| COMMENTARY SNEAK PEEK |
— Ukraine considers asset freezes for citizens who dodge the draft, but Izzy points out the proposals are unlikely to pass (at this stage).
— Dario argues that tribal loyalty is perpetuating corruption in Africa, compromising economic development.
— The ongoing explosion of authorised push payments fraud proves the KYC/AML regime is more trouble than it’s worth.
Welcome to Sunday and, for some of you, half term.
And what a week it was! There’s been a notable buildup in important themes. As ever, I try to keep on top of the big trends I plan to write about come Friday for the Blind Spot by jotting down helpful little reminders in my workflow chat throughout the week. By the time Friday comes, however, I sometimes forget exactly what it was that I wanted to say about them.
This week’s helpful reminders to myself included the note: “Things undermining capitalism: Russian asset seizure, senior managers regime and Elon Musk’s pay check”. Please send answers on a postcard if you have any idea what I was thinking.
Just joking. I do remember. And it’s all loosely connected (even though I feel I had the argument more eloquently structured in my mind earlier in the week). All three, essentially, speak to the importance of legal certainty in contract law for capitalism to maintain itself as a positive force. All three are now at risk of undermining that certainty by normalising something that has, until now, been seen as anathema in a free market system: asset confiscation.
The confiscation of Russian assets may have made such consequences a central talking point, but really – if truth be told — state-encouraged asset confiscation in its latest political incarnation really began with the initiation of the senior managers regime and the clawing back of Jes Staley’s compensation in 2018 (and the continuing attempt to claw back even more of Staley’s fortune for his Epstein ties). This, however, has mostly been deemed a bearable confiscation risk by the City. Indeed, one of the curious things about the regime is just how few prosecutions there have been under it. That, most people say, is by design, as the hope is that a few high profile cases should be enough of an incentive to improve behaviour.
But now we’ve had something entirely new hit the billionaire class. A couple of weeks ago a Delaware court refused to allow the pay out of Elon Musk’s mega performance-linked $55 billion bonus, despite it having been approved by shareholders and Elon having achieved all the necessary targets. This was largely deemed too much of a state intervention and even some of Elon’s harshest critics have risen up in defence of the Tesla boss. (That said, I’m told if you read into the nuance of the ruling, the judge didn’t really care how much Elon got paid. They were more concerned about how much of an interest several other directors had in the payout and whether that had been properly disclosed to shareholders. If he were to update the disclosures and put the thing to another vote, chances are there would be no issue.) Regardless, the case has spooked the system.
But here’s the thing. Europe’s political class is still entirely aligned on the idea of confiscating Russian assets to raise money for Ukrainian reconstruction. While that may make moral sense, it ignores the consequences for one of Europe’s biggest exports and selling points: its legal services industry and its global prowess as an adjudication centre.
This is no small matter. While it’s popularly understood you can’t do business in places like Russia without running the risk of having your assets grabbed by unscrupulous state-supported power factions, even in Russia huge efforts are taken to mask confiscation under the veil of some sort of legal legitimacy so that the illusion of a viable legal framework for markets can persist. While markets tend to see through the charade, the efforts at least carry weight with the domestic population and can be used in propaganda narratives. They’re not for nothing.
In Europe, however, politicians are only now beginning to understand the limitations set upon them by their own legal frameworks when it comes to asset confiscation. They’re also only now beginning to understand the cake-ism in play. You can’t both preach about the superiority of your system because of its respect for the rule of law and then selectively pick and choose from the international rules you’ve promised to abide by as it suits you.
That tension is one of the reasons that despite all the will in the world to seize Roman Abramovich’s assets and send the proceeds to Ukraine, it’s turning out to be surprisingly difficult to do so. The law is the law. And Abramovich has more say over the dispersal of his assets under that framework than most politicians ever appreciated. Indeed, what they’re learning: if you’re going to break your own rules, you need to at least do it creatively.
