Paying Cash? You Could End Up In Prison

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Australian money

A proposed new law would make paying more than $10,000 in cash for goods or services a criminal offence.

The proposed changes were first announced in the 2018-19 budget, and a draft of the legislation, called the Currency (Restrictions on the Use of Cash) Bill 2019, was quietly introduced by Treasurer Josh Frydenberg last month, as one of the recommendations of Federal Government’s Black Economy Taskforce.

The Government says the law is designed to help stamp out tax evasion and money laundering, but critics see it as a disturbing attack on civil liberties which would contribute to our nation’s move towards an Orwellian state.

Fines and prison time

Under the proposal, Australians could face two-year prison sentences and fines of up to $25,000. The laws would be intended to apply to all payments of more than $10,000 to a business with an ABN, affecting major purchases like cars, boats, housing and building renovations, with exemptions for transactions between individuals with no ABN.

So essentially, if you choose to sell a personal asset to a private individual, such as a car, or a boat or a caravan for $15,000, you will still be able to do so in cash, but you cannot make such a purchase from a registered dealer or retailer and pay $10,000 or more of the balance in cash.

If passed, the laws would take force on January 1, 2020, and for certain AUSTRAC reporting entities from January 1, 2021, and the penalties for those exchanging more than $10,000 in cash would apply to both parties — the payer and the receiver.

However, there is the very real fear that the law as it currently stands would give the banks (which were heavily criticised by the recent Royal Commission into Finance and Banking) as well as government agencies too much power, to trace people’s spending.

Treasury is also considering whether the law should compel businesses to dob in customers trying to make large cash payments. It has already suggested that the community could report ‘suspicious’ activity and behaviour via the black economy hotline, which was also announced in the 2018-19 federal budget.

No safeguards in the law

Another serious concern is that the law enables the government to investigate and prosecute people without being required to demonstrate the commission of what would normally be considered a criminal act, nor the intent to commit such an act, without appropriate safeguards for the presumption of innocence.

CPA Australia has expressed the view there is no justification for such an “extraordinary penalty” for the use of legal tender, and that to “link all large cash transactions to criminality is a step too far.”

A step too far?

While the use of cash in large transactions can potentially be an indicator of illegal activity, that’s not always the case, as the Australian Dental Association argued in its submission to have the bill rejected. It says many older Australians who need expensive dental treatments pay in cash, because they don’t have access to electronic banking facilities or do, and don’t know how to use them.

It’s a bill with wide-reaching implications for a lot of Australians. Cash is after all, legal tender, and the question needs to be asked whether this proposed new law would actually be effective in stopping the big tax cheats and system rorters any way.

Right now, in 2019, many criminologists would argue that law breakers have long moved on from cash anyway, preferring to transact in cryptocurrencies because transactions are virtually impossible to trace, and because these exist in the digital space, for now, they are beyond the parameters of law enforcement and out of the reach of financial regulators.

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Sonia Hickey

Sonia Hickey is a freelance writer, magazine journalist, and owner of 'Woman with Words'. She has a strong interest in social justice and is a member of the Sydney Criminal Lawyers® content team. Sonia is the winner of the Mondaq Thought Leadership Awards, Spring 2022.

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