Gun restrictions are back on the table in the United States, and rightly so after yet another atrocious high school shooting in Parkland, Florida. This time students are standing up and calling for more stringent measures on how assault weapons are sold, and to whom.
As a result, a number of financial institutions have been toying with the idea of terminating their business relationships with any company or organization directly affiliated to the National Rifle Association (NRA), including gun manufacturers.
If at first sight this might cause a round of applause, it is worth asking how effective such standalone measures will be to stop illegal or suspicious gun sales. Just like in the case with cashMoney in physical form such as banknotes and coins. More restrictions as a tool to deter terrorism financing, imposing restrictions without a more comprehensive approach could simply push the problem elsewhere.
In Europe, a wave of limitations on cash usage were applied these past few years supported by the questionable argument that cash is the preferred payment methodSee Payment instrument. More of both criminals and terrorists. Alas, now that these restrictions are in place (varying from €500 in Greece to €5,000 in Slovakia), the EU has realized that they have done little to prevent acts of terrorism. Not surprisingly, European Parliament Foreign Affairs Committee MEPs have listed other suggestions to fight the funding of illicit activities that no longer mention cash. Among other things, the proposal recommends implementing a monitoring mechanism targeting suspicious organizations, individuals and entities that are under opaque regimes and advises that cryptocurrencies be subject to greater scrutiny.
A similar scenario is evolving in the U.S. While restrictions on gun sales are being discussed, a shift in gun purchasing habits is taking place, and it includes cryptocurrencies. What stands out from these data is that one-off restrictions do little to solve the problem at hand. On the contrary, they inevitably shove it under the carpet, hindering visibility even further.
G2 Web Services data exclusively made available to PaymentsSource found that “the first two quarters of 2017 showed 21% and 18% decreases in weapons content on e-commerce sites compared with the same quarters in 2016. However, weapons content on websites shot up by 188% in the fourth quarter of 2017 from a year earlier, and sustained its momentum at 108% over the previous year in January 2018.” This peak came immediately following the Las Vegas shooting when a new set of restrictive gun laws were being discussed.
Cryptocurrencies have also offered greater anonymity to users, which should start to alarm authorities. For example, Michael Cargill of Texas’ largest online gun shop, Central Texas Gunworks, noticed a 45% increase in revenue since he began accepting cryptocurrencies as a paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More (CoinDesk).
When the security and well-being of our societies are at stake, it’s unfortunately too simplistic to single out only one payment tool because, at the end of the day, they are tools. Although they might have different characteristics, one is not more evil than the other. Users, on the other hand, can be evil. Authorities should therefore broaden their scope and implement a more holistic approach to the funding of criminality and terrorism, just as the EU’s MEPs are now recommending.