A fascinating story from my Politico colleague Gregorio Sorgi this week seems to signal the Europeans are finally beginning to understand this point. As he reported (my emphasis):
The G7 group of industrialised nations are considering a proposal to use these frozen assets as collateral for bank loans that can finance Ukraine’s reconstruction, according to officials involved in the proceedings.
These funds would be seized if Russia refuses to pay reparations after the end of the war.
The Belgian Conservative member of the European Parliament Johan Van Overtveldt, who put forward this idea in an interview with POLITICO last week, said it would put pressure on Putin to end the war and come to the negotiating table.
“If you take those €200 billion as a total [by confiscating them], where is his [Putin’s] incentive to come to the peace negotiations?” he said.
These proposals come amid mounting concerns about Moscow’s retaliation ― including potential cyberattacks targeting Western countries ― against a full-scale confiscation of its frozen assets.
Now, whether any investor would buy bonds backed by Ukrainian reparation claims is another matter entirely.
As usual, this newsletter was put together by me, Izabella Kaminska, and the Blind Spot’s resident geopolitics nerd Dario Garcia Giner. If you enjoyed the insights please do feel free to share them or to promote our service.
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| THE BIG BLIND SPOT THIS WEEK |
TUCKER CARLSON INTERVIEWED VLADIMIR PUTIN in the Kremlin and broke the internet. At the last count the interview had 150 million views on X (formerly known as Twitter).
In the ANGLO WESTERN MEDIA:
The FT’s Gideon Rachman: How Tucker Carlson became Putin’s useful idiot. “Carlson used his audience with Putin to ask a series of leading questions, hoping the Russian leader would chuck back some red meat for the Maga crowd in the US.”
Politico went with: 5 lies and 1 truth from Putin’s interview with Tucker Carlson in a piece by Sergey Goryashko (an author currently being hosted at POLITICO under the EU-funded EU4FreeMedia residency program.)
Andrew Neil went all in on the traitor theme at the Daily Mail with Tucker Carlson’s Vladimir Putin stunt was like interviewing Hitler without asking about the concentration camps.
Reuters did a voxpop with Moscow citizens. CNN went with: Putin walks away with propaganda victory after Tucker Carlson’s softball interview.
The Independent went with Vladimir Putin rants about Ukraine in Tucker Carlson interview.
The Telegraph had Putin threatens World War Three if US deploys troops in Ukraine.
AND IN ROW…
Musk also replied “wild times” to a comment noting that “Today, Russia’s President gave a 30 minute monologue on 20th century Soviet Union geopolitics and our President was deemed certifiably retarded in a court of law.”
This struck me as a potential signal to those in the know that Putin isn’t really the one calling the shots in Russia. If you want dialogue, Putin seemed to be saying, It’s the special services, a.k.a the Siloviki and other Russian power clans, that you need to be engaging with. I am just the front of house.
Now, the theory that Putin isn’t fully in control of what’s going on in Russia isn’t entirely new. But, at the same, it’s not exactly common knowledge in the West either.
A further insinuation was that these vested interests (which we can presume are mostly to be found in the military) had accumulated great power and wealth by perpetuating the myth of foreign boogeymen domestically.
But the larger subtext, really, was that the deep-state systems of Russia and the West were not only engaged in a shadow war with each other, but were now struggling to adapt to a new power dynamic. In that context, political power remained largely illusory. The world, according to Putin, was bound only by “inherent laws” (a euphemism, I think, for the strongest man wins). Empires came and went. And now it was Elon Musk who was emerging as a force of his own.
“I think there’s no stopping Elon Musk, he will do as he sees fit,” Putin told Carlson. “Nevertheless, you need to find some common ground with him, search for ways to persuade him. I think he’s a smart person, I truly believe he is. So you need to reach an agreement with him because this process needs to be formalized and subjected to certain rules.”
Putin then mocked Carlson for having once aspired to join the CIA, adding the journalist had been lucky to be rejected by the organisation.
