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From time to time, when making presentations about identity and related topics, I have to stop to explain to baffled foreigners that the United Kingdom has no national identification scheme or identity card or any other such symbol of continental tyranny, so our gold standard identity document is the gas bill. I understand that these are notoriously difficult to forge and that the skilled artisans behind the North Korean $100 bill “ supernote ” threw down their tools in frustration when faced with the multiple layers of security that are part of the British Gas quarterly statement for residential users. Hence our gas bill  is a uniquely trusted document , and the obvious choice of platform for anyone concerned about fraud. (By the way, if for some reason you do not have a gas bill to attest to your suitability for some purpose or other,  you can buy one here  for theatrical or novelty use only.) No wonder identity fraud is an epidemic in the UK. Fraudsters are ruthless about exploiti...

xxx According to research published in the Journal of the European Economic Association, the level of trust in cultures today can be informed by events that occurred hundreds of years ago. The research shows that Italian states that became free cities in the Middle Ages – a process that required mass cooperation – exhibit higher levels of trust today than those that didn’t. From Chinese Government rolls out trust ratings to combat corruption | World Finance xxx

xxx The Chinese Government’s new tool to generate trust is known as ‘social credit’, and is currently in the process of being rolled out. The plan is to generate a score for every citizen based on how trustworthy they are. The system will aim to instil trust by combining carrot and stick: those with a good score will reap rewards, while a bad score will lead to punishments, such as public blacklisting and restrictions. From Chinese Government rolls out trust ratings to combat corruption | World Finance Now, in one way, this is a back to the future thing. When we all lived in clans and roamed the savannah, the social credit score of each and every one of us was stored in the “shared ledger” of the memories of the clan members.

xxx the regulations that govern this area. These state that a bank has to “have made clear to their customer how a Chaps payment will be processed” and that the bank “will make a payment solely on the basis of a unique identifier and will not execute it on the basis of the intended recipient’s name”. From ‘We lost £120,000 in an email scam but the banks won’t help get it back’ | Money | The Guardian xxx

xxx Lloyds, which took eight hours to make the payment, did not carry out any checks to ensure the name of the firm to which the payment was to be made matched the account numbers, From ‘We lost £120,000 in an email scam but the banks won’t help get it back’ | Money | The Guardian Neither Lloyds, nor any other bank do this. That’s just how the system works: the account name is an attribute, not an identifier.

There's a huge amount of payment fraud going on in the UK at the moment. The fraudsters intercept legitimate requests to transfer money from one account to another, often from solicitors in relation to house purchases but also from tradespersons such as builders) and they change the details so that the payer sends the money to an account under the control of the fraudsters rather than the intended destination. So, typically, the fraudsters will monitor e-mails coming from a solicitor and when that solicitor sends an email to a customer asking for money (e.g., for a house purchase), the fraudsters replace solicitor's legitimate account details with details of another account that they control. I wrote about this ages ago and put forward the obvious solution, which is to stop using e-mail for important transactions, but nobody paid any attention, and the problem continued to grow. In the first half of this year there were about 20,000 such frauds with some £100m lost (and only £2...

xxx "While most of the ICOs to date have been Utility Tokens, because of the massive advantages that Security Tokens have over traditional capital raising, I think the total market cap of all security tokens will be much larger than the total market cap of all utility tokens." From "7 Thoughts On Blockchain, Cryptocurrency & Decentralization After Another Three Months Down The…" . xxx

xxx NEW YORK, NY--(Marketwired - May 03, 2016) - SmartMetric, Inc. (OTCQB: SMME) -- According to a research report conducted by the research organization The Nilson Report, for 2015 through 2020, card fraud worldwide is expected to total $183.29 billion. In 2020, global card fraud is projected to exceed $35.54 billion. Fraud, grew by 19%, and outpaced volume, which grew by 15%. Fraud losses by banks and merchants on all cards issued worldwide reached $16.31 billion in 2014 when global card volume for the same period totaled $28.844 trillion. From Annual Global Card Fraud to More Than Double Reaching Over $35 Billion in Four Years My general sense of the industry, without giving away anyone’s figures, is that not only is fraud growing faster than volume, but that merchants are annoyed because declines are growing faster than fraud. We need a sea change in tackling fraud and I think there are two parts to this: changing the security vs. convenience model at the front end and changin...

