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Personal Autonomy and the War on Cash

  • October 16, 2022
  • Clayton Rice, K.C.

In a cashless society financial transactions are conducted with digital information by the use of credit and debit cards, mobile payments and digital currencies. The trend toward digital transactions has increased in the early twenty-first century with the development of electronic banking, intermediaries such as PayPal and digital wallet systems like Apple Pay. But the convenience of the digital marketplace has brought with it the dark arts of government surveillance, social control and the bartering of personal data as a commodity.

1. Introduction

Fintech is the portmanteau of ‘financial technology’ that is commonly used to describe new technology that competes with traditional methods of delivering financial services. Artificial intelligence, blockchain, cloud computing and big data are often regarded as the four pillars of fintech. The use of smartphones for mobile banking and the development of cryptocurrency are two examples of fintech that have grown exponentially, and not without controversy, in the last decade. They are at the forefront of the movement to drive cash out of the global economy. But the movement does not have its genesis in public demand although many of us may frequently choose digital methods of payment over cash.

In a piece titled Killing off your cash is a cynical bid to make fatcat bankers fatter, published by Britain’s Daily Mail on March 6, 2019, journalist Ross Clark, also the author of The War Against Cash (2017), described the cashless movement as a “calculated campaign” led by the fintech industry to develop software and hardware such as contactless payments to computerize money transfers. (here) Mr. Clark referred to a report published by the United States Department of Commerce which revealed that $19 billion of investment was pumped into the American fintech sector in 2016. Transaction fees totaling $1 trillion were extracted from consumers using cashless payment methods – a figure expected to double by 2023. These are high stakes.

2. The Controversy

The controversy is not about the benefits of digital payments as opposed to the benefits of cash transactions. The core issue is whether cash payments should be prohibited and the consumer forced to make payments using e-commerce technologies. It is an issue of personal autonomy and freedom of choice. In a paper titled The war on cash is about much more than cash, published by the Institute of Economic Affairs in 2019, Professor Kevin Dowd of Durham University succinctly summarized the arguments for and against abolishing cash. (here) I will use his summary of the arguments to ground my following comments.

(a) Arguments For Abolishing Cash

Although some digital payments are very convenient, that does not mean all digital payments are more convenient than cash. Focusing on the technical efficiencies of digital transactions overlooks some of the benefits of cash such as anonymity and the ability to make small payments without a costly electronic device which many consumers cannot afford. The convenience argument also overlooks the issue of personal autonomy. There is a hidden paternalistic premise in the war on cash – that someone else has a better idea of what is good for you and you should therefore act as fintech directs, in your best interests of course. If digital transactions are really superior for all transactions, there would be no need of compulsory compliance and the war on cash would be an hypothesis.

Advocates also argue that cash is used by money launderers, drug traffickers and terrorists who are the purported targets of government regulation. Although that is well documented, the implications of the argument extend beyond the investigation of crime. If cash is abolished because bad guys use it, the same rationale would also apply to computers, smartphones, the internet and cryptocurrency platforms. The use of digital transactions for criminal activities is steadily on the rise such as the use of Interac e-Transfers for narcotics trafficking. What is the point, then, of abolishing cash for the purpose of frustrating criminal activity when alternative methods of e-commerce are readily available?

(b) Arguments Against Abolishing Cash

There are many transactions for which cash is the ideal means of payment. It is efficient and easy for small transactions. The anonymity of cash transactions has always been one of its benefits. Cash does not require a password and it is hack proof. Its usefulness is not hindered by technology breakdown. Advocates of a cashless society also frequently overlook the impact it would have on marginalized people. Everyone would need access to digital technology in order to function. Many vulnerable people do not have the resources to purchase electronic devices and pay the monthly fee charged by service providers. And there are those who have access to the technology but struggle to use it efficiently.

