are going to report it to the government.
Similarly, for PayPal, you need to
have an account and you need to
have a proper checking account in
But in other cases, you send
money and they will give the money
only in cash. They do not send the
money to a person’s bank account.
So there is no record and even if
there is one it could be deleted. So
that is the problem. There is no
authentication when you register
with e-currency. It is actually black
money because it is not reported to
the government. That is why the
government is worried.
How do then people send money to
Swiss banks, black or white money?
Swiss banks work in a different
way. There you hold your currency
in fiat currency, which is declared by
a government to be legal tender. You
can actually make exchanges, for
example Indian rupees into Swiss
currency, but there is no intermediate currency in between like e-currency.
Also there is a different way an
account in a Swiss bank can be
opened. The only thing is that they
do not divulge account holders’
information because of compliance
So are you actually transferring
money when you talk about e-currency? Suppose one has an account
with a recognized bank, the bank
will ask the sender about where the
money is being sent, right?
That is a pretty good question. Yes
you actually transfer money. But a
sender can evade surveillance
because the exchange-makers have
legitimate bank accounts and so you
can transfer inter bank.
Exchange-makers have usually different
bank accounts. When you send money to
an exchange-maker, banks do not want to
know anything except whether the
exchange-maker has an account with them
Since exchange-makers have accounts
with banks, they would not question the
sender about anything else. Exchange-makers would admit that they have got the
money from another legitimate account
holder in a bank.
The problem starts after hackers have
compromised the account, because banks
would not know who the actual actor is. So
it is basically open to hackers who can reset
notification, passwords sitting in another
part of the globe.
Can’t something be done about it technologically?
Yes. Actually there are various organizations that are building some production
mechanism to disrupt the flow. In computer parlance, one has to stop the error at the
top; if we are not able to do that, it will keep
We have to detect those kinds of malicious codes before they can extract all the
Solutions are being built but it is a kind of
MIKE SEGAR/REU TERS
Preet Bharara, United States Attorney for the Southern District of New York, describes charges against Costa Rica-based Liberty Reserve, one of the world’s largest
digital currency companies, May 28. The company and seven of its principals employees were indicted in the US for allegedly running a $6 billion money laundering
‘It is a global problem’
arms race. They (cyber attackers) know
how the Internet works and that is why it
has become a potential problem.