As the former governor of the Bank of England, Meryvn King, has eloquently pointed out, banks are institutions that pre-date modern capitalism and “owe much to the technologies of an earlier age” (The End of Alchemy, 2016). There is no reason to expect them to continue in this form under the technological, regulatory, social and business pressures for change that are about to overwhelm them. If that sounds like waffle futurism that does not need to be taken seriously, you could not be more wrong. In the UK, those changes are going to begin in January when the world of “open banking” is created by the implementation of the Competition and Markets Authority (CMA) “remedies”. That is, the nine largest banks are compelled to provide Application Programming Interfaces (APIs) for third-party applications to access bank accounts, a milestone in a long journey to bring a revolutionary degree of competition to the sector. This all rooted in the frustration of the regulators to see more competi...

xxx   The Riksbank governor, Stefan Ingves, called for new legislation to secure public control over the payments system, arguing that being able to make and receive payments is a “collective good” like defence, the courts, or public statistics. From "Being cash-free puts us at risk of attack": Swedes turn against cashlessness | World news | The Guardian .   xxxPuerto Rico "Cash only," said Abraham Lebron, the store manager standing guard at Supermax, a supermarket in San Juan's Plaza de las Armas. He was in a well-policed area, but admitted feeling like a sitting duck with so many bills on hand. "The system is down, so we can't process the cards. It's tough, but one finds a way to make it work." From In a Cashless World, You'd Better Pray the Power Never Goes Out - Slashdot xxx xxx If I was the manager of Waitrose after the Woking earthquake, then I would simply accept payment by writing down card numbers, or photocopying dr...

xxx Shares of jewelers climbed in India after the government withdrew an order that brought the industry under anti money-laundering legislation, a move that comes just as gold buying improves before the Hindu festival of Diwali, the peak season for demand. Jewelers were included in the Prevention of Money-Laundering Act in August, increasing compliance requirements. Buyers have been shying away from making purchases as they had to provide their income tax identity for transactions above 50,000 rupees ($766), hindering high-value deals. From Jewelers Rally After India Anti-Money-Laundering Rule Reversal - Bloomberg xxx

xxx Mass cash stashing might signal a widespread fear of a looming apocalypse – or, more prosaically, it could signal rampant illegality. From In the contactless payment era, why is cash making a comeback? | Business | The Guardian xxx

I’m not sure if you’re supposed to have a favourite supply chain fraud or not but I do, and it is the famous case of the vegetable oil that almost bankrupted American Express (and went some way toward making Warren Buffet a multi-billionaire). The essence of the story is that a conman, Anthony “Tino” De Angelis, discovered that people would lend him money on the basis of commodities in the supply chain. His chosen commodity was vegetable oil (see How The Salad Oil Swindle Of 1963 Nearly Crippled The NYSE ). Amex had a division that made loans to businesses using inventories as collateral. They gave De Angelis financing for vegetable oil and he took the Amex receipts to a broker who discounted them for cash. So he had tanks of vegetable oil and Amex had loaned him money against the value of the oil in those tanks, the idea being that they would get the money back with a bit extra when the oil was sold on. Now as it happened, the tanks didn’t much contain oil at all. They were mostly wat...

xxx ‘found worrying or nasty in some way’ From Making Britain the safest place in the world to be online - GOV.UK Yes, well I find things like this every single day on the internet. For example, I am very worried about 

xxx A new social media code of practice… From Making Britain the safest place in the world to be online - GOV.UK And so forth. There’s no point elucidating, because the strategy is, broadly speaking, to do nothing. A voluntary programme to ask people not to bully each other on Facebook. Publishing advertisements to tell people to be nice to each other is pointless. 

xxx While the implausible nature of the $9 billion price tag may have been a red flag to human traders, Apple did briefly see its stock rise to $158 before settling back down to around $156, raising the possibility that some algos were fooled. From Fake news: Dow Jones blames technical error for headlines claiming... xxx

Perhaps the universe was telling me something, because it seems to me beyond coincidence that I don’t remember hearing the word “ homophily ” before and yet I’ve just come across it twice in the same day: once when listening to historian  Niall Ferguson on the BBC’s Today programme while in the shower and then again a couple of hours later while reading Geoff Mulgan ’s new book “ Big Mind ” on the couch. Homophily means the tendency of people (e.g., me) to tend to congregate online with people who think the same as they do (e.g., the Chancellor of the Exchequer is very probably insane) but worse still in the new online world, also view only “news” (fake or real) that reinforces their position. We will come back to homophily in a moment. Geoff’s thesis is that the "collective intelligence” formed from groups of people connected together online functions according to new dynamics. Now, while he notes early on that a more networked world does not automatically means a higher IQ w...

