IRS Scraps Video Selfies Mandate For Online Services

On January 27, 2022, we reported that the IRS had implemented facial recognition policies, compliance mandated by June 01, 2022, that would require online IRS services users to provide video selfies to the IRS to conduct activity on their site. Whether filing tax returns or requesting prior filing records, the usual drop-down identity verifying menu would no longer suffice to access IRS online services. Those wishing to avail themselves of these services would have to submit a video selfie to digital identification services provider, ID.me, for authentication.

On May 11, 2022, the IRS scrapped the selfie mandate due to opposition from privacy advocates and a bipartisan group of lawmakers that have since asked the Federal Trade Commission to investigate whether identity verification company ID.me illegally misled consumers and government agencies over its use of controversial facial recognition software. Basically, ID.me had reassured the IRS that they would be using 1:1 matching facial recognition technology (FRT) but was found to actually be using 1:many (1:N) FRT.

Facial Recognition Matching

The two types of facial recognition matching are:
• One to one (1:1) matching -the face in the image is presented to the system and is compared with the face of a known person in the enrollment database to predict if they are the same.

• One to many (1:N) matching – the face in the image presented to the system is compared with the known faces in the enrollment database to see if any matches are found.

One major issue surrounding 1:N (one to many) FRT is that there are greater incidents of matching errors due to the flaws in the current imperfect technology. The face databases maintianed by most private FRT companies and the government contain many more Caucasian male face arrays than those of women and minorities. (Clearly, face accumulation databases are in direct proportion with current racial demographics in the United States.) Lawmakers pointed to the body of research demonstrating that facial recognition systems are often built with inherent racial bias that makes the technology far less accurate for non-white faces.

Also, concerns were raised that allowing a private company to collect face data from millions of Americans posed a cybersecurity risk.

As of today, both the IRS and ID.me have provided additional options that give taxpayers the choice of opting in to use ID.me’s service or authenticating their identity via a live, virtual video interview with an agent. Still, a very flawed policy by the IRS and with technology that has simply not undergone sufficient testing before going live. We can reasonably expect massive wait times, delays and confusion.

We will continue to monitor the various merging uses for FRT, especially when employed by government agencies, compounded by the reliance of these agencies on private sector virtual identification verification companies.

(Relatedly, now I’m curious about the use of facial recognition technology via the government’s employment verification program, E-Verify, a Department of Homeland Security site that allows businesses to determine employment elgibility in the United States both for U.S. citizens and foreign workers. I’ll return with my research results shortly.)

BNI Operatives; Situationally aware.

As always, stay safe.

Changes to Credit Reporting in 2022/2023

Consumer Credit Reporting Agencies

Equifax, Experian, and TransUnion have announced that effective July 1, 2022, they will no longer include medical debt that was paid after it was sent to collections on consumer credit reports.  In addition, the time period before unpaid medical collection debt appears on a credit report will be increased from 6 months to one year.

Also, the companies announced that beginning in 2023, they will only report medical debt in excess of $500.  Reportedly, these changes will eliminate approximately 70% of medical collection debt entries from consumer credit reports.

Department of Veteran Affairs

Earlier this year, the Department of Veterans Affairs announced that it was applying new standards for reporting outstanding medical bills to consumer reporting companies.

Under the new rules, the VA will only report medical debt that meets all of the following criteria:

• The VA has exhausted all other debt collection efforts,
• The VA has determined the individual responsible is not catastrophically disabled or entitled to free medical care from the VA, and
• The outstanding debt is over $25. (This appears contrary to the No Surprises Act per the above information from the Big Three conumer credit reporting agencies. We are awaiting confirmation on the VA’s compliance with the new reporting laws vis a vis the $500 minimum debt threshhold for reporting purposes.)

Additionally, under consideration in Congress now are the following proposed changes in consumer credit reporting:

Employer Restrictions

Under the new guidelines, employers would no longer be allowed to use a credit score to determine eligibility for employment. Other businesses that use credit reports to determine service usage such as utility and insurance companies are also under review to disallow consumer credit reporting as part of the decision making prcoess.

