by hilbert42 | 2025-08-31 11:07:01+00:00
There is something that's always perplexed me. Why is it that money when transferred electronically can so easily disappear into obscurity or oblivion? Why is there no full audit trail?

Restated, every electronic transfer requires a sender and a receiver—and there are standardized (electronic) protocols to ensure funds are debited from sender's account and credited to the receiver's account. So we ought to know where monies end up but so often we don't.

The way around these scams is (a) have infallible fully identifiable trace routes, and (b) destination banks must be known to the sending bank and meet an international standard of prudence and integrity or funds would not be transfered, and that ought to be a lawful requirement. (Ipso facto, it would be incumbent on recipient banks to know its account holders and to act on fraudulent transactions.)

In other words, the electronic funds transfer system should be transparent from the sender's account right through to the recipient's bank and the actual bank account within that destination bank. In short, the funds should be traceable right through to the point where the recipient withdraws cash from the destination bank and walks out the bank's door. (There are ways that a destination/bank can keep certain details about the recipient private and yet still allow the money trail capable of being audited that I can't address here.)

In effect, the requirements ought to be (1) sending banks would only transfer funds to banks of known integrity, (2) receiving banks must have procedures in place to recover monies from accounts in the event of fraud, and (3) protocols such as delaying payments, putting funds in escrow until transactions are proven legitimate, and methods of recovering/refunding funds etc. are properly established. Transparency would also mean transactions would be reversible in case of fraud.

Ideally, such procedures would be set out in ISO protocols and by law banks could only transfer funds to other banks that follow the protocols.

Yes, I know this sounds simple and the world's banking systems are complex and convoluted and that there'd be many objections from many sources, banks, credit card companies, money traders and so on but it cannot be denied that the great weakness in funds transfer is that monies can vanish without a trace. Frankly that's unacceptable in an age of electronic money transfer where every cent is accounted for along the transfer route. That various entities can obfuscate that accounting at various points in the transfer process ought no longer be acceptable.

To say it can't be done or that it's unacceptably complex is bullshit, for example banks and credit card companies such as Visa and MasterCard had no trouble blocking funds transfered to WikiLeaks.

The real problem is that the world's banking system is a law unto itself and that banks would on many grounds object strongly to introducing a system.

Look at it this way: similar schemes to that which I've outlined are already in place in say conveyancing, property is only deemed exchanged and the transfer complete when lawyers 'meet' and exchange money and land deeds. Same happens when say two waring countries meet and exchange captive soldiers on the spot.

Given the many billions of dollars lost to scammers every year it's clear that banking transfer systems are hopelessly flawed. Things would soon change if banks told customers that they cannot transfer monies to xyz destination because the money trail is untrusted/cannot be authenticated and that it would be unlawful for them to so act.