The Death of Cash? All Over the World Governments Are Banning Large
Are we witnessing
the slow but certain death of cash in this generation? Is a truly
cashless society on the horizon? Legislation currently pending in
the Mexican legislature would ban a vast array of large cash transactions,
but the truth is that Mexico is far from alone in trying to restrict
cash. All over the world, governments are either placing stringent
reporting requirements on large cash transactions or they are banning
them altogether. We are being told that such measures are needed
to battle illegal drug traffic, to catch tax evaders and to fight
the war on terror. But are we rapidly getting to the point where
we will have no financial privacy left whatsoever? Should we just
accept that we have entered a time when the government will watch,
track and trace all financial transactions? Is it inevitable that
at some point in the near future ALL transactions will go through
the banking system in one form or another (check, credit card, debit
The truth is
that we now live at a time when people who use large amounts of
cash are looked upon with suspicion. In fact, authorities in many
countries are taught that anyone involved in a large expenditure
of cash is trying to hide something and is probably a criminal.
And yes, a
lot of criminals do use cash, but millions upon millions of normal,
law-abiding citizens simply prefer to use cash as well. Should we
take the freedom to use cash away from the rest of us just because
a small minority abuses it?
the freedom to use cash is being slowly stripped away from us in
an increasingly large number of countries.
In fact, as
countries like Mexico "tighten the noose" around big-ticket
cash purchases, our freedom to use cash is going to erode rather
is a summary of some of the very tight restrictions being placed
on large cash transactions around the globe right now....
a bill before
the legislature would completely ban the purchase of real estate
in cash. In addition, the new law would ban anyone from spending
more than MXN 100,000 (about $7,700) in cash on vehicles, boats,
airplanes and luxury goods.
$7,700 is not
a very high limit, and this legislation has some real teeth to it.
Anyone violating this law would face up to 15 years in prison.
some of the "austerity packages" being introduced in various
European nations include very severe restrictions on the use of
all cash transactions above 1,500 euros are being banned starting
next year. The following is a comment by Greek Finance Minister
George Papaconstantinou at a press conference discussing the new
austerity measures as
reported by Reuters....
1. Jan. 2011, every transaction above 1,500 euros between natural
persons and businesses, or between businesses, will not be considered
legal if it is done in cash. Transactions will have to be done through
debit or credit cards"
has gotten into the act. As part of Italy's new "austerity
measures", all cash transactions over 5,000 euros will
be banned. It is said this is being done to crack down on tax
evasion, but even if this is being done to take down the mafia this
is still quite severe.
The U.S. government
has not banned any large cash transactions, and hopefully it will
not do so any time soon, but it sure has burdened large cash transactions
with some heavy-duty reporting requirements.
your bank is required to file a currency transaction report with
the government for every deposit, withdrawal or exchange over $10,000
Not only that,
but if a bank "knows, suspects, or has reason to suspect"
that a transaction involving at least $5,000 is "suspicious",
then another report must be filled out. This second type of report
is known as a suspicious activity report, and it is also filed with
But the reporting
does not stop there. As Jeff
Schnepper explained in an article for MSN Money, if you are
in business and you receive over $10,000 in cash in a single transaction
you must report it to the IRS or you will go to prison.....
in a business and receive more than $10,000 in cash from a single
transaction, or from related transactions within a 12-month period,
you have to file Form 8300 and report the buyer to the IRS. Don't
file, and you go to jail.
The IRS isnt
kidding. I had a client who was a dealer in Corvette sports cars.
He told me he didnt have time to file the forms. I told him several
times to file. He thought he knew better. He went to jail. So
did his children who were involved in the business.
This is very,
someone forgets to file a certain form with the IRS, that person
can go do serious jail time?
to Schnepper, quite a few Americans have already received very
substantial sentences for this kind of thing....
2004, the Internal Revenue Service initiated 1,789 criminal investigations.
There were 1,304 indictments and 687 convictions -- and an 89.1%
incarceration rate. The average sentence: 63 months.
2005, the IRS started 4,269 investigations, winning 2,406 indictments
and 2,151 convictions and an 83% incarceration rate. Average sentence:
is that governments around the world are getting very, very sensitive
about large amounts of cash and they are not messing around.
want all of us running around with big piles of cash. They want
our money in the banks where they can track it, trace it and keep
a close eye on it.
On the one
hand, it is a good thing to catch criminals and terrorists, but
on the other hand how much privacy and freedom are we willing to
lose just so that we can feel a little safer?
And as cash
becomes criminalized, are all of us going to be forced into the
banking system whether we like it or not? If we cannot pay for things
in cash, what other choices are we going to have?
The truth is
that the more you think about this issue, the more disturbing it
So what do
you think about all of this? Feel free to leave a comment below.
with permission from the Economic
© 2010 Economic