The chances are that the recent shutdown of the payment service Liberty Reserve didn't impinge much on your consciousness, unless you have a habit of making no-questions-asked transactions online.
The arrest of its founder last week marks the beginning of what's been called the largest online money- laundering case in history, with an estimated $6bn (£3.8bn) of criminal proceeds funnelled through a payment system where anonymity was guaranteed. Unlike its squeaky-clean equivalent, Paypal, Liberty Reserve ignored the "know your customer" rules that financial services must comply with to verify the integrity of each transaction; all it asked for was an email address. This was the digital equivalent of brown envelopes stuffed with £20 notes.
Anti-fraud investigators will have their work cut out to stamp out anonymous payment systems completely, however. There's huge demand for them among the criminal fraternity, and their transfers will have simply moved across to other payment services such as WebMoney, Perfect Money and cashU. "If Al Capone [pictured] were alive today," said an IRS spokesman, "[Liberty Reserve] is where he would be hiding his money."
But go forward a few decades, when cash has become obsolete. In the wake of the NSA scandal, where we're left wondering what privacy we really have, it'll be to the likes of Liberty Reserve that we turn to hide the paper trail of our whims and deviations. Today Al Capone, tomorrow you and I.
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