Amount of Time Negative Information Remains On Credit Reports

Currently, delinquent accounts remain on the report for seven years. Under the new proposal, information would only stay on the report for four years. However, bankruptcies could still be reported for seven years. 

We’ll keep an eye on developments in consumer credit reporting changes and update our readers as these changes occur.

BNI Operatives: Situationally aware.

As always, stay safe.

Asset Searches For Judgment Collections

Asset Searches for Judgment Collection

Winning a monetary damages award is a good thing; collecting on the judgment, however, may rapidly turn that joy to frustration. The courts rarely compel debtors to pay their debts so when the losing party fails to satisfy a judgment, collection efforts will depend on successful asset searches.

Asset Searches on Individual Debtors

The focus of a comprehensive asset investigation on an individual includes:

• Financial Accounts
  (Personal Bank, Investment, Brokerage and Retirement Accounts)
• Real Property
  (Current Ownership, Financing History, and Recent Sales/Transfers) *
• Fraudulent Conveyances
  (Transfers of Property to Family Members, Close Associates or Corporate Entities)
• Employment and Business Interests
• (Including Shell Corporations and special-purpose Limited Liability Companies)
• Personal and Family Trusts
• Financial Awards and Settlements
  (Divorce, Probate, Insurance and Civil Cases)
• Other Tangible Assets
  (Motor Vehicles, Aircraft and Boats)

* I cannot more strongly stress the importance of real estate sale dates to any financial asset search, and hope for recovery. We have located significant hidden money accounts that we became aware of upon discovering relatively current real estate sales. That sale money has gone somewhere.

Discovering Financial Accounts*

For medium to large judgments, we suggest nationwide searches for bank, brokerage and retirement accounts.

Account search results generally include:

• Account Type(s)
• Name and Address of Financial Institution
• Approximate Balance (Bank Accounts)
• Approximate Portfolio Value (Investment and Retirement Accounts)

Bank accounts include checking and savings accounts at banks, credit unions, and savings and loan associations. Certificates of Deposit (CDs) are also identifiable in certain cases.

Brokerage and retirement accounts include trading portfolios of stocks and bonds, mutual funds, 401(k) accounts, and Individual Retirement Accounts (IRAs) held at top brokerage houses and mutual fund institutions throughout the U.S.

Other types of financial accounts – from cryptocurrencies to mortgages, military (and civilian) pensions, to corporate profit-sharing plans – are also identifiable through various (and always, legal) methods and resources. There is now also the capability to identify foreign and offshore accounts.

These asset and bank searches are lawful as long as they are conducted in compliance with the Fair Credit Reporting Act (FCRA) and Gramm-Leach-Bliley Act (GLBA) financial privacy laws.

*With financial accounts, ensure that you have all owner and signer information, as well as terms of the specific account structure. A simple signatory agreement generally allows a designated individual to transact on the account (per transaction limits are often imposed) while ownership of the account is just that, and most often not automatically transferrable to a willed beneficiary should the primary account owner becomes disabled or deceased.

I strongly suggest obtaining as much information as possible on the defaulting debtor. Asset searches are not a game to see how much the investigator, with minimal information, can locate recoverable assets. The most successful asset searches are conducted with the active participation of the judgment awardee- people often know more than they consciously realize about their debtors.

BNI Operatives; situationaly aware.

As always, stay safe.

Airlines Unmask; Other Passenger Transit Providers May Still Require Masks

After a federal judge struck down a nationwide mask requirement for airplanes (buses and trains, as well) on Monday, the country’s major airlines passenger stated they would stop requiring masks on flights, as has been practice for nearly two years.

How the airlines have responded:

American Airlines

• Customers and employees could wear masks “at their own discretion” but would no longer be required to do so on domestic flights.

Southwest Airlines

• Employees and customers may make their own decision concerning their personal well-being vis a vis mask-wearing on its aircrafts.

Delta Air Lines

• Effective immediately, it would stop requiring masks from employees and customers, albeit they are suggesting that it may take a brief period of time for employees, customers and federal aviation agency employees and airport law enforcement personnel to fully comply with this change.