“Maybe we should thank God they didn’t let you in. Although, it is a serious organisation,” Putin said before cryptically noting, “I understand”, pausing and then continuing, “My former vis-à-vis, in the sense that I served in the First Main Directorate – Soviet Union’s intelligence service. They have always been our opponents. A job is a job.”
A moot point, perhaps, until you realise Carlson’s father had headed Voice of America under Reagan.
There was more cryptic and convoluted spy commentary when discussing who exactly Evan Gershkovich, the WSJ reporter currently being held in Russia on espionage charges, was working for.
But who or are what is Monaco? Unknown. Putin then concluded:
“It is up to the special services to come to an agreement. Some groundwork has been laid. There are people who, in our view, are not connected with special services.”
Was that a slip of the tongue or did he mean some people not connected with special services are well positioned to operate as back-channels between the two? Would that be people like Carlson? Or other well funded networks with less obvious agendas?
Putin then noted saying too much more in public would be compromising. “The more public we render things of this nature, the more difficult it becomes to resolve them.”
Yet if it’s really the case that Putin isn’t the one in control, why would he give the game away so openly — why would the networks in charge want that? Who are they trying to appeal to really? Are they seeking some sort of international parley or armistice?
And how does any of that gel with Putin’s extensive historical briefing at the beginning of the interview? For now, more questions than answers. Or, at a minimum, it’s all purposeful deflection.
| BUSINESS, ECON AND FINANCE |
ADM’S ACCOUNTING PROCEDURES WERE PROBED BY AMERICAN PROSECUTORS as the Justice Department interviewed former staff of the agricultural commodities trader as its nutrition business came under greater scrutiny.
NEW YORK COMMUNITY BANK STOCK DROPPED again after Moody’s downgraded its credit rating to junk, leading to an almost 70 percent fall in the first month of 2024, putting the stock at its lowest level since 1997. The stock, however, picked up by Friday after a series of executive share purchases were disclosed. NYCB had purchased parts of troubled lender Signature last year.
HEADACHES MOUNTED FOR CHINA’S XI JINPING as a litany of economic crises hit the Asian giant. Especially concerning for Chinese investors is that none of the piecemeal measures designed to boost consumer confidence so far, like trade restrictions or curbs on short selling, have budged the confidence needle.
DONALD TRUMP WILL WAGE A TRADE WAR WITH THE EU should he be re-elected as President in 2024, insiders told Bloomberg. The former President is reportedly keen to implement a general tariff of 10 percent on European products, imitating similar tariffs placed on Chinese goods during his former Presidency.
COMPANIES WERE TRYING TO AVOID SAYING ESG when discussing ESG-related strategies, as the free-fall in C-suite mentions of the term plummets to new depths. Instead, companies are ditching the politically charged term and using words like “green economy” and “energy transition.”
IRAQ BANNED 8 LOCAL BANKS FROM US DOLLAR TRANSACTIONS following a visit from a top US Treasury official to Iraq. The move was ostensibly taken to reduce fraud, money laundering and other illegal uses of US currency.
HAVING ACQUIRED CONTROL OVER 5 PERCENT OF SPAIN’S IBEX, Larry Fink is now in the firing line of socialist Spanish Minister Yolanda Diez, according to El Mundo.
GORDON BROWN CLAIMED A POVERTY EPIDEMIC was tearing through the United Kingdom, and accused the government of creating a wall of silence around “obscene” levels of destitution amid the “systematic shredding” of Britain’s social security system.
DEUTSCHE PFANDBRIEFBANK PREPARED FOR BAD DEBTS as it announced it was bracing for the worst decline in commercial property values in 15 years, setting aside as much as €215m to deal with these ‘bad debts’ in 2023.
TOP CHINESE CHIPMAKER REPORTED A FALL in quarterly net profit of up to 55 percent. China’s top chipmaker SMIC missed analyst expectations after weak global demand and fierce industry competition contributed to an unexpected drop in profits.
