RFID Technology fur Use in Currency Becomes More Sophisticated

The 500 euro banknote barely circulates in Europe – this is to say, it is rarely seen in everyday commerce. However, it does exist, and makes the handling of large amounts of cash easier. Not surprisingly, it is said to be highly popular with various criminal organizations, although as far as we are aware, there is no hard evidence of this. Rather, it seems to be an assumption, if a sensible one.

Hitherto, the ECB was mainly interested in the possibility of employing RFID tags in banknotes for security reasons (to make forging them more difficult), and as passive tracking devices, ostensibly in order to be able to track money used by organized crime so as to prevent money laundering.

 

10 after mw

10 euro bill after 10 secs of microwave treatment

Image via dvd-svcd-forum.de

 

Work on this ‘feature’ started in 2001 already:

 

“In 2001, the European Central Bank started working with technology partners on a hush-hush project to embed radio frequency identification tags into the very fibers of euro banknotes by 2005. The ECB was deeply concerned about counterfeiting and money laundering. Counterfeiting of euro notes has been a problem in Greece and there have been cases in the new member countries too. In 2003, Greek authorities were confronted with of 2,411 counterfeiting cases and seized 4,776 counterfeit banknotes while authorities in Poland nabbed a gang suspected of making and putting over a million fake euros into circulation. Money laundering was also an issue of increasing concern, and that was probably one of the reasons that the higher denominations were considered for tagging (€200 and €500 notes).

Although euro banknotes already include such security features as holograms, foil stripes, special threads, microprinting, special inks and watermarks, the ECB believes it must add further protection to keep the euro from becoming the currency of choice in the criminal underworld. Among the current security features are threads visible under ultraviolet light, but businesses and stores often find it hard to judge a note’s authenticity, as current equipment seldom can tell the difference between false currency and old notes with worn-out security marks. The ECB has contacted various central banks worldwide – not just in Europe – to discuss added security measures for the currency.”

 

Al-Capone-600x804Al Capone allegedly laundered $1 billion through a variety of legitimate business ventures. His first business operations indeed consisted of laundromats, which were quite useful in hiding and disguising illegal income because they were cash operated. It is possible that Capone’s use of laundromats actually explains the origin of the phrase “money laundering”.

Photo credit: Bettmann / Corbis

 

As far as we are aware, the planned RFID chipping of European banknotes never took place, presumably for cost reasons (at least the ECB’s web site doesn’t mention it. With respect to the security features of euro banknotes, they have plenty). Back in the mid 2000ds “privacy concerns” were also mentioned, but in today’s world these may no longer be considered worth worrying about. We have to catch assorted criminals and terrorists by any means possible after all, otherwise we’ll never be 100% safe! A summary of the challenges as they were perceived at the time follows below:

 

“A number of challenges must be overcome before RFID tags can be embedded on bills, said Kevin Ashton, executive director of the Auto ID Center at the Massachusetts Institute of Technology. “The most obvious one is the price,” he said. Today’s RFID tags cost between 20 cents to $1.00, and “that’s not economic enough for most bills,” Ashton said.

[…]

It is unclear whether the ECB will incorporate RFID chips into all euro banknotes or just on the larger bills. The EUR 200 and EUR 500 banknotes in particular are expected to be popular in the “informal” economy. Embedding a 30 cents chip into a EUR 500 bill would make more sense than putting it into a European buck, several industry sources said. There is also the issue of trust. Putting RFID tags in currency would be seen as a breach of privacy, as there would be a temptation to use it to track purchases and transactions in order to trace banknotes for fiscal reasons. Would the users confide in the ECB not tracking their transactions?

 

(emphasis added)

As far as we can tell, there seem to be very few temptations for control and surveillance to which governments and their agencies fail to yield, so these are certainly good questions.

As was to be expected, whatever technical or cost problems there may have been, appear to have been overcome in the meantime. And lo and behold, new potential applications have been discovered as well.

 

Remote Cancellation of Cash?

An Austrian-German company is reportedly at the forefront of developing RFID technology intended for use in cash currency at the moment. Here is a translation of a few pertinent paragraphs from an article on the topic in the Austrian press:

 

“Austrian-German technology company EDAQS has developed a new form of cash. Banknotes are equipped with a highly encrypted RFID chip. With the aid of appropriate terminals, whether in banks or other business establishments, the cash system by the name of “DICE” always knows where every banknote is located.

The privacy of users is supposed to be protected, at the same time however, crimes related to cash currency can be effectively stopped with DICE, as banknotes getting into the wrong hands can be canceled remotely.”