United Airlines

• It would not require masks on domestic flights but would still require them on flights to countries with mask mandates.

Alaska Airlines

• It would allow its customers and employees to travel, mask-free.

JetBlue Airways

• Mask wearing will now be optional for tis customers and flight crews may still wear masks in terminals and on planes.

Spirit Airlines

• Masks will now be optional on domestic flights.

Frontier Airlines

• While it would stop requiring masks on its planes, some airports and cities it serves may still require masks. It urges passengers and employees to continue to wear masks in indoor settings.

From TIME:

What about airports?

Most U.S. airports have confirmed that they will no longer be enforcing mask requirements, but a handful of others are keeping mask mandates in place, including New York’s JFK and LaGuardia and Chicago’s O’Hare and Midway.

Amtrak

Like all the major U.S. airlines, Amtrak is not requiring passengers or employees to wear face masks on its trains or inside stations. “Masks are welcome and remain an important preventive measure against COVID-19,” the passenger rail service said in a statement on April 19. “Anyone needing or choosing to wear one is encouraged to do so.” Amtrak operates more than 300 trains per day.

Local transit

Commuter trains and subway policies vary across the country, but several regional railway systems are still requiring masks. Riders of the Metropolitan Transportation Authority in New York City (M.T.A., which operates the city’s subways and buses) as well as Los Angeles Metro and Chicago CTA, for instance, must wear masks while in transit.

Charter Buses

Greyhound, Megabus and Coach USA are no longer requiring face masks for passengers or employees.

Facial coverings must be worn on cross border trips into Canada and Mexico until their requirements are removed, Greyhound noted.

Ride sharing

Masks are now optional for riders and drivers on Uber and Lyft, the nation’s largest ride sharing platforms, except in New York City, where masks are required for taxis and for-hire vehicles.

Our best advice is to carry extra masks, just in case, and, as you gauge the situation you are in regarding your own personal comfort.

BNI Operatives; situationally aware.

As always, stay safe.

Customs and Traditions of Passover and Easter Worldwide

Passover Customs: Friday, April 15, 2022

With millions of Jews worldwide celebrating Passover for the next eight days (seven days in Israel), it’s interesting to note the various seder customs as they developed in the countries in which Jews are present.

Having just completed my first set of Hebrew lessons (a fancy way of saying I now know the Hebrew aleph bet like any kindergartner in Israel!), my current favorite is the practice in Syria of breaking the matzah into pieces that shape Hebrew letters and numbers of significance. I recognize them!

From our friends at Jewishfied:

Syria – Matzah broken into the shape of Hebrew letters

The custom of breaking the middle matzah on the seder table into pieces (known as yachatz) can sometimes take on Kabbalistic meaning. Matzah broken into the shape of the Hebrew letters “daled” and “vav” correspond to numbers, which in turn add up to 10, representing the 10 holy emanations of G-d. Jews from North Africa, including Algeria, Tunisia, Morocco, and Libya, break the matzah into the shape of the Hebrew letter “hey,” which corresponds to the number 5.

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Easter Traditions: Sunday, April 17, 2022

Easter, the principal festival of the Christian church, which celebrates the Resurrection of Jesus Christ on the third day after his Crucifixion, is a joyous occasion immediately following the stricter Lenten period, celebrated in many and varied customs throughout the world.

Once again, I point to a personal favorite custom, this time in Italy, given my Italian heritage! (Btw, not only in Florence is this noisy welcome to Easter experienced but also in my family home town outside of Monte Cassino- 30 minutes south of Rome.)

From the good people at Reader’s Digest:

Italy: Fireworks explosion

You might need a pair of earmuffs if you’re in Florence, Italy, on Easter Sunday. The holiday starts off with a literal bang as locals gather to celebrate the 350-year-old Easter tradition of Scoppio del Carro, or “Explosion of the Cart.” A pair of oxen adorned in garlands pull a three-storey high wagon filled with fireworks through the streets to the front of the cathedral, accompanied by drummers, flag throwers and people in historical costumes. During Easter mass, the Archbishop of Florence lights a fuse that sends a dove-shaped rocket down a wire to cart, igniting a vibrant firework show. This extravagant custom dates back to the First Crusade and is meant to ensure a good harvest.

