Snippings

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Efforts are being made to track down the owner of more than 3kg of gold that was left in a carriage last October.
The hoard, worth around £152,000 ($191,000), was found on a train between St Gallen and Lucerne.

From Swiss search for owner of gold haul left on train – BBC News:

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The website Biblio-Fiend have listed their nine best books about the future of money and I cannot help but be a little flattered to find out that two of them are mine. Here’s the list:

The Currency Cold War by D. Birch (LPP:2020).

Blockchain Bubble or Revolution by N. Mehta, A. Agasha & P. Detroja (Paravane: 2019).

The Future of Finance by H. Arslanian & F. Fischer (Palgrave Macmillian: 2019).

Beyond Blockchain by E. Townsend (2018).

Before Babylon, Beyond Bitcoin by D. Birch (LPP: 2017).

The Internet of Money volumes 1-3 by A. Antonopoulos (CreateSpace: 2016).

Personal Currency by R. Colbourn & A. Riegelmann (Lionhead: 2016).

The Age of Cryptocurrency by M. Casey and P. Vigna (Macmillan:2015).

How Would You Like To Pay by B. Maurer (Duke University Press: 2015).

Needless to say, I was very flattered to be in such good company!

 

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The tech giants, meanwhile, see expansion into financial services as a way to further embed themselves in people’s lives and gather data they could use to inform more of their products.

From Google Plans to Expand Google Pay Into Commerce Portal — The Information:

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Madis Reimand, Head of the Baltic country’s Financial Intelligence Unit revealed that regulators suspect that licensed crypto firms are abusing their Estonian credentials to commit fraud elsewhere.

From Estonia withdraws permits from 500 cryptocurrency firms:

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FinTechs weren’t authorized to participate initially so Kabbage joined with banks as partners, including Cross River Bank since the first tranche of the PPP and eventually Customer’s Bank in the second working with more than 100. After the Treasury Department invited fintechs to participate, Kabbage applied and got into the second tranche to lend directly to businesses It also qualified for the Fed’s lending facility so it could borrow the money to lend rather than waiting for reimbursement.

From Kabbage Processed 129,000 SBA PPP Loan Applications For Nearly $4 Billion:

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When we think about designing the digital money of the future, the elephant in the room is anonymity. Should digital designers replicate the anonymity of cash in the digital realm? After all, there are people who think that the anonymity that cash affords them is a fundamental liberty. Of course, there are people who prefer to exist in a cash economy for reasons other than a fundamental lack of trust in the international financial and monetary system. Criminals and corrupt politicians, for example. Cash works rather well for them, but can sometime be quite inconvenient. For remote purchasing, for example. Only recently I read about two freelance pharmaceutical intermediaries who were arrested in California after police caught them dumping nearly $1 million in cash which was intended to buy marijuana some distance from their main place of residence.

If you are wondering why they didn’t just Venmo or Square Cash the money, remember that the state of California imposes a 15% excise tax on licensed cannabis so the cash-based black market avoids tax. The state estimates the regulated market has captured less than one-third of activity, once again suggesting to me that the primary function of $100 bills is tax evasion. Talking of $100 bills, by the way, the state of California has a huge $100 bill problem right now and not only along I-5. The coronavirus has disrupted supply chains so that drug dealers in the USA cannot use the normal trade-based cross-border money laundering pathways to pesos. Hence, massive quantities of dollars are piling up outside the financial system, which makes me wonder how it is that these people have never heard of cryptocurrency. Given the huge hassle bagging the Benjamins, why didn’t these informal chemical economy entrepreneurs simply buy a few bitcoins, drive to the drop zones and press the “send” button when the goods are in front of them. It only takes an hour or so for the half a dozen confirmations that the wholesale distributors would want to see, and then you are all set. But no, they packed up the greenbacks and set off in their car.

There must be many people who don’t want to carry around huge wads of cash for such purchases. Why aren’t they in crypto? How can it be more convenient to cart around great wodges of cash than to zip some magic internet money through the interweb tubes? Surely, I am forced to reflect, if drug dealers won’t use bitcoin, then who will?  What is the niche for cryptocurrency? A quick investigation tells me that the market-leading adult content site accepts four cryptocurrencies, three of which I’ve never heard of, and not Bitcoin, Monero or Zcash although that may change soon as I note that a number of campaigners have sent letters to Visa, Mastercard, Amex and all demanding that they stop processing payments for adult services. (Mastercard said that they were investigating claims made the and would “terminate their connection to our network” if illegal activity was confirmed.)

Maybe taking payment cards away from sites such as PornHub will stimulate evolution in user journey and ease of use for Monero et al and push them into the mainstream at last. If history is any guide, it’s demand from the adult industry that shapes the paths of new technologies and I can’t see why digital money should be any different. Maybe the porn and gambling guys will get together and launch an over-18 version of Libra which, as it will be the only way to pay for these services, will soon become the currency of choice for adult services and then, by extension, for adults.

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Portable identity enables people to safely and securely re-use their verified identity across financial services and other organisations, so that they don’t need to be re-verified every time they want to access new services.

