, and/or in privately owned vehicles.
The solicitation specified that the device must be able to screen a walking person with luggage and slowly-driven vehicles in an inspection area.
Three companies were granted $100,000 phase one contracts in October to complete feasibility studies, Verrico said. The firms, Lattice Government Services Inc, Intelligent Automation Inc, and Connecticut Analytical Corp. completed their studies last week.
DHS will soon begin reviewing the companies' reports to decide whether there are any ideas worth pursuing, Verrico said. If the agency decides to move forward, one or more prototypes will be built and field-tested.
We will evaluate them over the next 30 to 60 days before we make any further decisions on 'phase two,' he said.
Paul Burgess, the chief executive of New Jersey-based Lattice Inc, the parent of Lattice Government Services, described challenges: it isn't just currency moving through an airport, a body scanner will pick that up. The bigger problem is at border crossings. You can put money in a side door and it's going to be very difficult to detect.
Burgess added that DHS wanted the device to be capable of detecting U.S. and Canadian dollars as well as euros. Lattice's team began by studying the currencies for commonalities in ink, paper and magnetic qualities.
Chujen Lin, who led Intelligent Automation's research, said his team chose not to address the detection of bulk cash hidden in vehicles, which he called a much harder problem. Instead, it focused on new millimeter wave radar technology capable of detecting cash on people who are walking.
HOLE IN THE NET
Law enforcement authorities say they urgently need a technological advantage.
The Justice Department has estimated that the Mexican drug cartels smuggle between $18 billion and $39 billion in cash across the U.S.-Mexico frontier each year. They use the money to run their operations and battle the Mexican government in a deadly drugs war.
Some experts question why U.S. financial institutions should be spending billions of dollars to combat money laundering via electronic accounts when their efforts can be easily undermined by cash smuggling. U.S. enforcement officials are eager to fix this hole in their anti-money laundering net.
The cartels are believed to move most of their cash in passenger vehicles and commercial trucks, blending in with the tens of millions of southbound vehicles that cross the border each year.
An outbound inspection program launched in March, 2009 by U.S. Customs and Border Patrol seized just $67 million in its first two years, according to the Government Accountability Office. The agency's low seizure rate stemmed in part from the difficulty in detecting bulk cash, the GAO has said.
While specially trained dogs and X-ray machines can help determine when a vehicle contains hidden currency, dogs are not always available; and X-rays can be misleading.
There are a lot of false positives, especially when looking at a vehicle and trying to interpret anomalies and identify cash. Cash is easy to conceal in a small amount of space and it doesn't show up crystal clear on an X-ray like a weapon would, said Joseph Burke, the chief of the Department of Homeland Security's Bulk Cash Smuggling Center.
The center was created in August 2009.
While customs agents are chase false positives or wait for trained dogs, border queues of vehicles can quickly lengthen.
NEED FOR SPEED
Douglas Farah, a senior fellow with the International Assessment and Strategy Center, a Virginia-based think-tank focused on U.S. security issues, has thoroughly studied the bulk cash problem. He said that when it comes to border inspections, speed is of the essence.
Both sides of the border face the same insurmountable obstacle - how to carry out more inspections and become more efficient without damaging the vast amount of legal cargo that rolls through every day. Adding 45 seconds per search per car per day ends up being hundreds of hours in extra waiting time for legal commerce, he said.
Burgess said Lattice hopes to solve that problem by developing technology that can quickly detect a specific signature - whether electromagnetic, ink-related, or something else - that will accurately signal the presence of currency.
Ideally, you want a pass or fail scenario. Like a metal detector, either it beeps or it doesn't beep, that's where the technology needs to be graduated today, Burgess said.
Burke said effective currency detection technology at U.S. land borders would be a significant step in the right direction. He added that if money was not a factor, he would advocate the installation of the new technology at every lane of every border crossing if and when it is fully developed and proven effective.
The reality is that while that would help, getting from today to that point is a significant challenge, he said.
(Editing by Randall Mikkelsen)
(This article was first published by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete (http://accelus.thomsonreuters.com/solutions/regulatory-intelligence/compliance-complete/) provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges.)