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My best wishes to all who celebrate Passover and or Easter for a happy, joyful and peaceful holiday. – Lina

Will The U.S. Government Rescue You If You’re Kidnapped In A Foreign Country?

April 08, 2022

In October 2021, 17 missionaries – one Canadian and 16 Americans – were kidnapped near Port-au-Prince, Haiti, a country with one of the highest rates per capita of kidnappings in the world. This incident was one of the dozens of kidnappings of American citizens that occur abroad every year. (All hostages were eventually freed, with Ohio-based Christian Aid Ministries involvement.)

Will the US government rescue you in you’re kidnapped in a foreign country? Most likely no, but there are instances where they can assist you or private proactive actions you can take before you travel.

How the U. S. Government Can Handle A Hostage Situation

Albeit the official U.S. government’s position is that America does not and will not make concessions to hostage-takers, there have been instances wherein the government has worked with allied nations to negotiate the release of American hostages by foreign militants or terrorists.

A case in point is the 1985 TWA flight 847 hijacking by Shiite Hezbollah militants.

The plane at the time held dozens of Americans on board; one US Navy diver was killed, and 39 other passengers were held hostage. The militants were demanding the release of 700+ Lebanese prisoners who were detained in Israel.

Interestingly, and I believe not coincidentally, three days after the American hostages were released, the Israeli government set free approximately half of the Lebanese prisoners.

Clearly, despite the US’s no concessions stance, our government does avail itself of assistance from foreign friendlies in hostage situations.

Although the US today stands by its “no concessions” stance, some exceptions go against this policy.

Current “No Concessions”

1. When the hostage-taker is a nation state. Technically speaking, there’s a legal distinction between a hostage (someone abducted and held by a non-state actor) and a detainee (someone held by the state). This line becomes blurred when an American is detained for the express purpose of being used as a bargaining chip.
2. When the hostages are soldiers.  The provisions of the Geneva Convention allow for the exchange of prisoners of war. Reference Army Specialist Bergdahl
3. When another entity is paying the ransom. The law specifically prohibits the “material support” to a terrorist organization even if this so-called support comes in the form of paying a ransom for a loved one kidnapped by terrorists.

That said, no American citizen or organization has ever faced prosecution for paying a ransom to recover the victim. This permissive environment creates room for third-party intermediaries like military contractors to step in and conduct private hostage rescue missions, which easily begin at $30,000 USD/daily.

Finally, the US government permits ransom payment provided that the hostage-taker is not a designated terrorist organization. American citizens routinely pay ransoms to foreign-armed-political-militia and criminal organizations. These are usually handled by crisis management personnel, kidnap and ransom insurance policies, and the government’s interagency Hostage Recovery Fusion Cell.

Will The US State Department Get Involved?

Almost always, the answer is No.

The US Department of State (DOS) is a federal agency responsible for advancing America’s foreign policy to promote the security and interests of the American people. The State Department represents the US at the United Nations and negotiates agreements and treaties with foreign entities.

Rescuing Americans is not a part of its defined mission, but there are a few things the DOS does to assist its citizens abroad.

The DOS routinely issues travel warnings. A US State Department Travel Advisory provides information on the conditions in a country, including the high-risk areas, where to seek help, what to do in that situation, and more useful information. If a particular country poses a higher-than-usual security risk, it will usually appear on the US State Department Do Not Travel list.

If you’re traveling overseas, you can enroll in the Smart Traveler Program (STEP) to receive up-to-date security alerts in real-time. This information is also available on the US Embassy and Consulate website of the country you’re in or the main DOS embassy and consular site.

However, if you travel to a high-risk area and end up getting kidnapped, there’s not much the government can or will do to help you. This could be for any number of reasons, including armed conflict, ineffective local authority policies, the absence of a functioning government, poor governance, etc.