xxx “Zero-knowledge proofs are one of the biggest inventions in the last two decades in cryptography,” said Emin Gun Sirer, an associate professor of computer science at Cornell University. It “will allow a slew of applications we can’t even imagine right now.” From ‘Mind-Boggling’ Math Could Make Blockchain Work for Wall Street - Bloomberg xxx

As I’ve written many times (e.g.,  here ), it is difficult to overestimate the impact of artificial intelligence (AI) on the financial services industry. As  Wired magazine  said, "it is no surprise that AI tops the list of potentially disruptive technologies”. With  Forrester  further forecasting that a quarter of financial sector jobs will be “impacted” by AI before 2020, there’s an urgent need to develop strategies in this. It is  because the need is so urgent that I was delighted to be asked to give a keynote at the  Digital Jersey AI Retreat  in September, an  event was put together by my good friends at  Digital Jersey  (where I am advisor to the board) working with  Cognitive Finance . T hey did a great job of bringing together a spectrum of both subject matter experts and informed commentators to cover a wide variety of issues and provide a great platform for learning. In “ Radical Technologies ”, Adam Greenfield wrote of  the advance of automation that many of us (me inc...

xxx According to RBA estimates, the merchant will pay an average of about 0.55 per cent of the transaction's value in a "merchant service fee" to their bank when the payment goes through the credit card network. But if it goes through the eftpos (CHQ or SAV) system, this drops to 0.15 per cent. From The hidden cost of the tap-and-go boom xxx

xxx Officers initially confiscated his passport before Ali changed his name by deed poll and applied for a new one, flying to Dubai two days before he was to be tried for possessing a quantity of bullets. From Arab driver filmed himself in his Porsche going 180mph | Daily Mail Online xxx

snippet To maintain their cover, undercover detectives were posting and sharing abuse material on Childs Play. Other users continued to post and view images while the site was under police control. [From Australian police sting brings down paedophile forum on dark web | Society | The Guardian ] snippet

xxx The accumulating evidence on economic growth, meanwhile, has become damning. Between July and September 2016, India’s GDP grew 7.53 percent. Between January and March 2017 it grew 5.72 percent. Former head of the Reserve Bank of India Raghuram Rajan, now returned to the University of Chicago, links the drop to demonetization: “Let us not mince words about it — GDP has suffered. The estimates I have seen range from 1 to 2 percentage points, and that's a lot of money — over Rs2 lakh crore [i.e. trillion] and maybe approaching Rs2.5 lakh crore." Kaul adds that GDP does not well capture the size of the informal cash sector, where the losses from demonetization were greatest. From India's Failed Demonetization Program and Its Retreating Economic Defenders - Alt-M So why does the Bank of England think that getting rid of paper cash will boost the economy when the figures from India clearly show it didn’t. The answer, of course, relates to the stage of development of the...

xxx Chancellor Philip Hammond has announced a new National Productivity Investment Fund of £23 billion to be spent on innovation and infrastructure over next five years. From Chancellor announces £23bn Productivity Investment Fund - ITV News Since this announcement productivity has collapsed still further.

xxx Bank of England’s (BOE) Chief Cashier Victoria Cleland adamantly stating that “cash is not in decline.” Cleland made the remarks at the Future of Cash Conference in Vienna, Austria, on Oct. 5, continuing the argument that, despite the fact that non-cash purchases and transactions are on the rise in the U.K., the amount of currency being circulated in England’s economy is also increasing. “Very notable in the U.K. is the rise in the use of contactless cards, which tripled in 2016, accounting for 7 percent of payments. The shift in consumer preferences is also evident in online spending, where average weekly online shopping in the U.K. was £1.1 billion in August 2017; an increase of 16 percent compared with August 2016. Such developments have led many commentators to predict the demise of cash,” she said. “But the numbers show a different story,” Cleland continued. “In 2016, the value of Bank of England notes in circulation increased by 10 percent, reaching over £70 billion in t...

Well, this was fun. The BBC2 series “Billion Dollar Deals” had an episode on the “War on Cash”. As you might imagine, the reason I mention this is because I was on it, gratifyingly labelled a “Digital Money Expert”. xxx xxx xxx xxx xxx   xxx xxx

xxx European Banking Authority should require banks provide evidence that a customer was aware of the nature of the transaction and gave informed consent before they can hold the customer liable. From Liability for push payment fraud pushed onto the victims – Bentham’s Gaze Having worked on a European project about means of establishing informed consent, I can assure you that this is a non-starter.