From Onfido, Deloitte and Evernym Prove that Re-usable Digital Identity is Market-Ready with the FCA Regu:

So, a customer presents a passport or driving licence to open an account at Bank A. Onfido verify the documents and Evernym create a digital identity that is then stored on a blockchain by Deloitte. Then, when the customer wants to open another account at Bank B, they do not need to present the documents again, they simply point Bank B at the digital identity on the blockchain. Bank B knows that the identity has been verified by Bank A, so they do not need to verify the documents again. This saves everyone time and money.

It’s a timely demonstration of where the industry might go next. The Financial Action Task Force (FATF), the global inter-governmental money laundering and terrorist financing (ML/TF) watchdog, recently published its new “Guidance on Digital ID” (6th March 2020). These aim to encourage governments and financial institutions to use the FATF’s risk-based approach to “encourage use of digital customer onboarding” and to take advantage of “simplified due diligence” to tackle the challenges of COVD-19 whilst remaining alert to “new and emerging” risks.

What is particularly interesting about the new guidelines is that, in common with the EU’s Fifth Anti-Money Laundering Directive (AMLV), they recognise that there is role of digital onboarding beyond convenience or necessity. Paragraph 87 of the document says very clearly that given the advances in the technology and standards in the digital ID world that “non-face-to-face customer-identification and transactions that rely on reliable, independent digital ID systems with appropriate risk mitigation measures in place, may present a standard level of risk, and may even be lower-risk (my emphasis) where higher assurance levels (eg, NIST IAL2) are implemented and/or appropriate ML/TF risk control measures are in place.

Of course, digital and “face-to-face” are not alternatives. The use of digital onboarding to support and enhance face-to-face interactions to also going to accelerate. Here’s an example from Canada. In March 2020, Royal Bank of Canada (RBC) introduced an enhancement to its mobile application to allow customers to verify their identities when opening a new account in branches. The app can use the contactless interfaces in mobile phones to read the chips in electronic passports to speed things along. Why bother? Well, RBC say that when a customer verifies their identity this way, there details are immediately flashed to the computer screen of the RBC employee helping them, so giving “a stronger connection between the branch and the app” and cutting the account opening time by more than two-thirds.

Since the FATF made the new recommendations, regulators around the world have issued their own statements supporting such action including the UK’s FCA, Hong Kong’s HKMA and the US FinCEN as James Mirfin of Refinitiv pointed out. In the UK, for example, the Financial Conduct Authority (FCA) issued a letter noting that while organisations have to meet their obligations under the relevant regulations (in this case, the UK’s Money Laundering Regulations 2017), they can be flexible. Now, some of this flexibility is a little old school (allowing people to send scanned documents as PDFs by e-mail instead of producing original documents, for example, is what I label “digitised identity”) but some of it is, I think, a considered and sound response to the new environment.

The FCA have said that they will accept “third-party verification” (where a lawyer or accountant corroborates data) and, in a step towards the federated digital identity of the future (the “financial services passport” that I have been going on about for years), organisations can rely on CDD performed by other organisations (the example given is the obvious one of customer’s primary bank account provider) and on commercial providers who “triangulate” data sources to verify documentation. This is why the sandbox experiment is so timely. We may be about to see a step change in the costs

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Although Twitter removed the “Antifa” tweet and the account, its digital shadow continues to stretch across the internet.

From The Anatomy of a Fake Antifa Tweet – OneZero:

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On June 2, Twitter disclosed that an account suspended for inciting violence was the work of a far-right white nationalist organization known as Identity Evropa. The group had created a Twitter account, @ANTIFA_US, that claimed to be part of the anti-fascist movement known as “Antifa.”

From The Anatomy of a Fake Antifa Tweet – OneZero:

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CaixaBank is the world’s first bank to create ATMs with effortlessly and securely integrated biometric technology.

From CaixaBank deploys ATMs with facial recognition technology throughout Spain:

Excuse me, but I don’t think so. When my sister worked for Nationwide Building Society, she loved using their cardless biometric ATM and that was more than two decades ago! But actually there’s another reason why this headline caught my eye, and it is this: as the COVID crisis has accelerated the trend toward a cashless economy (apparently the average Brit has now gone 44 days without using cash) so making fancy additions to ATMs starts to look a little like designing new deckchairs on the Titanic.

The economics of ATM networks start to look very shaky once the transaction volumes start to fall. The machines are expensive to install (and to replace in places such as Philadelphia where they are being blown up at an alarming rate) and it costs money to distribute money: someone is paying for security guards and armoured trucks and so on (it’s you, by the way). This is why John Howells (the CEO of Link, which runs 70,000 ATMs in th UK) said cash could be “almost killed off” by the end of the summer. When the lockdown began, cash was still used in around a third of transactions but Link predicts its use will slump to just 10 per cent by August.

This, as you can imagine, has significant ramifications. Consumers face higher charges, for one thing, as the cost of the network is spread over fewer transactions. In the UK, the amount paid by consumers to take cash out of ATMs rose by £29m to £104m last year as many free machines were withdrawn or converted to charge fees, while not having to maintain so many machines saved the banks £120m.

ATMs are one way of distributing cash to consumers, but only one way. Retailers are another, and if customers come in to get cash then that saves the retailers from having to bank that cash, so that’s a good thing.