MORNINGSTAR REPORTED CATHIE WOOD’S ARKINVEST HAS DESTROYED $14.3bn of wealth over the past decade. The high profile fund, which attracted a record $30bn in assets in 2020 and 2021, plunged during the 2022 bear market when its flagship fund dropped by 67 percent and is yet to recover.
DESPITE ALIBABA’S REVENUE MISS, the Chinese e-commerce giant hiked its share buyback programme by $25bn, causing a whipsaw in the company’s shares after earnings were released.
GERMANY WAS HIT WITH MORE STRIKES THIS WEEK, the latest being the industrial action by airport ground staff, which forced Lufthansa to cancel hundreds of flights affecting over 100,000 people.
PALANTIR STOCK SURGED OVER 30 PERCENT on Tuesday as investors cheered the software company’s latest advancements in artificial intelligence. Palantir predicted its AI program, the Artificial Intelligence Platform or AIP, as the key reason it expects US commercial revenue to grow by over 40 percent in 2024.
| COMMODITY CORNER |
KEIR STARMER DITCHED HIS GREEN INVESTMENT PLEDGE, as the Labour leader U-turned on most of its policy to spend £28bn a year to “reach climate targets and secure green jobs.”
| CBANKING |
YELLEN CLAIMED COMMERCIAL REAL ESTATE LOSSES could leave banks “quite stressed”, and explained that bank regulators will aim to avert the turmoil caused by the collapse in the value of commercial real estate.
UKRAINE IS SET TO USE ITS ‘DIIA’ EVERYTHING APP as a mechanism to pressure citizens to sign up for the draft, Elon acolyte Mike Benz posted on X. Benz further explained how the application, which was created in part with funding from USAID, has become known as Ukraine’s “state in a smartphone”. This is due to the way it digitises medical records, banking, biometric data, and more, while linking Ukrainian citizens’ digital ID to their bank account. But with the Ukrainian government now wanting to take advantage of that concentration by threatening citizens who attempt to dodge the draft abroad with asset freezes, concerns are mounting that it’s helped to entrap the Ukrainian citizenship.
But the concerns may be unwarranted. Among the amendments being called upon before the bill’s final draft are the removal of the hugely unpopular asset freeze proposal.
David Arakhamia, head of Servant of the People’s party faction, the monomajority in Ukraine’s parliament, meanwhile, said “the rules regarding blocking personal accounts of citizens are absolutely unacceptable” and that “I do not see those in the Council who would support such a thing.”
Nonetheless, as my Politico colleague Geoff observed, that such a measure could even be considered is an indication of how the fabric of Ukrainian society is creaking under the strain of keeping the war going. In related news, Ukraine’s deputy central bank governor, Serhiy Nikolaychuk, told our other colleague Gregorio that his boss, Andriy Pyshnyi, was scheduled to discuss the issue of the Russian assets frozen in the EU yesterday with EU Commission vice-president Valdis Dombrovskis and Belgian National Bank Governor Pierre Wunsch.
| GEOPOLITICAL HOT SPOTS |
NAYIB BUKELE ACHIEVED A LANDSLIDE VICTORY in El Salvadorian elections this week, with the world’s “coolest dictator” seemingly reaping electoral rewards from his dramatic strategy towards eliminating crime: imprisoning everyone with a tattoo.
FLEMISH NATIONALISM AND THE POTENTIAL BREAKAWAY REPUBLIC OF FLANDERS. The decades-long battle for Brussels between the French-speaking Bruxellois and the Flemish Brusselaar reportedly risks flaring up again ahead of elections in June, in which the far-right Vlaams Belang party is expected to emerge as the biggest political force. “Vlaams Belang’s president Tom Van Grieken has made no secret of his ambition to break off Flanders — the Dutch-speaking north of the country — from the rest of Belgium to form an independent state, leading to a division of the country along linguistic lines,” Politico reported.
THE EU BACKED A TOUGH NEW MIGRATION PACT: The EU approved on Thursday a migration deal that will see thousands of asylum-seekers — potentially including children — locked up, Politico reported.
