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The idea is that the government can (or wants its constituents/subjects to think it can) not only monitor currency so it's always aware when money is acquired through theft, extortion, selling of contraband and other crimes, but can remotely 'ruin' such ill-gotten gains therefore taking away any value they once had. Ideally because of this people would not see much point in becoming drug dealers, pimps, gun runners etc, because any profits gained by such crimes quickly become worthless.

Is there a way this could be done? I'm not asking for something 100% effective, but ideally a way that would make a large dent in crime.

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    $\begingroup$ I don't think it's possible. $\endgroup$ – Xandar The Zenon Jan 14 '16 at 23:24
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    $\begingroup$ So you want a currency which is able to make a difference between "I just bought a banana for \$100, this is overprice but I really wanted a banana" and "I just bought a banana for \$100 but in fact there is drug in the bag" ? Seems really hard. $\endgroup$ – Kolaru Jan 15 '16 at 1:34
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    $\begingroup$ I want to see a magic based solution. Can you make money sentient or something like that? Does it make sense to do it in a setting where it is possible (ie, with powerful enough magic)? $\endgroup$ – Theraot Jan 15 '16 at 4:32
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    $\begingroup$ I think if this worked you could solve the human condition. $\endgroup$ – xdhmoore Jan 15 '16 at 5:08
  • $\begingroup$ Make it legal, tax the shit out of it to the point where it's faster to make money through other (previously legal) means? $\endgroup$ – Jon Story Jan 15 '16 at 12:03

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No Cash.

If money only exists in electronic form, all transactions are electronic too. This means that for money to change from person to person, both persons need to agree on the transaction.

Of course, people may resort to treats to get the other part to give the money, just like always.

But all transactions may be monitored by a central bank, and it could be a matter of reporting the incident. Futhermore, if you force everybody to report their ins and outs (which is not rare for people who pay taxes) it could be cross referenced. Which will allow the goverment to notice when somebody is reporting a false income.

So with fully eletronic money, all transaction - even small ones - would be registered. With proper regulation, everybody will have to report. For example a person will have to report like "A gift from XYZ of such ammount" and XYZ will have to report "Made a gift of such ammount to a person" (a person, that's the name :P). With this in place, even if the goverment does not care, the thieft will be paranoid.


What happens if a person dies without reporting? - That depends on the ruling, but an interesting scenario is where the transaction is reverted.


What about a criminal that coerces the victim into reporting? The report process will require special protection. It may be the case that it cannot be done online. By anymeans it has to require strong authentication.


Money will never be lost, as it exists in ethereal accounts in the central bank... unless it is lost from the central bank. There could be rumors that this has happened in the past. Or you could just put it in the law as a form of punishment - even if never made effective.


Addendum: No cash, but there is a catch! people may still rob valuable goods. It may be the case where all manufactured or sold goods have an id, and are also reported to the goverment. This means that any homebrew item, or whatever artinal or handcraft item will not be easy to sell, as it will be required to be reigstered first.

This may also create an underground barter market, where people don't use money - or some alternative form of money maybe used. Use post apocalyptic ideas of money as inspiration.


Logistics

If we are requiring people to report in person, we should not expect people to remember all transactions. Instead a personal record of transactions would be kept. And people could use the same device used for any other transaction.

To access this device we need strong authentication. Something like fingerprint and DNA scans come to mind. You also have the option of having the device implanted in the person.

In order to report, people would have to go to a special installation, where they would be left alone beyond security lines - so no criminal will enter with them or be able to monitor what they do^1 - and there they can report the robbery. All normal transactions would be reported by interfacing with a machine in the place.

^1: Unless, maybe they are part of the government force. It could be the case that cameras are there to prevent damage of the equipment in the installation. I let this as your creative decision.

Countermeasures

If there is a machine that can interface with the device used for transactions, there is the risk that some criminal organization will create a replica that will be capable of reading - and maybe editing - the entries on the device. With such machine it would be easier to steal. Although I would expect that it will require to take the victim to a particular location where the machine is located at.