Ultimately, in a country that does not maintain diplomatic relations with the US, the government has no means of providing consular services to its citizens stranded abroad.

Even if you are a US government employee at a Consulate or Embassy, a US Embassy evacuation would only be possible if:

• There’s no commercial transportation available;
• Consular and embassy officers are present and available; and,
• The conditions permit.

Only then would the DOS try and identify the evacuation options available – such as repatriation flights – to rescue US citizens out of the crisis area.

The Bottom Line

Will the US government rescue you in a foreign country? The short answer is – highly unlikely. Your best bet would be to take security matters into your own hands by consulting with a security firm that specializes in high-risk private hostage rescue operations.

That way, if you’re traveling to a high-risk area, you can rest easy knowing that there are highly skilled hostage negotiators, elite extraction teams made up of former US Special Operators, and strong logistical and intelligence support on stand-by to rescue you if you end up getting kidnapped and held hostage.

During these very turbulent global times, research your trips to foreign countries, determine if it is safe to travel to your intended destination and at all times, avail yourself of all US DOS updates and make sure you know what to do if unsafe sitautions arise.

BNI Operatives: Situationally aware.

As always, stay safe.

Soft Mask Facial Recognition Technology, II/II

Soft mask facial recognition technology

The US Department of Homeland Security (DHS) is testing facial recognition technologies (FRTs) that can see through face masks with an encouraging level of accuracy, meaning that travelers could end up breezing through airports without the need to uncover their mouths and noses at border checks. In light of the COVID pandemic, research funding has increased dramatically for testing soft mask FRT. On average, said the DHS, the different AI systems correctly identified 93% of unmasked individuals; for those wearing a mask, the identification rate reached an average of 77%. While this percentage of accuracy is very far from ideal or usable, as the field of penetrable facial recognition technology research continues to expand, so will the refinement of its applications to acceptable levels of facial detection. Soft mask facial recognition algorithms typically work by measuring a face’s features that are visible — their size and distance from one another, for example — and then comparing these measurements to those from another photo of the subject. Some key findings of the soft mask FRT thus far are: – The more of the nose a mask covers, the lower the algorithm’s accuracy. The study explored three levels of nose coverage — low, medium and high — finding that accuracy degrades with greater nose coverage. – While false negatives increased (with soft masks on), false positives remained stable or modestly declined. Errors in face recognition can take the form of either a “false negative,” where the algorithm fails to match two photos of the same person, or a “false positive,” where it incorrectly indicates a match between photos of two different people. – The shape and color of a mask matters. Algorithm error rates were generally lower with round masks. Black masks also degraded algorithm performance in comparison to surgical blue ones. Anti-Facial Recognition Technologies Currently, anti-facial recognition technology is centered on clothing, jewelry and other wearables designed to thwart FRT, such as the LED privacy visor below, invented by Japanese scientist, Isao Echizen, a professor at the National Institute of Informatics in Tokyo.

Anti-FRT Visor

I’m fairly certain that Homeland Security will ban such devices, most likely enforced through the anti-mask laws that exist in most states; the earliest mask law passed in 1845 in New York.

BNI Operatives: Situationally aware.

As always, stay safe.

Simplified Arrival: Airport Facial Recognition, Part I/II

Simplified Arrival; Dulles

As early as 2015, we became aware that the U.S. government was investing heavily into facial recognition as an alternative to paper or digital identification documents. Facial recognition is currently used in select US airports as part of a program called Simplified Arrival, under the jurisdiction of U.S. Customs and Border Protection (CBP); newly added airports applying this technology are in Arkansas, Louisiana, Mississippi, Alabama and Tennessee.  Rogers Municipal Carter Field Airport, Lakefront Airport, Alexandria (Louisiana) International Airport, Gulfport Biloxi International Airport, Birmingham-Shuttlesworth International Airport, and Memphis International Airport. Under Simplified Arrival, the identity of international travelers who enter and exit the country can be verified at inspection points in the airport by the snap of a picture, rather than having to present a travel document.  