NGOs supposedly see the pact, from which Ukrainians will be exempt, as pandering to the increasingly right-wing sentiments of Europe, ahead of a critical election year. The left say the measures will do little to curb migration flows, since these are being motivated by real needs. Supporters of the pact, however, argue the measures will put off would-be migrants and act as a deterrent.
PAKISTAN SUSPENDED TELEPHONE SERVICES during election day, citing the need to “maintain law and order.”
THE SENEGALESE GOVERNMENT EFFECTUATED A ‘SELF-COUP’ as security forces expelled opposition MPs, who hold a 1-seat majority, from parliament to vote for the postponement of the presidential election to December.
BRITISH BANKS FACILITATED FUNDING FOR THE IRGC, as Lloyds and Santander were found to be implicated in the funding of Iran’s Revolutionary Guard Corp by facilitating transactions from Iran’s petrochemical company, despite the latter being subjected to sanctions since 2018. Both banks deny wrongdoing.
THE £3.5bn QUEEN ELIZABETH CARRIER GOT STUCK IN PORT after engineers discovered a malfunction that rendered her unable to deploy. The MoD stated that Queen Elizabeth’s problem was unrelated to her sister carrier ship, the Prince of Wales, breaking down in August 2022 over a malfunction in its starboard propeller shaft.
US OFFICIALS CLAIMED IRAN DOES NOT HAVE FULL CONTROL over its proxy groups in the Middle East, including those which attacked and killed US troops in recent weeks, according to US government sources.
FRENCH ORDERS OF DEFENSIVE EQUIPMENT HIT A POST-COLD WAR HIGH, with over €20.3bn being ordered from private defence contractors by the French government in 2023.
THE SWEDISH PROSECUTION AUTHORITY CLOSED ITS NORD STREAM INVESTIGATION citing a lack of jurisdictional ability to identify any responsible culprits accurately.
BRAZIL’S BOLSONARO SURRENDERED HIS PASSPORT after police raids targeted the former President and his inner circle over allegations the group had attempted to organise an invasion of government buildings when his party lost elections.
NO END IN SIGHT FOR THE HOUTHI BLOCKADE claimed Maersk CEO, as he stated that military operations by Western countries couldn’t guarantee the safety of ships transiting the Red Sea.
As time goes on, it will become ever clearer the only route out of the Red Sea kerfuffle is diplomatic. No amount of Western strikes on hardened Houthi targets, who can easily store their relatively small drones and missiles in a variety of hiding places in the cavernous country, will suffice to bring this conflict to a head.
The special US envoy to Yemen seems to be doing just that and has announced that diplomatic efforts are underway to try to find a ‘climbdown’ with the Houthi movement as of February 6.
ERIK PRINCE CALLED FOR THE US TO COLONISE AFRICA since these countries allegedly “can’t govern themselves”. The founder of mercenary group BlackWater claimed his position was legitimised because “governments there are all about looting and pillaging and lining their pockets and going shopping in Paris”.
An insightful study I read at the LSE in 2019 that I’m now unable to find — but which, I assure you, exists — outlined an intriguing finding. Nigeria was widely understood to be one of, if not the most, corrupt countries in the world. Not just in terms of the absolute amounts being siphoned from the public purse, but also in relative terms.
This paper found something astounding. It identified that not only did Nigerian officials in governmental jobs assume corruption was part of the job, they also saw it as a critical perk of office. Why else become a public official? They would abscond from the job, leave family members in charge of critical positions, and generally make a mess of it. But, wait for it. These same individuals were then observed and studied in their positions as members of traditional tribal societies in Nigeria. These tribal societies reflect ancestral links to certain villages and ethnic groups, and their limited jurisdictional power comes down to ensuring social peace, taking care of the disfavored, and solving local community problems.
