Money Laundering – CyberEye

Dan Gavin 7, Sep, 2024

Blog

How the World Ends

In today’s vernacular you might say you’ve been “click-baited”. Or maybe not. I’ll let you be the judge. I guess it will all come down to how you interpreted “World” and “Ends”. If you immediately pictured the metaphorical “world” or the global context of “world” and if your definition of “ends” means “completion of current state and transformation to something better,” then this most likely will not be what you expected. My intent is to reveal something more sinister and far more depressing. But I beg you to hear me out. After all, it’s only about 5 minutes of your time.

In 1942 concentration camp victims created massive amounts of counterfeit British pounds in an effort to collapse the British economy. This wasn’t the first use of currency counterfeiting in war though. The technique has been around a long time. The British attempted it during the Revolutionary War; Napoleon used it against the Italians; even during the 15th century Italy employed it.

Why would one country counterfeit the currency of its enemy? Were they intending to go on a shopping spree after invading their foe? Oh no, that’s not it. it’s more nefarious than that.

See, here’s a dirty little secret. And it’s one that the Federal Reserve Bank and other central banks around the world would rather you not find out. Counterfeiting leads to hyperinflation. The effect isn’t immediate. It takes some time to get all the money out into circulation. But once it does, the effect can be horrific on the economy.

Hyperinflation manifests itself in rising prices. At the grocery store, at the gas pump, at the movie theater. Everywhere regular people do their daily transacting. When prices rise everywhere at about the same time, this is the effect of inflating the money supply. It’s not a collusion among all the grocers. It’s more a collusion among Central Bankers. It’s not rich farmers gouging you at the store. It’s the ultra-wealthy oligarchs who control everything.

By flooding your enemy’s economy with counterfeit bills, you dilute the value of the currency until it becomes worthless. It’s pretty easy as the British found out at the end of World War II. The counterfeited bills were so good, they couldn’t tell the fake from the real bills. The only thing they could do was to stop printing the legitimate pounds and wait for the money to dissipate naturally.

In the US we’ve been experiencing inflation for some time. Actually, the Fed has a target of 2% per year. It’s intentional. This time, it just got out of hand. Not from counterfeiting, but from legitimate money creation.

Take a look at the St. Louis Fed website. Just do an internet search for “M2 money supply”. In 2020 the money supply exploded. Not counterfeit. It was Legal Tender. Because of the lag time from currency flooding the economy and inflation we are now feeling the effects. Thank you, US Congress.

If you have been wondering maybe the US Congress doesn’t always have our best interest at heart, perhaps you are onto something. Think about this. Like you, I live in Sierra Vista. I also own a small business. It’s nothing of significance but I like to think I make a difference in the lives of the people I serve. It’s my small way of pursuing happiness in my life.

In 2021 Congress passed the Corporate Transparency Act (CTA). As a result, small businesses have to disclose all the details of their business ownership. We have to upload our business details into a government database. You know, the kind of database that is a major target of cyber criminals. The kind of database our government bureaucrats should protect but don’t. From a cybersecurity perspective, the data they require for compliance can easily be used in a social engineering attack to get YOUR information and to scam YOU. Even if you aren’t the small business owner.

The funny thing about the CTA is that it affects only small businesses that almost exclusively do business locally. Corporations with over $5 million in annual revenue are exempt. The reason Congress claims they passed this legislation is to eliminate elicit money laundering. It’s supposed to be a way to financially suffocate terrorist cells. Most money laundering happens in companies handling greater than $5 million. The exemption is in the wrong direction. It will achieve the stated intent. It’s a shell game.

Small businesses have little or no budget to hire cybersecurity professionals to protect their computers, networks and sensitive business data. They are the most vulnerable to cyber attacks like ransomware. so in reality what this Act will do is provide a convenient database containing millions of small businesses who characteristically have little or no cyber security controls protecting their data. All neatly packaged for any moderately skilled threat actor.

Maybe it’s not the end of the world. Or maybe it is the end of the world as we have become accustomed to it.

Dan Gavin 18, Apr, 2024

Blog

Is the world headed towards Central Bank Digital Currency?

The Bank for International Settlements (BIS), is the governing body for most of the world’s Central Banks, including the United States Federal Reserve Bank. The BIS plays a pivotal role in the global financial system and has been actively involved in discussions and research regarding Central Bank Digital Currencies (CBDCs). One of the potential applications of CBDCs, as highlighted by the BIS and other financial authorities, is to enhance the monitoring and regulation of financial transactions to combat illicit activities such as money laundering, terrorism financing, and tax evasion. Here’s how CBDCs could facilitate this:

Digital Traceability: CBDCs inherently possess a digital footprint, allowing transactions to be recorded on a blockchain ledger (think of it like an accountant’s ledger book), which could be either centralized or distributed. This digital traceability means that unlike cash transactions, which are anonymous and untraceable, CBDC transactions can be monitored and audited by the issuing central bank and other regulatory authorities. This makes it more challenging for individuals or entities to engage in illicit financial activities.

Enhanced Regulatory Oversight: With CBDCs, central banks and financial regulatory bodies could have real-time or near-real-time access to transaction data. This capability would significantly enhance regulatory oversight, making it easier to identify suspicious transactions as they occur and take swift action. Advanced analytics and AI algorithms could be employed to detect patterns indicative of money laundering or other forms of financial crime.

Implementation of Compliance Checks: CBDC platforms can be designed to automatically enforce regulatory compliance. For instance, transactions exceeding certain thresholds can be programmed to require additional verification before they are processed. Similarly, transactions involving entities on watchlists or sanctions lists can be automatically flagged or blocked, ensuring compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

Reduction in Anonymity: While the reduction in anonymity might raise privacy concerns, from a regulatory perspective, it limits the ability of criminals to operate undetected within the financial system. CBDCs can be designed to strike a balance between privacy and transparency, ensuring that while individual privacy is respected, there is enough transparency to deter and detect illicit activities.

Global Cooperation and Cross-Border Payments: CBDCs can also facilitate improved cooperation between countries on financial oversight. With CBDCs, cross-border payments can become more transparent and faster, reducing the time window that criminals must move illicit funds across jurisdictions. Enhanced data sharing and cooperation between central banks and international regulatory bodies could further strengthen global efforts to combat financial crime.

It’s important to note that while CBDCs offer these potential benefits for combating illicit financial activities, the implementation of such systems must carefully consider privacy rights and data protection laws. The challenge lies in designing a CBDC system that maximizes the effectiveness of regulatory oversight and crime prevention without infringing on individual privacy and freedoms.

On October 19, 2020, the BIS General Manager, Agustin Carstens, called for “a unified programmable ledger in a public-private partnership”. He was talking about CBDC. Think of it as Bitcoin (blockchain) but without the privacy blockchain currencies afford. Mr. Carstens further stated, “for example, we don’t know who’s using a $100 bill today, we don’t know who is using a 1000 peso bill today. A key difference with the CBDC is that the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability and also we will have the technology to enforce that.”

So, in essence, Mr. Carstens is talking about a bank account with digital money which can be programmed for specific use. For example, the entity which controls the digital $100 in a given bank account could put an expiration date on the money thus ensuring it will be spent by a specific date. Or it could be programmed so it can only be spent on food, or rent, or gasoline. This programmability is only limited by the imagination of the controlling entity.

Whether this is a good thing or not is conjecture. Either the BIS will restrict itself to a reasonable amount of control over every digital dollar and allow citizens of each nation to continue private individual control of their own private earnings or they won’t.

The original article from the Sierra Vista Herald can be found here.