The former Director-General of the National Drug Law Enforcement Agency, Mr. Femi Ajayi, has outlined the demerits of a cash-based economy, saying it allows all sorts of economic crimes.
Ajayi, who spoke at a conference entitled, ‘Cashless Nigeria: progress, prospects and opportunities’, stressed the need for the Federal Government and other stakeholders to stick to the cash-less policy.
He said, “Cash is the lubricant and desirable means of exchange that facilitates most organised crimes. Cash is desirable and preferred because it is not easily traceable. Cash encourages these crimes by reducing the possibility of detecting and tracing these crimes”
According to the immediate past director general of NDLEA, paper cash is non-traceable, and easy to hide, adding that it is easy to lose, steal and spend without trace.
Hence, he stressed that cash had facilitated bribery and corruption.
Ajayi said, “Many bribe-takers would shy away from the act if they were told that they would be paid with cheque or via electronic money transfer into their accounts. The fear of detection could dissuade them from insisting on taking bribe whereas easy-to-hide and non-traceable cash makes bribery very tempting.
“Cash because of its un-traceability, also facilitates heinous crimes such as smuggling of immigrants, human trafficking and currency trafficking.”
He added, “One of the easiest and contemporary ways of checking the above crimes is through tracing and monitoring the proceeds of crimes. Being un-traceable and easy-to-hide makes cash a close ally and a cherished means of exchange to perpetrators of organised crimes.”
The former anti-narcotics boss recalled that the need to trace, monitor and detect proceeds of crimes as a means of anticipating, pre-empting and detecting organised crimes led to the establishment of Financial Intelligence Units.
He said that the FIUs were used to monitor movement of huge funds, noting that the department relied on the traceability of funds which was facilitated by electronic payment and other cashless policy instruments.
According to him, NDLEA is so concerned about money laundering because it injects ‘hot’ cash into the economy and disrupts fledgling economies.
This, he said, could lead to wild interest rates fluctuation, foreign exchange rate instability, and share price manipulations.
“All these compromise macroeconomic stability and make economic projections and planning difficult. Money launderers have the capacity to undermine the banking system and/or capital market of a country.”
Aside from facilitating organised crimes and economic crimes, cash-based economy promotes informal economic transaction and facilitates high level of tax evasion, according to Ajayi.
Consequently, he noted that the cashless policy was a conscious attempt to free the modern money market of its demerits.
He described cashless policy as time saving, efficient, convenient and cost-effective.
He added, “It removes the security challenges and cost implications of transporting cash. By capturing the informal economy, it increases the potential tax revenue of governments. It automatically integrates the hitherto unrecorded and unaccounted for informal economy thereby promoting financial inclusion.”
He, however, said, “These are not the reasons anti-crime and anti-corruption agents are interested and passionate about the cashless policy. Our own interest lies in the fact that the cashless policy makes financial transactions at once traceable, accountable and undeniable.”
He explained, “let me quickly sound a note of caution that cashless policy is not a value-free and risk-free financial policy. If it is not properly implemented and appropriately regulated, it can even increase financial scams as demonstrated by Internet frauds and yahoo-yahoo online transactions.
“This also means that nothing stops money launderers and terrorists financiers from transferring their funds using electronic means or Internet banking if the FIU is non-functional, dysfunctional or dis-interested in carrying out its statutory mandates.”
Punch