Fascinatingly, these same individuals were found to administer their tribal positions with the zeal of the most stuck-up German bureaucrat. Meritocracy was favoured for promotions. The tribal purse was considered sacred and untouchable. In fact, these same officials *gave* to the tribal societies more than they received, often taking from their public office to give to their tribal society.
What this clearly shows is you cannot judge a fish by its inability to climb a tree. African economies exist under a superimposed and artificial Western-style government without true social legitimacy, hence, why it is treated as a burden for those under it, and an opportunity for those in it.
And we shouldn’t forget that, until very recently, European nobles treated their public offices in much the same way, at least until corruption of office became a privatised affair with the rise of the centralised state and industry since the 19th century.
| CRYPTO EVANGELISM |
THE MOST PROFITABLE CRYPTO TRADERS DON’T TRADE and instead rely on the rapid minting of meme coins and other so-called “shitcoins” that are then pumped on social media or Telegram groups.
SEC-REGISTERED PROMETHEUM CHOSE ETHEREUM for the launch of custodial services, a move that could compel the SEC to finally rule on whether ether constitutes a security.
‘SPY IN THE BAG’ HELPED CREATE BITCOIN claimed Craig Wright, the man who alleges to be Satoshi Nakamoto, the anonymous founder of Bitcoin, in legal proceedings in the United States. The spy, Gareth Williams, was a codebreaker from GCHQ who was found dead inside a zipped and padlocked bag in his London apartment in 2010. But Wright’s critics pointed out it was awfully convenient that the Satoshi claimant was once again relying on dead men to back up his claims.
| American political drama |
TRUMP’S ATTORNEY OUTLINED THERE COULD BE SERIOUS LEGAL FALLOUT if there was a ruling against Trump as it could lead to “cycles of recrimination.” This point of view contends that every former president could realistically be charged with crimes — George W. Bush for prosecuting the Iraq War with false intelligence, or Barack Obama for civilian-killing drone strikes — if Trump loses his immunity.
RFK JR TOLD SUPPORTERS THAT MONEY SENT TO UKRAINE was a laundering scheme for BlackRock and other politically connected economic and defence institutions in the United States.
NIKKI HALEY WAS TROUNCED IN A NEVADA GOP BALLOT by a “none of these candidates” candidature, which achieved 61.4 percent of the vote in the ballot versus Haley’s 32.2 percent.
US SPECIAL COUNSEL WON’T CHARGE BIDEN for holding classified documents despite evidence that he “wilfully retained” sensitive materials, citing that a potential jury may see Biden as “an elderly man with a poor memory.”
| FOOD FOR THOUGHT |
TRACTOR PROTESTS ARRIVED IN SPAIN with most major roads in the Spanish mainland being cut off by farmers angered by recent proposals to curtail the EU’s agricultural sector.
HOW TO ADDRESS GROWING FOOD RISKS, The Japan News penned an editorial that outlined the swift creation of measures to address the food security risks posed by international conflict and increasing droughts.
PRISONERS IN THE UNITED STATES ARE PART OF A HIDDEN WORKFORCE linked to hundreds of popular food brands, according to a compelling investigation by AP published earlier this year.
One lovely individual, a very caring and thoughtful vegan, began her vegan cheese startup soon after graduating from university. Originally seeking to gain internships at prominent restaurants in London, she and her partner cracked several recipes for delicious vegan cheeses.
So far so good. That is until they needed scale. Several years into the enterprise this vegan cheese company needed to expand its manufacturing, but couldn’t find a suitably cheap workforce of individuals to produce it. So these vegan-loving, rasta-wearing ultra lefties found a possible solution: prison labour. This labour was UK-based and, even better, could be paid below minimum wage.
One day they told me about their factory-building plans and expressed their shock at the lack of humane treatment the building contractor expected for their workforce. One sticking point was the founders wanted windows. “They’re just prisoners, they won’t mind” was the contractor’s alleged response. But the founders resolutely put their foot down.