I would expect that no rouge connection to the central bank for reporting can be done, not without a proper key that is. Yet, if we consider some corrupt officials may be involved, such machine may also be able to interface with the central bank - using a key provided by the corrupt officials - allowing the criminals to report the transactions as legit.

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    $\begingroup$ You still have money laundering. Goods are valuable because they have a use, not because some government put a price tag on them. If I steal your television, I can still trade it to someone for something useful -- say, 50 gallons of gasoline. He gets a cheap television, I get free gasoline. He knows it's stolen, but doesn't care because he wants to watch the football game. I use my free gasoline to earn money delivering newpapers and now I don't have to pay the fuel bill and can use the extra money to buy a steak dinner. Etc. $\endgroup$ – MichaelS Jan 15 '16 at 2:42
  • $\begingroup$ @MichaelS I'm aware, I did mention that there would be an underground market. $\endgroup$ – Theraot Jan 15 '16 at 4:24
  • $\begingroup$ I guess my point was just that everything you've suggested would be incredibly expensive, ridiculously cumbersome, and all for nothing because it's also easily circumventable by anyone with enough brain cells to pull off the robbery. Your system would protect people from accidentally dropping cash on the sidewalk, but so do debit cards. Side-note: fingerprints, retinal scans, DNA scans, etc., are far less secure than a decent password. $\endgroup$ – MichaelS Jan 15 '16 at 4:41
  • $\begingroup$ @MichaelS Let's not talk expensive, your answer - aside from pointing that no security is perfect - suggest as solution a permanent surveillance of all land. As you said, this is worldbuilding. Consider DNA and fingerprints suggestions, although I admit that choosing identification and authentication mechanism is not trivial. $\endgroup$ – Theraot Jan 15 '16 at 4:48
  • $\begingroup$ So, the most valuable crime would be hacking the reporting system. $\endgroup$ – Burki Jan 15 '16 at 8:00
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The problem with the question is the underlying premise that the laws and actions are unambiguously "crimes", so can be easily reported and actioned. The reality is there are huge grey areas which will make a system such as the one being proposed nightmarish to administer, and potentially cause far more problems than it purports to solve.

Consider the act of committing a crime. Generally, for a person to be considered to have committed a crime, there must be both the actus reus (the act) and the Mens rea (the awareness the activity is criminal). It is quite possible in today's society to be committing a crime (actus reuse) without any intention of criminality or even awareness of criminality due to the vast number of overlapping and often poorly written statutes and regulations. So are these people going to have their wealth seized because they were not aware that they were infringing on some sub sub paragraph of an obscure Federal Statute? Some people believe this situation exists on purpose, since almost anyone can be "criminalized" if they cross the wrong politician or bureaucrat. Consider this quote from Atlas Shrugged:

“Did you really think we want those laws observed?" said Dr. Ferris. "We want them to be broken. You'd better get it straight that it's not a bunch of boy scouts you're up against... We're after power and we mean it... There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.

As another example, it was very difficult for Enron to be convicted of criminal activity because they were very skilled at operating in the "spaces" between various regulations, particularly when operating across State lines (i.e. selling energy from Nevada to California). While you might consider this an admission of Mens Rea, if what is being done is perfectly legal in Nevada, then are you actually breaking a law in California?

Administration is another issue to consider. There are laws which allow seizure of assets deemed to have been gained from the commission of crime. The problem comes when, for example, the asset is held by the State for a prolonged period while the trial is being held. During this time, who is responsible for the upkeep and maintenance? If it is a financial asset, can it be reinvested while the trial is going on? If the person is acquitted of a crime, ors the State owe compensation for the potential value that could have been gained during the time the asset was out of the owner's hands?

Crime is probably much better handled by making criminal statutes much tighter and covering much smaller and clearer areas of life and social interactions.

