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Is cash the king of crime and tax evasion?
Perhaps due to cinematographic renditions, cash smells of brimstone, and a large wad of cash will always raise questions as to where it's from and what it's for. For many years, paper currency was the preferred vector for all layers of the crime world, including the white collar one. But things have changed with the digital era, and cash is no longer a symbol of crime.

The origins of the hot reputation of cash are not hard to find. Being the only payment medium, which doesn't involve a third party, it was always highly convenient for anyone who wished for their transactions to remain as discreet as possible, such as fraudsters and criminals. In addition, before the digital age began at the end of the 20th century, a very large portion of the world's wealth was stored in the form of cash, thus attracting most criminals, who tried to either steal from citizens, or directly from the bank, in a riskier but more lucrative move. Tax evasion, counterfeiting and crime, in the old days. Tax evasion traditionally used cash, as banks were feared to inform fiscal services of suspicious transactions and kept a money trail.

Finally, money counterfeiting was an interesting technique for unlawful aggrandizing because, contrary to other types of financial crime, one single offense can yield an unlimited amount of money. Ken Rogoff, an economics professor at Harvard, has been writing about paper money for 20 years and he says much of this cash"is used to facilitate all sorts of crime". For all those reasons, large amounts of cash became a picture often associated with dirty deeds being done, including in popular movies and series.

 

The crime world has invaded the digital world

Very shortly after the digital age began, fraudsters and thieves quickly realized they had an opportunity. With traditional cash theft often requiring breaking and entering, or even physical assaults, the risk in the case of an arrest was double: one charge of theft, and another for whatever was necessary to commit the theft. Brian Krebson, financial security expert, says "Organized cyber criminals stole more than $25 million from small to mid-sized businesses in brazen e-banking heists in the 3rd quarter of 2009 alone, federal regulators said last week. In contrast, traditional stick-up artists hauled less than $9.5 million out of U.S. banks over that same time period last year." Electronic money not only allowed to commit the crimes in a far more discrete way, but also reduced the charges in case of interception.

 

John Ramption, web specialist for Inc, confirms the high inherent risk of online transactions: "Unfortunately, by their very nature, some transactions will come at a higher risk. Ecommerce providers are especially susceptible to fraud, with their transactions labeled as "card-not-present" events, sometimes resulting in higher fees. Although a large percentage of today's transactions are online, these transactions are still seen as risky and can create problems for a business when they do fall victim to fraud. Even when businesses take measures to reduce their risks, they still may find their processor puts the responsibility back on them." 

Electronic world now offers more protection to criminals

Cash is simply not worth the risk anymore, and the digital world offers discretion which no other medium can offer. With most countries having placed limits on cross-border cash transport, moving large amounts in several trips would place too high a risk on the overall operation. In addition, with the rising trend of electronic payments, the average contents of a leather wallet have dwindled, and having large amounts of physical currency will make the holder stand out, in an unwelcome publicity.

The globalized financial market now offers solutions way more advantageous for the wannabe tax evader, through offshore services such as shell companies, or short-lived bank accounts in several non-complying countries. Not only do such computerized services greatly reduce the risk of being identified or detected, but if the operation is indeed spotted, the identity of the perpetrator will still be as difficult to establish, as the owner is far from the illegitimate funds.

Using front companies is a classic way to disguise an identity, while being caught with undeclared funds in an airport will leave little work to investigators. Colleen Curry and Susanna Kim write for ABC: "Banks report any incidences of suspected fraud to FinCEN, the government-run Financial Crime Enforcement Network. Each year from 2001 to 2010, an average of 6,460 reports of suspected fraud are sent from banks to FinCEN. In 2011, there were more than 5,500 reports of suspected embezzlement at banks. Of those cases, approximately 580 were investigated, and of those investigations, 429 cases, or 8 percent, ended with convictions, according to FBI data."

Hollywood isn't the only one to give cash a bad name. Banks, businesses and governments also dislike cash, for the burden it places on them and the fact that it eludes their control. Now that criminals have abandoned the idea of carrying large duffel bags full of currency rolls, a new category of people have picked up the defense of cash: whistleblowers. As government control and commercial invasion continue to roll out, civil rights activists see cash as the guarantee for citizen's freedom to do as they please with their earnings.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of merinews.com. In case you have a opposing view, please click here to share the same in the comments section.
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