Ebay/PayPal have anounced their projects to offer the ability to transfer money via instant messaging and PayPal’s confirmation process. The concept of beaming money around is not a new idea, but it has been a long time coming in the form of a trustworth implementation. PayPal in fact created a low tech way to do this several years ago, when it allowed people to email money. Mobile devices with email capabilities could take advantage of this, but the perceived risk (real or not) of email messages from a mobile device delayed the take off.

Now PayPal intends to offer a process where a user would text a PayPal number, identify an amount and identify a destination phone number. PayPal then has an automated service call the user back to verify the transaction and enter a pin. In theory about as safe as an ATM transaction. The point is that it does not have to be 100% safe, but as safe as the status quo is perceived to be.

We’re going ot explore the dark side of this process and look at the challenges that this new technology will create for the law enforcement communicty at large. The bottom line, an electronic wallet makes it both easier and much more complicated to track criminal behavior whether it be a drug deal, money launderer or terrorist.

Improvements for Law Enforcement
Cash provides people with an anonymous method for exchanging something of value. Switching to an electronic transaction provides an electronic trail of evidence.

Today if no one witnesses a cash transaction and the serial numbers of the bills are not know and the bills are not marked, a transaction can be difficult to trace. For purposes of this article I’m going to use the example of a drug deal to illustrate the potential and pitfalls.

Simple scenario
Drug Dealer offers drugs for $100
Drug Addict Agrees, hands dealer 5 x $20 bills
Drug Dealer hands Drug addict package containing drugs
Drug Dealer repeats over and over again all day, all night, all week all month
Drug money piles up & Drug Dealer senses need to launder money (too dangerous to have a house full of money with so many Drug addicts around)
Drug Dealer finds organization to clense money by running it through business that appears to be legitimate – Business charges dealer a fee

See next Issue for the complications that come up for law enforcement when this transaction can be performed electronically. . .

EBay Plans Payments Using Cell Phones – Yahoo! News
Electronic WalletsMoney LaunderingAnti-Money LaunderingPaypal Texting Money

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