But while it’s easy to make fun of ideologically-minded individuals behaving like hypocrites, the economic attraction of prison labour should make us pause. After all, there’s no doubt prisoners provide an excellent source of cheap labour at globally competitive rates in the Western world, second only to illegal migrant labour.
The fact that so many inmates are racial minorities who stem from communities where criminality is glorified in the culture, does pose the question whether some of that is by design. That at least was rapper Ice Cube’s contention on a podcast with Bill Maher last year. “[The] same people who own the labels own the prisons. It seems really kind of suspicious — if you want to say that word— that the records that come out are really geared to push people toward their prison industry,” Ice Cube said, adding it was a type of “social engineering” to ensure that “prisons stay full.”
| MEDIA MATTERS |
MICROSOFT ANNOUNCED PLANS TO DISABLE COMPUTERS of individuals who share ‘non-mainstream’ content online, adding the move was needed to combat ‘misinformation’ in the run-up to the 2024 election.
THE FORMER UKRAINIAN SS SOLDIER WHO WAS INVITED to Zelensky’s address to the Canadian Parliament, was personally also invited to attend a rally in Canada by Prime Minister Justin Trudeau, a freedom of information request has revealed. This contradicted Trudeau’s government, which initially claimed the individual had not attended the rally in question.
AMAZON BOWED TO WHITE HOUSE PRESSURE AND CENSORED BOOKS on its marketplace after “feeling pressure from the White House”, internal Amazon documents subpoenaed by the GOP revealed.
AUSTRALIAN ACTRESS HOLLY VALANCE broke the internet after claiming “everyone starts as a leftie and then wakes up and realises all the ideas are crap” at the launch of Liz Truss’s new conservative movement ‘PopCon’.
HOMELAND SECURITY CITED AN INACCURATE ALLEGATION to censor the social media account of a journalist who worked for the New York Times in 2020.
| POLSKA |
POLAND WAS HEADING FOR A CONSTITUTIONAL CRISIS as the bitter conflict between its current and former government members and appointees continued. The conflict is being exacerbated by both sides refusing to accept the legitimacy of courts that don’t favour their actions.
| TECHNOLOGICAL DEVELOPMENTS |
A FINANCE WORKER WAS CONNED OUT OF $25M AFTER A DEEPFAKE VIDEO CALL, in the latest demonstration of just how sophisticated and convincing AI deepfakes are becoming. The finance worker in Hong Kong was duped into meeting several other members of staff, including the company’s Chief Financial Officer, all of whom were AI deep fakes of employees he knew at the firm before being convinced to wire $25m to the scammer’s accounts.
Suffice it to say eventually the penny dropped. He is now understandably furious with himself for having fallen for the scam.
The frustrating thing is that when Dad contacted his bank, they told him there was nothing much they could do as the recipient account, a Lloyds account no less, had been closed and the money moved on. While he has initiated a claim under the CRM code, the moral of the story is that sometimes payment friction is a feature not a bug, and that maybe our obsession with instant settlement is far from healthy. But even more glaring in my opinion is just how useless the KYC/AML regime is turning out to be.
What exactly is the point of KYC when, based on my conversations with experts in the field of push payments fraud post the affair, the likelihood of the police ever investigating the case are near zero, despite the banks knowing all the details of the recipient accounts. In reality, fewer than 1 percent of such cases get picked up for investigation at all. We are all instead collectively paying for the costs of such fraud, which is only likely to escalate further given the proliferation of deepfake technology capable of impersonating almost anyone.
One of the problems the police face, of course — besides a lack of resources — is that so much of this fraud is facilitated by student bank accounts, and in particular by foreign students who sell their accounts on the black market when they head back home. That means every year there is a new crop of unblacklisted accounts that comes to market ripe to exploit. Once the students head back home, meanwhile, the cost of bringing them to justice by UK police are too prohibitively high for them to bother. Which does make me wonder whether student accounts should be somehow treated differently in the system, or at a minimum flagged as such.
