Last December, Atlas the Labrador was added to the Australian Federal Police force’s Canine Wall of Excellence, honoured for his service as the country’s first cash detection dog.
Atlas has sniffed out hundreds of thousands of dollars in his nine-year career, some hidden in stereo speakers or buried underground. And since he began work, Australian Customs and Queensland Police have followed the AFP’s lead, introducing canine squads focused on currency.
The dogs have their work cut out for them.
We're turning from cash but demande for notes has never been higher
1. BUSINESS THE ECONOMY ORGANISED CRIME
We're turning from cash, but demand for notes has never
been higher
Last December, Atlas the Labrador was added to the Australian Federal Police force’s Canine Wall of
Excellence, honoured for his service as the country’s first cash detection dog.
Atlas has sniffed out hundreds of thousands of dollars in his nine-year career, some hidden in stereo
speakers or buried underground. And since he began work, Australian Customs and Queensland
Police have followed the AFP’s lead, introducing canine squads focused on currency.
The dogs have their work cut out for them.
By Patrick Begley
11 May 2018 — 3:03pm
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2. While Australians opt more and more for tap-and-go payments, the demand for cash has never been
higher. It is a situation that suits organised criminals looking to disguise the profits of international
drug crime as legitimate revenue.
Treasurer Scott Morrison announced in the budget on Tuesday a $10,000 limit on business
transactions using physical currency, a move designed to combat tax avoidance and money
laundering.
Others are much more ambitious.
Richard Holden, a UNSW economics professor, is calling for cash to be completely phased out by
2020, describing it as a "lubricant” of organised crime. “Cash is a way of avoiding detection - it’s a
way not to get caught,” he says.
Former US treasury secretary Larry Summers wants an end to the $US100 bill while Harvard
professor Kenneth Rogoff says cash is a “curse” - one that facilitates crimes from human trafficking
to terrorism.
In 2016, the European Union announced it would no longer print the €500 note (sometimes named
the “Bin Laden” for its criminal associations) while India eliminated its two highest denominations
in an anti-corruption drive.
So should Australia rake back its cash?
The 'cash paradox'
Paying without cash has never been easier or more popular.
According to the Reserve Bank of Australia, the proportion of cash payments made by Australian
consumers dropped from 70 per cent in 2007 to 37 per cent in 2016. Over the same period, the value
of the payments dropped $56 billion, down to $162 billion.
Cash’s popularity has declined "faster than any of us anticipated", says Westpac chief executive Brian
Hartzer, who predicted 95 per cent of payments would be electronic within a decade.
Tap-and-go card payments are booming, while the New Payment Platform engineered by the RBA
allows for instantaneous transfers between customers of different banks.
Atlas served as Australia's first cash detection dog, working for the AFP.
Photo: ACT Churchill Fellows' Association
3. And yet more cash flows through the Australian economy than ever before: about $74 billion in 1.5
billion notes.
The ratio of physical currency to GDP has risen to a 50-year high as the commercial banks have
demanded larger stocks of every note for a decade.
As for the rarely-seen green $100, there are now 14 for every Australian.
Why would banks demand more cash than ever if the majority of the customers are turning away
from it? It is a puzzle sometimes known as the “cash paradox”.
“Trends in cash demand across a range of countries cannot be easily reconciled with changes in
consumer payment preferences,” RBA analysts wrote in a 2016 article. One possible driver of
demand, they noted, was “the use of cash for unlawful purposes”.
Central banks, which make profits by selling notes to commercial banks, have been accused by some
media commentators of facilitating tax evasion and organised crime by pumping out so much
money.
The scale of the criminal demand for cash is hard to determine, though, and the RBA points to other
drivers.
About $74 billion in 1.5 billion notes flows through the economy.
Photo: Chay Talanon
4. RELATED ARTICLE
Some people hold large legitimate deposits of cash, especially after financial crises and when banks
offer only low interest rates. International students and tourists often prefer cash, foreign
governments hold stores and demand rises in line with population and economic growth.
"Any kind of instrument that facilitates an exchange of value is likely, unfortunately, to attract
nefarious activity,” assistant governor of the RBA Lindsay Boulton tells Fairfax Media. “That's true
for cash and true for payment cards and other instruments, but the legitimate uses for those
instruments are far more important and significant for the community.”
'Bucketloads of cash'
Anonymous and ubiquitous, cash remains popular among high-level criminals, both as a means of
transaction and a store of wealth.
“Cash is definitely king at the moment,” says Scott Cook, acting director of criminal operations
within NSW Police. “Crime groups and networks have bucketloads of cash.”
Since April 2014, the NSW Police organised crime squad has seized $60 million in physical currency
and Cook predicts it will retain its throne for the foreseeable future. “I can’t imagine the time when
a street-level drug deal is going to be conducted using an electronic card, but you never know where
technology will take us”.
