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By NWV News writer Jim Kouri
Posted 1:00 AM Eastern
January 15, 2011

On Friday, January 14, Secretary of Homeland Security Janet Napolitano's office announced that the Obama administration canceled the 'Virtual Fence' project along the U.S.-Mexico border.

The reason for this latest cancellation is the continued technical equipment problems and the rising costs of constructing and installing the components including closed-circuit TV cameras and monitors, electronic detectors, and other security measures.

As reported by in the past by, the original border security plan called for a fence and barriers to be used on parts of the U.S.'s southern border, but with the Democrats controlling both houses of Congress and the Bush Administration being weak on border security, the plan switched from a real fence to a virtual fence using high-tech equipment.

Unfortunately, the Department of Homeland Security’s latest failure to protect the United State, was a costly program to place crucial electronic surveillance systems along the U.S.-Mexico border that is years behind schedule. The security project is grossly over budget because Secretary Janet Napolitano's agency hasn’t adequately managed the contractor doing the work, according to a Washington, DC watchdog group.

As a result, hundreds of millions of taxpayer dollars will be wasted and the porous southern border will continue to be vulnerable despite the Obama Administration’s assurances that it’s as secure as it’s ever been. So far the troubled project, known as Secure Border Initiative Network, has cost the government $672 million although it’s nowhere near completion, according to Judicial Watch, a public-interest group that investigates political corruption.

After years of debates, congressional votes, government studies and political posturing by lawmakers, the so-called "virtual fence" continues to cause more problems than it solves, according to testimony at a session of the House Homeland Security Committee.

In a compromise that met with disappointment by those who advocate tighter border security, instead of walls or chain link fencing, the U.S. Border Patrol and Homeland Security Department created the concept of virtual fence security that includes surveillance cameras, motion or heat sensing detectors, radar, and supposed state-of-the-art control towers designed to detect and prevent illegal immigration and drug smuggling into the United States.

According to a report obtained by the National Association of Chiefs of Police, the security contractor -- Boeing Co. -- is installing the hi-tech physical security system. The original plan called for a completion date by December 2009 at a cost of $1.1 billion for a virtual fence. According to the report obtained by NACOP, Boeing requested that completion date to be amended by seven years.

Physical security experts told this writer it should surprise no one that a relatively simple project would become complicated and unmanageable given that fact that most of the decision-makers probably have no law enforcement, security or engineering background.

The Obama initiative aims to enhance border security by designing technological tools that enable Border Patrol agents to detect and respond to incursions along unmanned stretches of the 2,000-mile Mexican border. This includes installing unattended ground sensors, radars and cameras. The so-called virtual fence was supposed to be completed by 2011, but Homeland Security officials recently pushed the date up to 2014, well after Obama's 2012 reelection campaign.

That’s because the agency has failed to properly oversee the project’s prime contractor, resulting in costly rework, numerous delays and lots of extra money. In fact Homeland Security officials stood by as the contractor provided information that was “replete with unexplained anomalies, thus rendering the data unfit for effective contractor management and oversight,” congressional investigators found.

The initiative to erect barriers -- both electronic and physical -- along the U.S. Mexico border has been plagued with a multitude of problems since it was implemented under the George W. Bush Administration. After funding issues got largely settled, some border mayors in Texas blocked the feds from conducting fence work on city property, a large Indian tribe (Tohono O’odham) in Arizona refused to allow a fence to be erected along a vulnerable stretch of border and the so-called virtual fence project has been delayed several times.

Last year a separate GAO report revealed that the physical fence was costing U.S. taxpayers an average of nearly $4 million per mile. The per mile costs vary considerably depending on the type of fencing, topography, materials, labor costs and the price of land acquisition, but investigators determined that serious cost overruns have led to the exorbitant average figure.


It is estimated that criminals smuggle $18 billion to $39 billion a year in bulk cash across the southwest border, according to a U.S. government estimates.


The U.S. Customs and Border Protection is the lead federal agency responsible for inspecting travelers who seek to smuggle large volumes of cash -- called bulk cash -- when leaving the country through land ports of entry. The Financial Crimes Enforcement Network (FinCEN) is responsible for reducing the risk of cross-border smuggling of funds through the use of devices called stored value, such as prepaid cards.

The U.S. Congress recently asked the Government Accountability Office to examine the extent of actions taken by CBP to stem the flow of bulk cash leaving the country and any challenges that remain, as well as the regulatory gaps, if any, of cross-border reporting and other anti-money laundering requirements of stored value. If gaps do exist, the GAO was asked to evaluate the extent to which FinCEN has addressed them.

To conduct its work, GAO observed outbound operations at five land ports of entry. GAO also reviewed statutes, rules, and other information for stored value. This is a public version of a law enforcement sensitive report that GAO issued. Information CBP deemed sensitive had been redacted.

In March 2009, CBP created an Outbound Enforcement Program aimed at stemming the flow of bulk cash leaving the country, but further actions could be taken to address program challenges. Under the program, CBP inspects travelers leaving the country at all 25 land ports of entry along the southwest border. On the Northern border, inspections are conducted at the discretion of the Port Director.

From March 2009 through June 2010, CBP seized about $41 million in illicit bulk cash leaving the country at land ports of entry. Stemming the flow of bulk cash, however, is a difficult and challenging task. For example, CBP is unable to inspect every traveler leaving the country at land ports of entry and smugglers of illicit goods have opportunities to circumvent the inspection process.

Other challenges involve limited technology, infrastructure, and procedures to support outbound operations. CBP is in the early phases of this program and has not yet taken some actions to gain a better understanding of how well the program is working, such as gathering data for measuring program costs and benefits. By gathering data for measuring expected program costs and benefits, CBP could be in a better position to weigh the costs of any proposed expansion of the outbound inspection program against likely outcomes.

Regulatory gaps of cross-border reporting and other anti-money laundering requirements exist with the use of stored value. For example, travelers must report transporting more than $10,000 in monetary instruments or currency at one time when leaving the country, but FinCEN does not have a similar requirement for travelers transporting stored value.

For instance, a traveler may deposit a large sum of money into his or her credit card account and once across the U.S. border, withdraws large sums without notice. Also bank debit cards make crossing the border with large sums easier.

Similarly, certain anti-money laundering regulations, such as reports on suspicious activities, do not apply to the entire stored value industry. The nature and extent of the use of stored value for cross-border currency smuggling and other illegal activities remains unknown, but federal law enforcement agencies are concerned about its use.

FinCEN is developing regulations, as required by the Credit CARD Act of 2009, to address gaps in regulations related to the use of stored value for criminal purposes, but much work remains. FinCEN has not developed a management plan that includes, among other things, target dates for completing the regulations. Developing such a plan could help FinCEN better manage its rulemaking effort.

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When it issues the regulations, law enforcement agencies and FinCEN may be challenged in ensuring compliance by travelers and industry. For example, FinCEN will be responsible for numerous tasks including issuing guidance for compliance examiners, revising the way in which it tracks suspicious activities related to stored value, and addressing gaps in anti-money laundering regulations for off-shore entities that issue and sell stored value.

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Unfortunately, the Department of Homeland Security’s latest failure to protect the United State, was a costly program to place crucial electronic surveillance systems along the U.S.-Mexico border that is years behind schedule.