April 24, 1996 12:30 PM PDT
Cleaning up money laundering on Net
The U.S. Treasury Department estimates that $300 billion a year is laundered worldwide. Government agencies fear that criminals will soon be able launder similar amounts in cyberspace, sending electronic cash to electronic accounts stashed all over the world, according to a report in today's San Jose Mercury News.
This week's meeting was called to begin an examination of the potential dangers of cyberlaundering, which could be combatted with some kind of tracking mechanism for electronic transactions, weighed against rights of privacy for ordinary citizens. Officials from the Treasury Department's Financial Crimes Enforcement Network (FinCEN) are mainly worried about the use of smart cards, which resemble credit cards but are equipped with computer chips to, in effect, store money.
The problem is that, like cash, the smart cards can be stolen. And unlike dollar bills with printed serial numbers, the stolen smart cards can be used without leaving any physical evidence. Smart cards, which computer industry leaders like Microsoft chairman Bill Gates expect to replace cash eventually, could set back federal efforts to control money laundering by 25 years, according to the report.
On the other hand, if smart cards could be programmed to leave a trace, some kind of code could be registered in a log wherever someone made a transaction. Then law enforcement officials could use that information to more easily track criminals; every time they paid a bridge toll, ate a meal, or stopped at a hotel, they would leave a track for police to follow.
But many online activists and computer industry vendors object to the suggestion that smart cards be used to trace activities, arguing that it violates the privacy of innocent individuals.
The FinCEN didn't resolve anything this week but invited privacy attorneys to form an advisory panel to discuss the issue. The subject will also be debated at the Third International Money Laundering Conference to be held May 15 in Miami, a meeting that will host 38 speakers on illegal transactions, including cyberlaundering.