I saw two related stories today. The first is about high-denomination currency. The EU is considering dropping its 500-euro note, on the grounds that only criminals need to move around that much cash. In response, Switzerland said that it is not dropping its 1,000-Swiss franc note. Of course, the US leads the way in small money here; its biggest banknote is $100.
This probably matters. Moving and laundering cash is at least as big a logistical and legal problem as moving and selling drugs. On the other hand, countries make a profit from their cash in circulation: it’s called seigniorage.
The second story is about the risks associated with legal marijuana dispensaries in the US not being able to write checks, have a bank account, and so on. There’s the physical risk of theft and violence, and the logistical nightmare of having to pay a $100K tax bill with marijuana-smelling paper currency.
Posted on February 19, 2016 at 6:34 AM •
It helps if you own the banks:
The report said Shor and his associates worked together in 2012 to buy a controlling stake in three Moldovan banks and then gradually increased the banks’ liquidity through a series of complex transactions involving loans being passed between the three banks and foreign entities.
The three banks then issued multimillion-dollar loans to companies that Shor either controlled or was connected to, the report said.
In the end, over $767 million disappeared from the banks in just three days through complex transactions.
A large portion of this money was transferred to offshore entities connected to Shor, according to the report. Some of the money was then deposited into Latvian bank accounts under the names of various foreigners.
Moldova’s central bank was subsequently forced to bail out the three banks with $870 million in emergency loans, a move designed to keep the economy afloat.
It’s an insider attack, where the insider is in charge.
What’s interesting to me is not the extent of the fraud, but how electronic banking makes this sort of thing easier. And possibly easier to investigate as well.
Posted on May 8, 2015 at 6:13 AM •
Here’s a story of a fake bank in China—a real bank, not an online bank—that stole $32m from depositors over a year. Pro tip: real banks never offer 2%/week interest.
Posted on January 30, 2015 at 6:49 AM •
I found the story of the Federal Reserve on 9/11 to be fascinating. It seems they just flipped a switch on all their Y2K preparations, and it worked.
Posted on September 23, 2014 at 1:09 PM •
Parrish allegedly visited Apple Stores and tried to buy products with four different debit cards, which were all closed by his respective financial institutions. When his debit card was inevitably declined by the Apple Store, he would protest and offer to call his bank—except, he wasn’t really calling his bank.
So, the complaint says, he would offer the Apple Store employees a fake authorization code with a certain number of digits, which is normally provided by credit card issuers to create a record of the credit or debit override.
Now that this trick is public, how long before stores stop accepting these authorization codes altogether? I’ll be that fixing the infrastructure will be expensive.
Posted on July 31, 2014 at 6:55 AM •
Goldman Sachs is going to court to demand that Google retroactively delete an e-mail it accidentally sent.
The breach occurred on June 23 and included “highly confidential brokerage account information,” Goldman said in a complaint filed last Friday in a New York state court in Manhattan.
Goldman said the contractor meant to email her report, which contained the client data, to a “gs.com” account, but instead sent it to a similarly named, unrelated “gmail.com” account.
The bank said it has been unable to retrieve the report or get a response from the Gmail account owner. It said a member of Google’s “incident response team” reported on June 26 that the email cannot be deleted without a court order.
“Emergency relief is necessary to avoid the risk of inflicting a needless and massive privacy violation upon Goldman Sachs’ clients, and to avoid the risk of unnecessary reputational damage to Goldman Sachs,” the bank said.
“By contrast, Google faces little more than the minor inconvenience of intercepting a single email – an email that was indisputably sent in error,” it added.
EDITED TO ADD (7/7): Google deleted the unread e-mail, without waiting for a court order.
Posted on July 3, 2014 at 5:46 AM •
Ex-NSA director Keith Alexander has his own consulting company: IronNet Cybersecurity Inc. His advice does not come cheap:
Alexander offered to provide advice to Sifma for $1 million a month, according to two people briefed on the talks. The asking price later dropped to $600,000, the people said, speaking on condition of anonymity because the negotiation was private.
Alexander declined to comment on the details, except to say that his firm will have contracts “in the near future.”
Kenneth Bentsen, Sifma’s president, said at a Bloomberg Government event yesterday in Washington that “cybersecurity is probably our number one priority” now that most regulatory changes imposed after the 2008 credit crisis have been absorbed.
SIFMA is the Securities Industry and Financial Markets Association. Think of how much actual security they could buy with that $600K a month. Unless he’s giving them classified information.
But don’t worry, everything Alexander knows will only benefit the average American like you and me. There’s no reason to suspect that he is trading his high level of inside knowledge to benefit a bunch of rich people all around the globe. Because patriotism.
Or, as Recode.net said: “For another million, I’ll show you the back door we put in your router.”
EDITED TO ADD (7/13): Rep. Alan Grayson is suspicious.
Posted on June 24, 2014 at 2:30 PM •
Interesting research paper on a bank card chip-and-PIN vulnerability. From the blog post:
Our new paper shows that it is possible to create clone chip cards which normal bank procedures will not be able to distinguish from the real card.
When a Chip and PIN transaction is performed, the terminal requests that the card produces an authentication code for the transaction. Part of this transaction is a number that is supposed to be random, so as to stop an authentication code being generated in advance. However, there are two ways in which the protection can be bypassed: the first requires that the Chip and PIN terminal has a poorly designed random generation (which we have observed in the wild); the second requires that the Chip and PIN terminal or its communications back to the bank can be tampered with (which again, we have observed in the wild).
Posted on May 20, 2014 at 2:01 PM •
Interesting article on the cybersecurity branch of the Federal Reserve System.
Posted on May 1, 2014 at 6:52 AM •
Sidebar photo of Bruce Schneier by Joe MacInnis.