Another important concern is the impact a cashless economy would have on civil liberties when the state is party to an agenda for expanding social control. The point is that when government coerces everyone to use electronic currency that it controls, it can also control the ways in which it is spent. It could identify and block payments to or from individuals who are targeted because of their political views. Not only political opponents and whistle blowers could be compromised by having access to their bank accounts blocked for even the most mundane of purchases. As investigative journalist James Corbett asked in a post to The Corbett Report titled The Criminalization of Cash dated April 15, 2015 – Do you really want the government to be able to stop you from buying a table lamp at a garage sale? (here)

3. What is FINTRAC?

Although cash enhances economic anonymity, it is not completely untraceable, and is subject to the process of currency bill tracing in the banking industry. The most popular currencies for currency tracing are reported to be the United States dollar, the Canadian dollar and the Euro. In Canada, the Financial Transactions and Reports Analysis Centre, known by the acronym FINTRAC, is the financial intelligence unit that monitors monetary transactions to identify suspected money laundering activities and financing of terrorist organizations. The Centre fulfills its financial intelligence mandate by working with Canadian businesses to ensure compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and associated Regulations. (here)

In FINTRAC’s Annual Report for 2020-21, the Centre reported that 2,046 disclosures of actionable financial intelligence were provided to Canada’s law enforcement and national security agencies. (here) Of the disclosures, 1,812 were related to “money laundering”, 146 were related to “terrorism financing and threats to the security of Canada”, and 88 were related to “money laundering, terrorism financing and threats to the security of Canada.” Throughout 2020-21, the Centre’s financial intelligence contributed to 376 major investigations at the municipal, provincial and federal levels. Canadian police agencies continue to be the main recipients of FINTRAC’s financial intelligence.

4. Abortion Surveillance in America

The Surveillance Technology Oversight Project (STOP) based in New York released a chilling report on May 24, 2022, titled Pregnancy Panopticon: Abortion Surveillance After Roe by Albert Fox Cahn and Eleni Manis. The report reviewed the digital surveillance threats facing pregnant women in America who seek abortion information and services and how these threats could escalate if the United States Supreme Court overturned Roe v Wade and the states criminalize abortion. On June 24, 2022, the court released the opinion in Dobbs v Jackson Women’s Health Organization that overturned Roe allowing the states to ban abortion. (here and here) The prescient concerns reported by STOP are now a reality.

The report emphasized that electronic payment records and retail sales data are “potent sources of abortion surveillance”. While large numbers of abortion seekers are able to purchase abortifacients online, there is likely no way to do it anonymously, particularly when the most effective medications are only administered by prescription. It is an example of the “bureaucratic surveillance of intimate life” discussed by Professor Danielle Citron of the University of Virginia School of Law in The Fight for Privacy: Protecting Dignity, Identity, and Love in the Digital Age (2022), published after the STOP report. The purpose of government surveillance of pregnant women and girls “is to impede reproductive freedom,” she said.

The STOP report also emphasized that law enforcement can subpoena shopping records to prove the sale or purchase of abortion-inducing medications or to prove that a particular woman was pregnant in the first place. When purchasers pay with a credit card, an online account or with a store loyalty card, everyday purchases such as medications, pregnancy tests, prenatal vitamins and menstrual products, can become circumstantial evidence of pregnancy. Information bought and sold by the largely unregulated data broker industry may be used not only to target pregnant women with ads, but to target them for arrest.

5. Conclusion

According to recent statistics, Canada is one of the world’s best connected countries for mobile communications. Approximately 70% of smartphone owners used internet browser apps regularly in 2022. Approximately 53% of Canadian internet users, aged between 18 and 34, accessed the internet most often with their mobile devices this year. Alberta is the Canadian province with the the highest percentage of households that have at least one smartphone at 93.4%. (here) But hidden in the statistics are the Canadians who do not own a smartphone. In 2020, Statistics Canada reported that 84.4% of Canadians owned a smartphone. Approximately six million Canadians, then, did not own a smartphone in 2020. This is the approximate number of people who could not use a smartphone for internet access and digital financial transactions if Canada was a cashless society. (here)

Canadians who do not own a smartphone, however, may be on the “emergency staircase” without knowing it. Brett Scott, author of Cloudmoney: Cash, Cards, Crypto, and the War for Our Wallets (2022), has warned that a cashless society would be so fast that some people would inevitably be left behind. In an interview with Chris Hill titled Understanding the War on Cash published by The Motley Fool on August 11, 2022, Mr. Scott likened digital transactions to the use of an elevator to get to the top of a skyscraper. “But that doesn’t mean I want the emergency stairs removed,” he said. “[T]he cash system is like the emergency stairs that payment systems [don’t] go down when the hurricane hits.”

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