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  • $\begingroup$ There are also cases where it's not possible to define a clear criminal statute -- such as physical trespass law. In these cases, the statute actually relies on the judiciary applying well-understood social norms to adjudicate individual situations, but this doesn't work when the laws are made before the norms of a space have had time to develop (example: CFAA). $\endgroup$ – Shalvenay Jan 15 '16 at 3:11
  • $\begingroup$ Re Enron: It gets worse when you decide that it is a crime due to cross-state law. Now you can prosecute the Turtle Soup Shack in Missouri because the turtles he bought from a supplier were illegally harvested in Maine. Or you have international law which supersedes everything. It is perfectly legal in some states to hunt geese...by state law. The US has an international agreement with Great Britain (on behalf of Canada) that Canadian Geese will not be hunted (or more accurately: any migratory bird). Woe be the hunter who doesn't know this. Law is so complex we have an entire profession for it $\endgroup$ – Draco18s Jan 17 '16 at 15:34
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Limit the value of money.

This is the reason the US no longer prints anything bigger than 100 dollar bills. The US used to have 500 and 1000 but we got rid of them. So criminals having to make large hidden transactions have to now carry a suitcase of cash that is 5x larger or 10x larger making life harder for them, making them more noticeable and easer to catch. If we could drop from the 100 to the 20 then they would not be able to do sizeable payments except online.

Problem is barter. Criminals now trade in valuable items instead of cash. They trade valuable art drugs or gems as a value dense secret trade medium.

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First, note that not all crime is about money. If my girlfriend cheats on me and I decide to murder her, you can't stop that via any kind of currency.

Second, the only way to make crime not pay is if you can monitor every single person and therefore detect and prove each crime that's committed, then dole out equitable punishment. Even then, the people in charge of monitoring can be bribed, blackmailed, or otherwise coerced into ignoring specific crimes. And the only way to monitor everyone at all times involves a substantial portion of the population being employed as monitors, which would be hugely inefficient (you'd waste more money stopping crime than the criminals would have stolen from you to begin with).

As I pointed out in a comment, stolen goods can always be laundered for money. It's just a matter of selling a stolen item for cheap to someone who doesn't care about legality. The thief can trade "services performed" (such as cleaning or yardwork that don't actually occur) and the stolen item (which isn't listed on the bill of sale) for money or goods. If trading for goods, those goods can then be sold for money, or used directly by the thief, allowing them to save money they would have otherwise spent.

However, this being worldbuilding, a valid answer could involve one or more centralized AIs or super-smart aliens, and recording devices surrounding every building in the country/planet. Ideally, you'd want to record the rooms inside the building, but it would be pretty hard to say you weren't guilty when we can show you staking out the house, entering just after the owner left, and walking away with a box full of stuff. You'd still have trouble with jewelry and other easily-concealed items, but as long as people kept that stuff well-hidden, it would be a fairly minor issue (plus, we'd note the breaking-and-entering and when the cops found your pockets full of expensive jewelry, that would be pretty substantial evidence of theft).

For major corporations, they often already have recording devices everywhere, so now we'd just have an AI who was capable of almost immediate detection of the crime and tracking the suspect until the police arrived at the scene.

For consensual crime, like drugs and prostitution, you're not going to catch every little case unless you've got cameras in every room in the land, and on every tree in the woods. However, an AI would be able to make very good referential deductions and help the police take down major suppliers or brothels, as well as people who make almost all their money off such things. With drugs, taking down the major suppliers would be enough to largely eliminate the problem. Prostitution would be trickier unless sex itself were outlawed, but you'd still catch the career girls/guys/shemale aliens/robots/whatever they're into by this point.

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  • $\begingroup$ @MichaelS- I never meant to eliminate all crime this way, just profit-related crime, maybe I should have been more specific- if so, my bad $\endgroup$ – king of panes Jan 15 '16 at 6:43
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We need to ask two questions first.

What is crime?

Crime is something the people in power don't want you to do. They normally try to justify the action being forbidden as being harmful to others.

Why does crime pay?

