Headless Hunch : Bar-coded Currency Notes – Tracking Black Money

Black Money, as Wikipedia defines as funds earned from black market, on which income or other taxes have not been paid.  This has been favorite topic of discussion for scholars and perhaps best tool in any leader’s kitty to win popular kudos as it’s really a grey area in Indian Economy.  As there cannot be any legitimate estimates of the Black Money, it’s importance can be described from the term quoted ‘parallel economy’.

Well lot has been said on and little has been done to bring the money back from tax heavens, but that’s not much of concern for me at least.  A major concern is that, it’s still continuing and there is nothing whatsoever been done to check or restrict it from this point forward.  So leaving aside bringing back the black money, here is something, I want to suggest to ‘intellectual’ individuals – a way to track, restrict and provide deterrent to this ‘Parallel Economy’.

I had always wondered why the currency notes were having serial numbers and did lot of research over internet to identify the purpose of this serial number and could only find that the utility only restricted to give each note a unique identifier and a step ahead, a quick identification of where it was printed.  This is definitely a requirement of the currency note but it’s now old fashioned and need more out of it.  With advancement of technology, even currency notes needs to be upgraded.  Now its time to introduce bar-codes on currency notes, even a step further, Sim-card type micro-chips would be best.  However, looking at the cost factor and the purpose, I will be happy to settle with Bar-codes.  Let me explain how I intend to track black money and money laundering using these bar-coded currency notes.

Have you ever heard of website ‘Where’s George’? Well it’s wonderful concept of some hobbyists to track US currency notes.  Based on similar idea, there are lots of websites which provide such currency notes tracking. In fact, I also came across Indian Rupee website, ‘Track Gandhi’, a website developed to track Indian currency notes on lines of Where’s George.  Currently all these websites, gives you excellent statistics on where the note you are holding with you have been traveled before it reached you.  Backed by some wonderful analytical tools and intelligence, one can see which state holds how much currency and much more things, one can imagine.  Of course this all is possible through that unique serial number on the currency note.

Now let’s get back to our topic, bar-coded currency notes.  So the plan is very similar to what this websites does; only the scale of operation differs, just because we are not hobbyist but into serious business of curbing illegal money from the system. So here is what we what we do:

Step – 1:

We print all currency notes along with bar-codes which help the notes to be easily read by any bar-code reader.  Bar-codes must be able to capture and identify information such as, unique identifier (serial numbers) and denomination of currency notes.

Step – 2:

Create a central database and related infrastructure which stores all the barcode information.  This is what will give you raw data for all further analysis.  Combined suite can be termed as Currency Tracking System (CTS)

Step – 3:

Create support infrastructure at ’Transaction Point’ such as Banks, POS, Government Treasuries, Cash Distribution Outlets (Factory day-pay centers, ATMs) etc., that can easily read and store this bar-code every time the currency notes pass this T-Points. These T-Points would transmit these note information back to centralized database enabling central database to create history of the currency note movements.

Step – 4:

Implement an integration platform enabling CTS to talk with existing applications which track the currency movements in non-cash format, ie., credit card transactions, cheque transactions etc. If there is no such application it should be developed. Again, CTS should be able to get feed from Income-Tax application to ensure that all cash and non-cash transactions can be pinned to individual face based on PAN information.

Step – 5:

Now comes the most wonderful part. When the bar-coded currency notes comes out of press and moves within hands, it would be tracked and recorded into CTS at different T-Points.  Entire information can be loaded to smart analytic engine to derive specific patterns to specific geographies and if information is accurate to individuals.  That’s it!!! Now unleash Enforcement Directorate to investigate on specific leads and I am sure they will dig out the skull.