A facial recognition algorithm compares the picture against a gallery of images that the traveler has previously provided the government with, such as passport and visa photos, to confirm the individual’s identity. Passengers are allowed to opt-out of the process, if they wish, by alerting a CBP officer during the identification process at the terminal, in which case a more traditional document inspection is carried out by CBP officials. 

According to the CBP, as of January 24, 2022, more than 130 million travelers have participated in the biometric facial comparison process at air, land and seaports of entry. Since September 2018, CBP has leveraged facial biometrics to prevent nearly 2,000 imposters from illegally entering the United States by using genuine travel documents that were issued to other people.

U.S. Customs and Border Protection

It remains that the technology behind Simplified Arrival has been a topic of heated debate ever since it was first implemented. Much of the debate involves the accuracy of the system’s algorithms.

The Government Accountability Office (GAO) found that the recognition accuracy of the system allowed for 0.0092% of travelers at risk of being mismatched to a photo of another person. Seems like a small percentage of the traveling population until you realize it could translate to tens of thousands of incorrect identifications on a country-wide scale.  

My next article on this subject will be on the technology behind the soft mask facial recognition systems currently being tested domestically and internationally, augmenting Simplified Arrival. There are also modified masks now that can block facial recognition but I suspect they will be banned for usage at ports of entry in the country.

BNI operatives: situationally aware.

As always, stay safe.

CISA Issues “Shields Up” Warning To American Businesses

The U.S. Cybersecurity & Infrastructure Security Agency, (CISA), which is a part of the U.S. Department of Homeland Security has issued an unusual warning to businesses, preparing them to defend against cyber attacks originating from Russia.

“Every organization—large and small—must be prepared to respond to disruptive cyber activity,” the agency says in its warning.

“In the wake of continued denial of service and destructive malware attacks affecting Ukraine and other countries in the region, we are working very closely with our Joint Cyber Defense Collaborative (JCDC) and international computer emergency readiness team (CERT) partners to understand and rapidly share information on these ongoing malicious cyber activities,” the CISA statement says.

CISA further recommends that “all organizations—regardless of size—adopt a heightened posture when it comes to cybersecurity and protecting their most critical assets. Recognizing that many organizations find it challenging to identify resources for urgent security improvements, we’ve compiled a catalog of free services from government partners, and industry to assist. Recommended actions include:

Reduce the likelihood of a damaging cyber intrusion

• Validate that all remote access to the organization’s network and privileged or administrative access requires multi-factor authentication.
• Ensure that software is up to date, prioritizing updates that address known exploited vulnerabilities identified by CISA.
• Confirm that the organization’s IT personnel have disabled all ports and protocols that are not essential for business purposes.
• If the organization is using cloud services, ensure that IT personnel have reviewed and implemented strong controls outlined in CISA’s guidance.
• Sign up for CISA’s free cyber hygiene services, including vulnerability scanning, to help reduce exposure to threats.

BNI Operatives: Situationally aware.

As always, stay safe.

Part II/II: Crypto Assets – Hidden in Plain Sight

Though cryptos (cryptocurrencies) remain a bit strange and elusive to many people, when attempting to uncover crypto assets, they can be dealt with in the same manner as any other major financial stake.

Often thought of as a way to hide capital or conceal transactions, cryptocurrency searches by an assets investigator are conducted much in the same way as we perform bank locates and searches. Instead of processing information through the banking structures, we work through crypto platforms. Proceedings and records for crypto assets should be sought in a similar fashion by attorneys as to how a lawyer would request assets like bank statements or stock market investments- by making a formal request through any and all cryptocurrency platforms being used. Hopefully, this information will engender a peace of mind knowing that there is a way to determine the existence of cryptocurrency even in the absence of official documentation to that effect.

One of the main issues attorneys face in determining assets valuation with cryptos is that they are not static as, for example, cash or real estate. Bitcoin and Ethereum, for example, have seen quite drastic changes in a short period of time — on the order of five to ten thousand dollars in a single month. As with stocks and bonds, this can make the actual value of an estate all but impossible to know with certainty from one month to the next. The best advice is to do your due diligence, be aware that the value of these assets can experience wild fluctuations and, repeat the valuation process immediately prior to any settlement or division of estate assets.

