• Law, Policy -- and IT?

    Tracy Mitrano explores the intersection where higher education, the Internet and the world meet (and sometimes collide).


Hidden Money Revelations

Crime, banks and the Internet

December 4, 2016

Of many interesting articles this week the one that caught my attention the most was about how to hide 400 million dollars. Written almost as if it were a mystery story, it tracks how an estranged husband sought to salt money away in international banks such that his wife would have no access in a divorce. As described in the article, the husband and the wife are not the kind of people with whom I would want to spend my time. They made money in fraudulent schemes, many of them played out on the internet. But liking or not liking them was not the intriguing point.  It was the revelation within the story that shell companies and trusts designed to hide money — much of it either generated illegally or being held to avoid legalities — hold a purported 21 TRILLION of the world’s financial wealth. 21 TRILLION USD.

That is a staggering amount of money hidden away for purposes of keeping one step ahead of tax bills, blinkered business partners, or an estranged spouse. This sum undoubtedly includes money acquired through criminal activity.  That is also an enormous percentage of the world’s wealth to be sequestered away from the active markets. In Adam Smith’s view of the world, that money would otherwise be available to generate new wealth, to grow economies, to pull scores of people out of poverty, or to keep existing working and middle classes from sinking back into want.  No wonder many developed countries in Europe, Asia and the United States have been relatively stagnant for some time now.  No wonder it is so difficult to penetrate endemic, destructive poverty in Central and South America, Africa, many parts of Asia and even within the United States and Canada.  Wealth exists, but it is not in circulation. This article implies that it is sitting still in some remote bank in the Cook Islands as the result of nefarious activities abetted by legal tricks.

The issues surrounding global internet governance parallel these implications. First, international governance to bring the principles of justice to bear on either global banking or the internet does not exist. Second, the dark interstices of this ungoverned territory create a haven for illegality and fraud. Third, about the only means of penetration into this world is through intermediaries, for example lawyers and financiers, on-shore banks that assist in holdings and transmission. Lawyers afraid of losing their license, credit card companies and legitimate banks that avoid legal action or bad publicity, accounting firms that make an honest living often act as check points from perpetrator to ungoverned cash. But to the tune of 21 trillion dollars and the intractable challenge of cyber insecurity on the internet, intermediaries may not be good enough to stem the tide of layers and layers of illegality.

Where neither moral compass nor legal constraint exist, human nature’s darker side lurks. That dark side lends itself to unchecked violence and dehumanization that often lies within the illegal processes of generating much of this hidden wealth. Knowing that you can safely hide ill-begotten money encourages brutal behaviors played out in drugs and addiction, sexual slavery, extortion, theft and fraud. Moreover, these activities are not separate from global economics. From perpetration to prosecution, those activities create enormous inefficiencies within rational society. They also impose aching burdens on people who live by the rules. 

I have no pat answers to these problems, but I feel strongly that they are vital questions. And the relationship between and among crime, global banks and the internet is more than an interesting insight about parallel tracks. Insofar as the internet facilitates crime, disorder and debasement, we must include its properties in our assessment as how to assert justice.  The medium, curiously, is also the message. 


Be the first to know.
Get our free daily newsletter.


Back to Top