There are two options here

  1. It pays because it's crime
  2. It's a crime because it pays

Examples of the first include drug dealing and assassination Examples of the second include theft and insider trading

There are quirks here. Drug dealing pays a lot more than assassination, but does it really harm anyone? You could make it not pay by making it legal, licenses, taxes, regulations. The system could make money out of it rather than it costing a fortune. I'm not going to go into further details here, it's not the right place. Just remember that there were no great kingpin druglords before drugs became a crime. Assassination on the other hand is a fine old career for a very small number of skilled workers, it's as much a public service as a crime when the system needs it.

The same is true for the second option. Theft on the whole is petty crime, absolute maximum £14million or so and anything of that value is really hard to fence. Theft doesn't really pay as it is. Insider trading doesn't really hurt anyone, what's lost is opportunity and "fairness", but makes millions as a starting point. It's a crime because it pays. To make crime not pay you're going to have to deal with the attitude that makes this a crime, not whether or not it pays.

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Well, let's go through this: "drug dealers, pimps, gun runners" are all examples of consensual transactions. How do you know that the consensual money is being paid for an illegal transaction? Perhaps all financial transactions are reported (even the tiny ones) and you use AI to detect which ones are for illegal transactions.

Gun running may be the easiest to detect. Presumably these come from legitimate manufacturers. They have to report the income. It can be traced to the illegitimate buyers. That flips around a bit if they don't buy legitimately at any step in the process. Steal the guns from someone that legitimately has them. But now you have to explain why you are paying the people who stole them. And why people are paying you.

Drug dealing has the same problem. Why are you paying these farmers for such expensive vegetables? The question is if you can distinguish drug deals from overpriced produce transactions. Can you? Do you have information on who is calling off work? Showing up high? Hospital visits? If so, you can trace their transactions back.

The obvious place to find pimps is by looking for people with unexplained income. To get around this, they would try to hide the prostitution income with legitimate income. For example, if the pimp owns a strip club and employs the prostitutes as strippers, then illegal paid sex acts can pretend to be legal lap dances. Of course, if you have comprehensive video covering even private spaces, that can be disproved.

Perhaps we go to next generation pimping. Think Ashley Madison. Customers pay for the algorithm's success in finding like-minded partners. The harder a customer is to match, the more they pay. The site pays especially adventurous dates who are willing to explore customers with more difficult matches. Is that prostitution? Or a legal escort service?

Even better is if you pay for one illegal service with another illegal service. Prostitutes paid in drugs or gun runners paid in drugs and prostitutes are going to be much harder to catch by examination of financial services than someone paid with money.

So maybe you have a bunch of people with regular jobs and illegal interests trading with other people with regular jobs and illegal interests. That portion of the illegal economy may be impossible to eliminate via financial examination. They might get caught via constant surveillance though.

Note that in the US, you'd need to get rid of that pesky fourth amendment. It would prevent the constant surveillance needed to catch people actually breaking the law.

In short, while laws regarding financial transactions may make it a little easier to catch some crimes, they won't eliminate even just for-profit crimes. Too much of the crime is dependent on things outside of the financial transaction.

If I give a farmer money, it may be for illegal marijuana. Or it may be for legal organic produce. The difference won't be in the financial transactions.

If I have sex with someone and buy her a gift, that could be prostitution. Or it could just be a normal interaction between two people. The difference is in the interaction. Did she say, if you buy me that \$500 piece of jewelry, we can do these sex acts? Or did I choose the jewelry only after the sex? It's not possible to see from the financial transaction. The financial transaction won't even show to whom I gave the jewelry unless I have it delivered.

Money is fungible. Illegally obtained money doesn't normally look different from legally obtained money.

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Theraot went farther than is needed in order to accomplish this: You don't need government monitoring of all transactions. Instead, use something like Bitcoin but where all the currency units come from a central authority, there is no mining. If money is stolen from you you report the offending transaction and the relevant currency units go on a suspect list--anything on that list can't be spent. If the investigation upholds your report they go on a dead list--again, can't be spent but this is permanent.