The British interior minister (“Home Secretary”, as we call them) is the historian Amber Rudd, famous for being the “aristocracy co-ordinator” for the inexplicably popular film “Four Weddings and a Funeral”. She has been attracting headlines. Amber Rudd Says She Doesn't Need To "Understand How Encryption Works" To Know It Needs Changing From Amber Rudd Says She Doesn't Need To "Understand How Encryption Works" To Know It Needs Changing xxx xxx Rudd replied: "I don't need to understand how encryption works to understand how it's helping, end-to-end encryption, the criminals." From  Amber Rudd Says She Doesn't Need To "Understand How Encryption Works" To Know It Needs Changing xxx    

xxx That said, there does still seem to be a lot of cash used for potentially dodgy purposes (e.g. drug deals or tax evasion purposes). While the RBA doesn’t have any direct data, its damaged banknote facility has uncovered multiple examples of huge cash piles in excess of $20,000. From $100 notes: the heart of the black economy? - MacroBusiness xxx

xxx One possibility is the break-up, or unbundling, of banking services. In the future, we might keep minimal balances for payment services on electronic wallets. The remaining balances may be kept in mutual funds, or invested in peer-to-peer lending platforms From IMF Head Foresees the End of Banking and the Triumph of Cryptocurrency - Foundation for Economic Education - Working for a free and prosperous world xxx

xxx People in China simply aren’t interested in bitcoin’s potential for political change… Ordinary Chinese bitcoin users I spoke to are far more interested in the ability to speculate on bitcoin’s wild price swings—it’s just another way to make money as China continues to adopt characteristics of a market economy. From Why China dominates bitcoin and how it may control the blockchain technology behind it — Quartz xxx

xxx "I don't mess with Venmo because I don't trust it," he said. That view echoed what someone said on this panel last year when it was comprised of young college students. Trust can be an important factor when choosing which products consumers use day to day. From Is Zelle finding a groove with bank customers over Venmo? | Mobile Payments Today xxx

xxx Paul Volcker, of the U.S. Federal Reserve fame, even considered it [the ATM] the “only useful innovation in banking.” From A Brief History of the ATM - The Atlantic xxx

Although it will be a while until we get the 2017 figures, the 2016 figures were unequivocal. Card fraud is worse than ever, and in the UK it’s now worse than when chip and PIN was introduced. Card fraud losses for 19 European countries hit approximately €1.8 billion, a new high. The UK saw the highest losses at £618 million, a 9 percent rise over 2015, topping the previous peak in card fraud, set in 2008 after the introduction of chip and PIN. From European Card Fraud for 19 Countries Hit Record €1.8B in 2016 | FICO® We’re fighting with the French for top spot in the European Champions League of Card Fraud. Who’s in front depends on how you measure things. Our fraud is  high, largely because of our very high Card Not Present (CNP) fraud which is running at more than 12 basis points. So we have higher absolute losses but their overall loss is worse in proportion. Of course, it isn’t just a European problem. Fraud, grew by 19%, and outpaced volume, which grew by 15%. From  Annua...

There’s a fascinating article int he archives of The New York Times. It’s from July 1992, and it’s all about the future for “personal wireless communicators” or what we now call “smartphones”. While John Sculley, then head of Apple, is enthusiastic about the coming “mother of all markets”, the idea is poo-pooed by Andrew Grove, the chairman of Intel, who called the idea of a such devices in every pocket “a pipe dream driven by greed”. Now, while it’s always fun to go back and find important, clever people making predictions that turned out to completely wrong, what’s more interesting to students of paleo-futurology is why they were wrong and what we can learn from that so our own strategies can me made more robust. I found the issue of software raised in the article particularly interesting in that context. Personal communicators for the mass market raise the possibility of dozens, hundreds, even thousands of different designs and functions and operating standards, each tailored to a...

Other countries have a more robust approach to banking regulation and less sympathy for poor behaviour by bank management. The former head of a major Vietnamese bank has been sentenced to death for his role in a fraud case involving millions of dollars of illegal loans. From Vietnam fraud trial: Death penalty for ex-head of OceanBank - BBC News xxx

xxx Contemporary artists are increasingly turning to vellum - the prepared animal skin sometimes known as parchment on which Britain’s Acts of Parliament have traditionally been printed - to insure against the risk of copies of their work being passed off as originals. But while the use of vellum goes back to the classical age, its use to foil bogus copies of valuable paintings is the result of a very modern technique - DNA analysis. Because, as an animal product, each piece of vellum used to paint on carries its own unique DNA fingerprint. From Artists turn to vellum to beat the forgers copying their work xxx