Financial crimes in a cashless economy; Financial crisis
While our economy, technology and society continually evolve, we must remember that so do crimes. Today, the question is no longer whether we should be moving towards a cashless society or not, for this advancement is inevitable and underway, the question committee must come together to answer is what regulations and precautions must be taken to reduce the advancement of financial crime within our economies.
The rampant and uncontrolled financial crime in the world is evident, as is the plausibility ,of a cashless society magnifying the occurrence of money laundering and terror financing. In all practicality, cash requires no infrastructure, authentication method or transaction cost, and remains ideal in developing economies which lack modern systems and communication. Yet, with its high liquidity and anonymity, cash serves as a facilitator for crime. Larger denomination cash notes, more prevalent in developing economies, are used less for consumer transactions and more for laundering and keeping money out of regulated banking systems. Studies have shown that a large amount of physical currency in circulation does not match up with the individual requirements of cash shown by statistics, indicating that a large amount of cash is being used not for consumer usage but for illicit activity.
While transitioning out off paper currency would lead to governments losing out on profits in printing the cash, the reduction of tax evasion in a cashless society could make up for millions of dollars lost annually by governments. Transactions done from banks and other organised channels allow better tracking of black money and thus lead to greater transparency.
However, terror organisations are too turning towards cyber crime, illegal e-commerce business and identity fraud for financing. Unregulated online channels, especially those which are transnational, are a portal for illicit activity and Crypto currencies like the Bitcoin allow crime to flourish through anonymous dealings. Hackers behind the ‘WannaCry’ ransomware attack affected computers over 150 countries, demanding ransom pay in bitcoins, showing the increasingly unreliable privacy and security of digital transactions. Thus, international community, regulators must all come together to lay down regulations that would stall if not stop the growth of financial crime, while aiding the transition towards a cashless economy.