The scammers who hit dad meanwhile are – believe it or not – still contacting him. This time they’re asking him to send cash in the post to someone I supposedly owe money to. While I would be inclined to play along to get the address, we all know the police would do absolutely nothing with it.
THE WEST IS BACKING AWAY FROM ELECTRIC VEHICLES with Western leaders and corporations paring back measures to both incentivise and create electric vehicles. Though only a few years ago most were competing to enact the most radical subsidies and inventions to turbocharge the uptake of EVs, the trend has now sharply reversed. This is no doubt because subsidies have become unaffordable with scale, even as scaled-up manufacturing processes have failed to bring down costs.
CAN THE EU SAVE ITS SOLAR PANELS INDUSTRY asked Politico’s Stuart Lau? Instead of cultivating domestic businesses, solar power subsidies pumped out by the EU are turbocharging Chinese imports that easily out-compete domestic European solar panel manufacturing. The EU solar power industry has warned it only has weeks left before the sector implodes as a result of this competition.
THE MASS CREATION OF FAKE DOCUMENTS is only starting. Welcome to ‘OnlyFake’, a website that uses neural networks to churn out fake IDs and other official documents which can thwart AML and KYC measures in cryptocurrency exchanges and banks.
BRITISH WIND FARMS HAVE BEEN OVERSTATING THEIR PRODUCTION capabilities to game subsidy-granting mechanisms from the British grid operator when too much wind generates levels of power the grid cannot reliably operate with, Bloomberg reported.
A FUSION MACHINE RELIABLY GENERATED FUSION ENERGY and simultaneously set a world record in energy output. The massive fusion machine at the Joint European Torus (JET) conducted deuterium-tritium experiments where high fusion power was consistently produced for five seconds.
THE UNITED STATES NAVY CONDUCTED A LARGE DEMONSTRATION of unmanned surface vessels (USVs) in collaboration with the John Hopkins University of Applied Physics.
The US gave a fantastic demonstration of what it considered the future of naval warfare to look like — much to my pleasing. Conspicuously absent from the show was any type of massive naval vessel. You know, the kind that might otherwise easily draw long-range missile fire and sink along with billions in taxpayers’ money.
The vessel above showcases two of my favourite developments in one unit. The unmanned vessel will operate a launcher that can fire loitering munitions, which is another word for a drone that can fly around before selecting a target and going ‘zoom –> kablooey’.
But my absolute favourite unmanned vessel unveiled a revolutionary technology. This emissions-free capability will allow the vessel to cruise along with minimal noise, signature generation and maximum fuel efficiency. Here’s a picture:
Yes, the sail is back. The Saildrone Voyager will operate in swarms that will be able to autonomously map and surveil enormous distances that would prove prohibitively costly in refuelling terms for conventional motor-powered vessels.
The use of USVs has shown great promise in the Russo-Ukrainian war — particularly from the Ukrainian side. Ukrainian USVs have been credited with a large number of seagoing ‘kills’ on far larger and more costly Russian ships. While most USVs are destroyed during their swarmed attacks, only one of these canoe-sized speed boats suffice to disable their targets.
But while a future of warfare in which unmanned vessels and drones are taking the ‘hits’ may seem pleasing from a moral standpoint, the reality is anything but.
A larger number of attritable units will simply encourage aggressive action and escalation, since no lives will be theoretically lost on the deploying side. The sad truth is that inevitably real humans will get involved — and these will get killed far more easily and in greater numbers by autonomous units, or by drones that are controlled miles away from the frontline, than by a similar human a few hundred metres away.
| COVID COLLATERAL DAMAGE |
OBVIOUS ECONOMIC RISKS RELATED TO LOCKDOWN were not only ignored by mainstream media and institutions, those who warned against their terrible impact on the world were ostracised and branded as “conspiracy theorists, COVID deniers, granny killers and far-right extremists.” The OECD now believes that lockdowns may be responsible for wiping £700bn off the global economy and stunting growth for decades because of the lasting impact of school closures on young people, according to The Telegraph.