All assets should be listed on the financial affidavit.  The financial affidavit does not include a field to declare cryptocurrencies like Bitcoin, but there is a section for “Cash or Cash equivalents.”

“Bitcoin clearly qualifies as “money” or “funds”…Bitcoin can be easily purchased in exchange for ordinary currency, acts as a denominator of value, and is used to conduct financial transactions.” United States v. Faiella, 39 F. Supp. 3d 544, 545 (S.D.N.Y. 2014)

Cryptocurrencies must be disclosed on the financial affidavit. Failure to do so may result in sanctions.

The question then becomes – how would one verify cryptocurrency holdings? Would you secure a screen grab from the crypto online platforms or would you go through the cryptocurrencies themselves? Would your client simply provide their soon-to-be ex the keys to all of their crypto accounts? (I’ll be referencing a divorce case in this article but clearly crypto searches occur in other types of matters, such as a partnership split.)

Some U.S. based coin exchanges such as Coinbase and Kraken will issue a 1099-K each year if there have been $20,000 or more in exchanges of cryptocurrency.

If the opposing party will not fully disclose their cryptocurrency holdings, you will have to turn to third parties to uncover those holdings.

Subpoenaing Cryptocurrency Exchanges

The most popular cryptocurrency exchange, Coinbase, allows themselves to be subpoenaed.

Coinbase and other exchanges do not hold cryptocurrency. They merely effect the transaction. So, a subpoena to Coinbase will be like subpoenaing a bank and asking not “what’s in your accounts?” but rather “what checks have your clients issued.”

Then there are sites like Localbitcoins.com which allow anonymous transactions of bitcoins. These sites don’t take any information from their users and merely connect a cryptocurrency seller with a cryptocurrency buyer. These sites don’t have terms of service. These sites don’t issue 1099s. Nor could they as the sites don’t even know who is using them. Informally (meaning there is no crime committed by allowing this exchange, yet), these sites can be viewed as facilitating money laundering via cryptocurrency.

Where Are Cryptos Kept? 

A crypto is a string of digital signatures, which can be accessed/sent through the use of addresses. One address is a private address used to send cryptos and the other is a public address used to receive cryptos.

While these addresses can be stored anywhere – on paper, online, etc., once this information is lost, the crypto is gone forever. Because of this risk, many crypto holders have a crypto wallet. There are companies that issue these wallets and, they create a backup. Helpfully, a lost wallet has a recovery seed which allows the owner to retrieve the cryptocurrency addresses.

Of course, if you are able to obtain the private key, you can examine all of the crypto transactions. But, just when that appears to be the most effective solution – along comes the much more sophisticated methods of “crypto-mixing”. Companies who offer this service allow a crypto owner to break the link between addresses by either creating temporary addresses or swapping coins with other addresses of the same value.

Furthermore, some of the newer, emerging crypto companies offer “private coins”; the identities of users and the origins of their transactions are completely protected.

Searching The Crypto Holder’s Computer For Cryptocurrency

Due to al of these methods of masking crypto holdings, you might have to search through the holder’s phone or computer (the only way to buy, sell and trade cryptocurrency).

A holder can object to having their phone or computer searched; the basis of such an objection might be that the search would be so overly broad as to reveal all or other private information contained on the computer or phone. Perhaps simply limiting the scope of the search for words such as crypto, cryptocurrency, Bitcoin or wallet might work in allowing for reasonable discovery while preserving the holder’s privacy.

(Let me repeat for the record that we do not dispense legal advice, are not lawyers, do not promote or advertise for lawyers or law firms. We are simply sharing experience in the field of digital investigative information.)

New currencies are not a fad so it pays to keep an eye on the emerging digital economy and, to develop the skills and gather knowledge to better understand its values and methods of discovery of these currencies.

BNI Operatives: Situationally aware.

As always, stay safe.