A NSW Crime Commission spokesperson said the agency had been detecting greater amounts of
cash, in line with larger drug seizures. “It is usually detected as part of the process of moving the
funds offshore to fund further drug importations or the repatriation of criminal profits."
In the six months to June 2017, the
Commission was able to seize $8 million in
cash from one Sydney money-laundering
syndicate but was aware the syndicate
transferred $100 million in that time.
Gangs, which tend to use “cash-intensive”
businesses such as restaurants, brothels and
casinos to launder funds, are not expected to
run out of portals any time soon.
Boulton of the RBA predicts a “steady walk
rather than a quick sprint” towards a society
with fewer notes.
“I think it's a stretch to say that in the
foreseeable future we would move to a cashless society."
The end of the $100 bill?
While some favour a complete phase-out, others are lobbying for the higher denominations - $100s
and $50s - to be scrapped.
$500,000 a pop: the price you pay in organised crime
5. The Australian Criminal Intelligence Commission notes organised crime’s preference for the bigger
bills, which “take up less space than lower-denomination notes of the same value and allow for easy
handling, transportation, and storage”.
Banks UBS and HSBC have called for the top bill to be abolished, partly to crack down on crime.
Likewise, economist-turned-politician and assistant shadow treasurer Andrew Leigh says Australia
should start talking about a transition away from large denominations.
“The convenience and privacy benefits of cash are just one side of the coin,” Leigh said. “The other
side is the very extensive use of cash for nefarious purposes.”
But proposals to abolish the $100 bill only are complicated by the fact that many criminal groups
prefer $50s, possibly because they are so commonplace.
The RBA has no plans to get rid of any notes.
If the $100 bill were banned, demand for the $50 would likely surge, leading to greater printing costs
for the RBA. And there is some concern the $50 - already the most counterfeited note - would be
faked even more.
Deakin University economist Pasquale Sgro predicts that even if some physical currency were
eliminated, criminals would simply adjust. “Whatever notes we have around, criminals will deal in
them,” he says.
Proceeds of crime seized in Sydney by NSW police.
Photo: NSW Police
6. RELATED ARTICLE
Cook, the NSW Police commander, agrees it would not stop crime. “It would only mean that they
have to carry bigger bags.”
The rise - or not - of cryptocurrencies
Virtual or cryptocurrencies, meanwhile, have
been touted as revolutionary technology for
organised crime, one that could offer cheap
and fast transactions outside the traditional
banking system.
Investigators from the NSW Crime
Commission and NSW Police Organised Crime
Squad last year detained a self-described
Bitcoin seller who received a large amount of
cash in a suspicious transaction. It was the
first transaction the agencies had seen
involving Bitcoin. “It is unlikely to be the last,”
the commission said in its annual report.
But law enforcement agencies say that while
cryptocurrencies may be popular among
lower-level operators, the professional money-
laundering syndicates catering to transnational crime gangs have shown limited appetite.
Cryptocurrencies are often volatile and can be hard to cash out.
“Bitcoin is not the most efficient mechanism for them to use,” says Krissy Barrett, an AFP national
manager focused on money laundering. “We are talking about networks that have incredible reach
and access to huge funds. They make a commission and profit from currency exchanges as well, as
this money moves through multiple countries.”
Cash may be a relatively primitive technology but its laundering has reached a sophistication that
has sometimes taken law enforcement by surprise.
Gangs turn to figures such as Altaf Khanani, the global money-launderer Australian authorities
helped catch, who funnelled funds to al-Qaeda and bikie gangs using a “shadow” operation of his
legitimate money-changing business.
“We often see that the organised crime groups don’t have the kind of reach that these professional
money-laundering groups do,” Barrett says.
A cashless future
Despite criminals’ fondness for the folding stuff, an economy in which customers start paying for
drugs using cards or phones would have its advantages.
Gangs currently have to source “smurfs”, often overseas students or tourists with no criminal
records, who visit branches to deposit less than the $10,000 threshold for automatic alerts to
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7. criminal intelligence agencies.
Less cash would mean fewer visits to the bank, fewer opportunities for detection.
“A cashless society will eliminate the need for smurfs to move cash but it will create digital smurfs or
mules,” says Chris Douglas, an anti-money-laundering consultant and former AFP officer. “People
will receive funds into their account, extract a fee and send the balance onto another account.”
And as Australians continue to embrace contactless payments, criminal intelligence bodies such as
the Australian Criminal Intelligence Commission predict rises in card and other electronic frauds -
the proceeds of which are beyond any dog’s nose.
Patrick Begley
Patrick Begley is an investigative reporter for The Sydney Morning Herald.
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Recent comments
Xavier 3 DAYS AGO
there are many legitimate reasons to keep and trade in cash. many do not trust Banks, fees and charges are
greater than...
BETTER WAY 3 DAYS AGO
A lot of cash is never ever banked so you can't measure that cash. It just goes around & around
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