To guard against spending the money before the theft is noticed put a time delay into it--you can't spend money for period of time after obtaining it. (Note that banks will likely waive this for good customers like they let you use the money from a check you just deposited.)

Note that such tracking schemes won't help with extortion or blackmail because the victim won't report it.

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  • $\begingroup$ Emitted electronic currency requires a database of money in circulation - so nobody creates counterfeit electronic money. To demonstrate ownership of the coin there are public records "block chain" of all transactions. Since this is the official currency, there will be an institutition that has the database and the official version of the records. The goverment may sniff on that copy (it is public anyway). And what may that institution be? Idk... a bank from the goverment? - also you can still steal electronic wallets, and buy drugs or prostitution with electronic money. $\endgroup$ – Theraot Jan 15 '16 at 2:35
  • $\begingroup$ @Theraot Sure there is a blockchain that's public--there is with Bitcoin now. You would only need to reveal the account that money was stolen from, nothing says you couldn't have more than one. $\endgroup$ – Loren Pechtel Jan 15 '16 at 3:33
  • $\begingroup$ Does not deter "drug dealers, pimps, gun runners ect" $\endgroup$ – Theraot Jan 15 '16 at 4:22
  • $\begingroup$ @Theraot Tracking every transaction doesn't deter them, either, unless you make everyone justify the transactions which would be incredibly intrusive. $\endgroup$ – Loren Pechtel Jan 15 '16 at 22:03
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Consider the theory and practice of civil forfeiture in the US. When it comes to unexplained cash, this is about what you are thinking about, in a more spotty way.

The principal objection is the presumption of innocence. Does the state have to prove the crime, or does the citizen has to prove the absence of a crime?

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Please note that I am emphatically NOT advocating this, but ...

Abolish all the laws about buying and selling things. Crime would then not pay because anything that paid would be legal! Hiring an assassin would be legal like paying a prostitute may today be legal depending on where you live. Murder would remain illegal though and maybe having abolished all financial crimes and most others, punishment of the few remaining crimes might be draconian.

This is an extreme libertarian position verging on anarchy. Some would say that it is anarchy. Whatever. As far as I know no such society has ever lasted for long enough for anyone to claim that libertarian anarchy works. On the other hand we have not had electronics and computers for long enough to have explored more than a tiny fraction of the possible social ramifications.

The biggest hole in this scenario is robbery, which is also IMO why anarchy has never been stable in the past. But suppose everyone was tracked all the time? Those of us who carry mobile phones and live in a city pretty much are, already. Currently that is voluntary. So perhaps things develop so that not carrying your phone is a crime. To avoid innocent mistakes the tracker function becomes a bio-implant installed when you are a child. You'd need surgery to turn it off and then you'd be an outlaw with almost zero ability to have a life ...

So robbery wouldn't happen because the system could trivially translate when and where into who.

Possible? Not quite yet. Stable? No idea. I'd like to read the book if you write it.

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If I may, one option would be using some kind of "cryptographic" currency. Bitcoin is a currency based on anonymity, however it's nature has Allowed the FBI to trace transactions If one where to go a step further, and design a currency so that each and every "cent" had a Unique Identification, Tracing currency would become (while data intensive) simple. To some degree, that is the concept behind serial-numbers on paper-money, however such serial numbers are not consistently traced at every transaction.

However, if the Big-Brother state in question required all "credit" transactions to be bio-metrically verified via the state-bank, it would be very easy to determine who had what money, and where.

Of course, this doesn't stop a person stealing objects of value, and attempting to sell them - but it would mean that once the sale was discovered, the money made could be voided instantly.

As a side note to this however - It would require that all cash-money be illegal, anything from copper-coins, gold-doubloons, paper-money, Barter, even an IOU would be a criminal offence.

This may in itself provide interesting plot points - Persons illicitly using foreign currency to trade for illegal items. Or underground "bartering markets" where the poor/criminals/vagrants attempt to trade items for food without using credits.

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