Let’s understand this patterns and leads by realistic scenarios:

1. Say a 500 rupee note (R1) has been printed with bar-code and is distributed to Mr. H from the bank B1 via ATM T1.  CTS will update the owner of currency note R1 as Mr. H as ATM T1 (via eventually bank transaction B1) will help to identify Mr. H via his PAN association.  CTS owner Mr. H
2. Now Mr. H deposit this money to his wife’s account Mrs. D via cash at bank B2 branch. Thus CTS update owner of R1 as Ms. D.
3. Now Bank disburses this note to Mr. V who has accessed bank B2 for his banking needs. CTS updated owner of R1 as Mr. V.
4. Mr. V now goes to local grocery store (not a T-Point) and transacts to get groceries. CTS still has owner of R1 as Mr. V.
5. Local grocery store pays this currency note to his employee as salary. CTS still has owner of R1 as Mr. V.
6. Grocery store employee transacts this note to pay school fees of his child at educational institute (E1) (not a T-Point). CTS still has owner of R1 as Mr. V.
7. Educational institute deposit the note to bank B3.  CTS update the owner of R1 from Mr. V to education institute E1.

and the cycle continues, but leaves the traces of where the note is passing hands and valuable information on flow of currency note.

Now suppose, Mr. V instead of shopping at local grocery store pays bribe/black money to someone Mr. K and Mr. K puts this note along with lot many other in bank locker.  Now this note R1 in CTS would still be in Mr. V ownership but then if this note is offline for long period of time, say 6 months, ED has good lead to investigate where it got disappeared.  This is how bar-coded currency note helps to generate lead for investigation and also helps in check hoarding of black money outside system.

Let’s take another twist, Mr. K doesn’t hoard but instead uses this money to pay up the black money part of the house he purchase (house is just an example, you can have anything). So this note R1, CTS owner Mr. V, will be in circulation and thus would definitely come back to CTS in some time, say at supermarket as cash transaction with Mr. P.  CTS will update the ownership of R1 to S1.  In similar scenario, it will not be a single note that will be moving from Mr. V to S1, there would be lot many notes, right? Even in combination of many to one, so if there are many currency notes being following same route, analytical engines would again generate lead for the ED to investigate the path of notes from Mr. V to S1 and dig out black money.

This is just an example of what can be done, once the ‘intellectuals’ brainstorm, I am sure there could be lot many permutation and combinations of such scenarios that can be developed and analyzed by good analytic engine ensuring strong black money deterrent being created.

The system will definitely create false positive but as we validate more transactions and mature in our patterns, we can definitely reduce false positives and create zero alpha system.

Having said so, I would answer a curious question on why bar-code and not serial numbers when we are still depending on serial number as unique identifier?  Well answer is simple, practicality. Based on my limited knowledge of these technologies, I find bar-codes easily and quickly readable rather than QR codes or in that matter serial number punching.  Remember we are speaking of billions of currency notes being scanned at a point of time, the speed and accuracy of scanning is the core of the entire scanning and thus bar-codes are preferred over anything else.  Again being futuristic, we can have Smartphone based applications where individual can scan the notes themselves (act as T-points) and the tracking can cover wider area.

This idea is still in nascent stage and can be debated and brainstormed to achieve day of light, but I believe it would be great thing to do, to provide a strong deterrent to black money.  Some of the other advantages I figured out of these system while penning it down are:

• CTS will give some wonderful statistics relating to life cycle of currency notes, helping central bank to upgrade its statistics on when and how much currency notes to print to replace the existing worn/soiled notes.
• CTS storing information in centralized database, identification of counterfeit/ forged currency notes can be eased as banning any series or currency notes can raise a trigger at T-Point leading to non-acceptance of such currency notes.
• Using secured algorithm to generate bar-codes can help in letting go may costly security features currently in practice to identify genuine currency notes.

Having said and explained this concept, my only dilemma about this excellent hunch is that the implementation of such system can only be done with strong will of government and unfortunately in India, as 99 of 100 would agree, the major black money holders are the one who have decision making power in government. But with a hope that someday, something will change, request all the reader to consider, brainstorm and hunch on this concept.