“Our system addresses all concerns connected with conventional cash currency”, says Daryl de Jori, one of EDAQS’ founders.

 

(emphasis added)

So the system will “know where every banknote is” at any given moment, but “the privacy of users will be protected”. And your cash will only be canceled and become utterly worthless if well-intentioned bureaucrats decide you are one of the “wrong hands” into which it has somehow erroneously fallen.

EDAQS provides the following image to make clear that only the most shady of characters will have to reorder their priorities in life and may henceforth be forced to consider a career change (such as for instance choosing a life of digital crime):

 

dice-renode-graph-small (1)The foiled bank robbery: cash currency that can be invalidated at the touch of a button. This means it will have to be stolen by new-fangled hackery instead of old-fashioned physical invasion of bank premises while waving guns about – click to enlarge.

 

Several central banks have already shown interest and are negotiating with the company – envoys from Russia’s central bank as well as Australian government officials have reportedly traveled to Vienna for talks.

Many are the avenues of abuse such a system would open up. First of all, there can be no guarantee that unauthorized persons (the same criminals ostensibly to be fought) won’t gain access to the ability to track banknotes, and the power to cancel them, or if need be, reverse cancellations at will. This would certainly make it quite easy to determine which cash transporters or which bank branch offices would be worth robbing. The excuse “that’s all the money we have here” wouldn’t work anymore either, no matter how convincingly conveyed.

Secondly, and far more importantly, even if it could be somehow guaranteed that only authorized bureaucrats would have access to the tracking and cancellation machinery, this would hardly constitute an immunization against potential abuse. On the contrary, thinking about who is more fearsome and represents the more worrisome gang of thieves, a handful of bank robbers and money launderers or the State and its enforcers, there really is no contest.

The former are a small minority against the depredations of which a formidable arsenal is already arrayed, both by the private sector and government. The latter is a ubiquitous force monopolist controlled by a ruling class whose agenda is often diametrically opposed to the best interests of society at large, in spite of all the propaganda to the contrary purveyed by its armies of statolatry-peddling dependents, bought off intellectuals and controlled media. And we haven’t even mentioned outright authoritarian governments yet, the number of which has slowly but surely begun to grow again after retreating for quite some time.

 

MoneyvanishesThe Beagle Boys, taking a bath in mostly non-RFID chipped money. The image is actually from a story entitled “The Money Vanishes”.

Image credit: Disney

 

Thirdly, there is an obvious flaw to the possibility of cash cancellation even if one assumes that only the purest of angels will ever operate such terminals. Assume e.g. that a small to mid-sized bank robbery takes place, in which the robbers escape with monetary units valued at the equivalent of $50,000 or $100,000. It is then decided to “cancel” these bank notes.

The problem is that only specialized devices will enable one to tell whether a note is still valid. Bringing a relatively small amount of banknotes that are “real” in every respect except for their RFID signature into circulation undetected shouldn’t present too difficult a problem. The vast majority of the recipients of such notes would however be perfectly innocent citizens, who would then find out that their cash was worthless as soon as they e.g. tried to deposit it in a bank. They may even end up being victimized still further for having obtained possession of “canceled” notes, as that would undoubtedly be regarded as suspicious.

There is already considerable danger associated with the fact that the vast bulk of the money supply exists only in the form of disembodied electronic information stored on servers at fractionally reserved banks. Physical currency, even though it is no longer redeemable, provides a certain layer of safety and privacy electronic money clearly lacks. If it can be tracked and even canceled remotely, this decisive difference disappears almost entirely.

The fact that criminals exist and use money is not the fault of money. Moreover, if criminals were to become seriously concerned about the usefulness of state-issued currency, they would sidestep it and use something else. Illicit web-based markets similar to Silk Road e.g. employ Bitcoin, and there are obviously plenty of alternatives to cash currency, such as precious metal coins and bars. The goal of “making life more difficult for criminals” (which is all that could possibly be achieved) surely has to be weighed against the rather obvious drawbacks of such a scheme.

 

Conclusion

This sounds like a really bad idea. Unfortunately experience is telling us that this makes its eventual adoption more rather than less likely.

 

RFID-chip-and-antenna-3-1024x935RFID tag used for merchandise in shops.

Image credit: Texas Instruments

 

 

 

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One Response to “RFID-Chipped Banknotes Fit For “Remote Cancellation””

  • rodney:

    This doesn’t make sense … why add another cost item to the production of banknotes if they seem hell-bent on abolishing cash? … RFID and the war on cash contradict each other.

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