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Daily briefing - 23 July 2019

Libra Whitepaper

Equifax seems to have gotten off lightly with a mere $800 million fine for allowing hackers to make off with the data of 150 million people. That's less than six dollars per customer. "The settlement comes two years after the breach in July 2017, when hackers were able to steal data including social security numbers after Equifax failed to patch its systems, the FTC said. The company had been warned of a security vulnerability in March that year but failed to take action until the hack." As part of the recompense, Equifax must offer customers six free credit reports a year over several years, which seems to also penalise competitors. In any case, this points to a solution that is already extant, and which has been centre to Lafferty discussions since 2016: decentralised digital identity as a solution to the mass centralised storage of consumer data.

We've previously noted that decentralised digital identity appears as a major feature of Facebook's Libra & Calibra project. Listening to regulators talk about digital currencies is quite comical. US lawmakers came across as people living in the pre-internet era. But Facebook won't get a free ride, and Libra should cause plenty of interesting debate with it. Facebook isn't really promising that it has thought this through entirely: that's not its style. The Jeff Bezos-owned Washington Post reports that fake sites offering as yet unavailable Libra coins are appearing on... Facebook. Yup. "An investigation by The Washington Post has uncovered a dozen accounts, pages, and groups across Facebook and Instagram which misleadingly claim to be official hubs for Libra, Facebook's proposed digital currency," according to TheVerge.com. "In some cases these pages, which were only removed after WaPo reported them to Facebook, offered to sell Libra at a discount through third-party websites." Facebook recently paid a $3.7 million settlement to Martin Lewis (who runs the website MoneySavingExpert) after ads for a cryptocurrency appeared on Facebook featuring his name. Immediately after the announcement of Calibra, Facebook's mobile wallet project, a site named Cal├Čbra.com appeared (with a barely noticeable grave accent on the i), and offered to sell Libra coins. The Washington Post reported the infringements to Facebook, which then removed the offending pages.

Central bank governors keep an emergency script about money laundering in their top drawers. It says: "When in doubt, talk about anti-terrorism and money-laundering." This week's champion is Patrick Njoroge, governor of the Kenyan central bank. He's worried about independent digital lenders, because in his own words, he doesn't know where they get their money from (answer: investors) and suspects they may be laundering money. The Kenyan central bank does not regulate mobile lenders, including Safaricom, which fall under the communications regulator. As a result, Safaricom has a near monopoly on mobile payments in Kenya, while the popularity of mobile finance means a path has opened up for lenders such as Branch and Tala. Speaking at the Afro-Asia Fintech Festival in Nairobi, CBK Governor Patrick Njoroge said independent mobile money lenders who churn out microloans to individuals and companies could be a conduit for money laundering. 'Of course you do not know where they get their money from. Money laundering and (the) financing of terrorism are concerns. This could be a standard money laundering operation and you will never know,' he said. A report by FSD Kenya puts the number of mobile money lenders locally at 49, with over six million Kenyans having secured microloans with institutions. 'They maybe many in terms of numbers, but that's not the best measure. The best measure is 'how big are they relatively to other institutions'?' said Njoroge. 'In that sense, they are less than one percent, in terms of lending. These are rough estimates... but we sense they are not large compared to commercial banks'."

Tide chief executive Oliver Prill announced the bank now has 90,000 digital business current accounts, with one-third added in the first half of 2019. "We have experienced an impressive level of growth over the course of 2019 and are delighted to have expanded the team so rapidly," he said. Like competitor OakNorth, Tide has a separate technology and development team, which in Tide's case is based in Sofia in Bulgaria. "In the second half of 2019 the company is planning to grow its Bulgarian office by 80%, and its London headcount by 25%," reports Altfi.com. Mr Prill is one of the speakers at Lafferty's upcoming SME Business Banking-Fintech Forum in London on 22-23 October. Tickets are available here.

Worldpay joins the IATA platform

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