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BMO, Pension Plan Pilot Blockchain for Fixed Income Issuance

Canadian financial firm BMO Capital Markets is working with the Ontario Teachers’ Pension Plan on a new blockchain pilot.

The trial sees the two firms register a fixed income issuance on a blockchain platform in an effort to assess the viability of using the technology for this purpose.

“The transaction included Bank of Montreal as the issuer and Ontario Teachers’ as the buyer of a CDN $250 [million] 1-year floating rate Deposit Note, making it the first Canadian dollar fixed income issuance demonstrating the viability of blockchain platform,” BMO said in a statement.

The prototype allows participants to view the transaction and verify the accuracy of the term sheet and payment amounts before the security reaches maturity. The solution is aimed at reducing the costs associated with compliance and financial reporting, among other areas.

Ontario Teachers’ is a notable partner, given the demographic it covers. The organization is a single-profession pension plan serving around 323,000 working and retired teachers in the province of Ontario, with $189.5 billion in net assets as of December 31, 2017.

“Ontario Teachers’ is committed to exploring technology and innovations that might improve our ability to serve our members,” Audrey Gaspar, a managing director for Ontario Teachers’, said in a statement. “We are pleased to partner with Bank of Montreal in this pilot blockchain initiative.”

Image Credit: Cut For Good Photo / Shutterstock.com

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Hackers Demand $1 Million In Ripple (XRP) From Canadian Banks

After getting hold of personal information of around 100,000 customers of two Canadian banks, some adamant hackers have demanded $1 Million ransom in Ripple (XRP), else they will reveal the stolen vital data to the world.

Bank of Montreal and online bank Simplii Financial (owned by CIBC) made known that hackers stole identifying personal information of not less than 90,000 different account holders at the two banks over the weekends.

In a report by CBC News, the cyber criminals publicized that they stole information like names, account numbers, passwords, security questions and answers, and even social insurance numbers and account balances.

A mail sent from Russia to the two banks on Monday evening reads:

“We warned BMO and Simplii that we would share their customers informations if they don’t cooperate.”

The hackers claimed they gained partial entry into the database of the two banks using a common mathematical algorithm fashioned to rapidly authenticate moderately short numeric sequences like credit card numbers and social insurance numbers.

The algorithm, according to the hackers, is used to steal account numbers, which later give them access to impost as authentic account holders who do not know their password again. This gives them access to answer security questions, which translates to having access into their account.

“They were giving too much permission to half-authenticated account which enabled us to grab all these information,” the email reflected, maintaining that the bank “was not checking if a password was valid until the security question were input correctly.”

$1 Million In XRP Demanded

The email, however, demanded that a ransom of $1 million Ripple (XRP) be paid if the two banks want their customers’ data returned, otherwise they would be released to the world.

“These … profile will be leaked on fraud forum and fraud community as well as the 90,000 left if we don’t get the payment before May 28 2018 11:59PM,” the email said.

It is believed that the hackers have not revealed the deadline for the payment, CBC News in a conversation with Bank of Montreal reflected that the two banks do not pay fraudsters, but try to protect the information of their customers.

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Vatican Address to Highlight Bitcoin Use in Human Slave Trade

The Vatican is soon to host an address on how bitcoin and other cryptocurrencies are being used in the modern-day slave trade.

To be held today at the Pontifical Academy of Social Sciences (PASS) in the headquarters of the Roman Catholic Church, the talk by Bank of Montreal senior manager Joseph Mari is to provide an overview of the role cryptocurrencies play in money laundering, while highlighting the potential of blockchain to help the unbanked.

The second of a three-day long event, itself part of an even larger effort led by Pope Francis to eradicate slavery entirely by 2020, the address is expected to be given to an audience including the Vatican secretary of state, Cardinal Pietro Parolin, and other senior church leaders.

Since the Pope was named the leader of the Roman Catholic Church in 2013, he has made slavery a top priority of the church, helping inspire the recent PASS efforts, according to an internal document provided to CoinDesk.

In addition to today’s address on blockchain, the group has held other workshops, seminars and plenary meetings culminating in the organization’s “core” recommendation to resettle slaves where they are found, if they so choose, rather than repatriate them.

Speaking in an exclusive interview with CoinDesk, Mari detailed the purpose of his particular address, and the potential bigger picture role it could play in fighting against what the International Labour Organization estimates is a $150 billion
 forced labor industry.

Mari said of the audience:

“Blockchain and cryptocurrency needs to be on their radar, it needs to be recognized as something that is current, is being utilized and the quicker the learning curve is surmounted, the quicker we can start working towards the risks that are presented.”

Mass education

The day’s proceedings are scheduled to kick off with the celebration of mass by H.E. Msgr. Marcelo Sanchez Sorondo, who is also the bishop of Argentina and chancellor of PASS.

Following chancellor Sorondo’s blessing at Casina Pio IV in Vatican City, Mari is scheduled to present the most recent results of Project Protect, founded two years ago to teach AML officers how to identify patterns in their own transactions that might be evidence of human trafficking.

Specifically, Mari plans to frame early results of Project Protect that identified an increase in the use of cryptocurrencies by slave traders in Canada and other regions in light of the broader concerns being addressed at the event.

Having early on identified an increased use of cryptocrrucny by slave traders , the project — which Mari calls a “zero-cost initiative” designed to bring new efficiencies to existing AML procedures — has worked with blockchain data startup Chainalysis and other financial institutions to create new methods to identify patterns in cryptocurrency transactions that might indicate a slave has been purchased, or is being advertised.

By focusing on that work, projects elsewhere that use blockchain to bring new levels of transparency to the shipping of goods and to provide individuals at risk of becoming slaves a self-sovereign means to identify themselves, Mari aims to present to the church leaders a nuanced depiction of the technology’s role in human trafficking.

“For everyone in the room at that time in the Vatican, I’m just really stressing from an AML standpoint that this is something that has been going on for the better part of ten years,” he said. “And its uses are diversifying across the board, in terms of both positive and negative.”

Church and bank

Expanding on Mari’s mission to jumpstart the education process of the church leaders was event co-organizer and founder of the Global Alliance for Legal Aid (GALA), Jami Hubbard Solli, who added to the objectives her hope to win the support of the Vatican in recruiting banks in the fight against human trafficking.

Originally conceived as a separate event hosted by GALA to draw attention to the slave trade between Nigeria and Italy, Solli first contacted the Vatican through the president of the Pontifical Academy, Margaret Archer, whom she invited to participate as a speaker.

Instead, Solli said she was invited by Archer, to co-organize today’s joint event, formally called “Assisting Victims of Human Trafficking: Best Practices in Legal Aid, Compensation and Resettlement.”

Through a diverse set of public-private partnerships scheduled to be discussed at the event, Solli believes existing anti-money laundering measures can be upgraded to more adequately account for the rapidly growing impact of cryptocurrencies on human trafficking.

“We really need partnerships between banks and prosecutors,” she said. “As well as between financial institutions and civil society.”

As a result of Mari’s address on blockchain and other addresses at the gathering, further Vatican recommendations are expected to be forthcoming, according to Solli.

Mari described the potential impact of the event could have on jumpstarting the fight against slavery transacted in cryptocurrency:

“The quicker that we can start coming to terms with the fact that this is something that is most likely going to be here for the foreseeable future, the quicker we can start getting towards mitigating the risk.”

Vatican image via Shutterstock

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New Banks Join UBS-Backed Blockchain Trade Finance Platform

Four major banks have joined a trade finance initiative launched late last year by Switzerland-based UBS and tech giant IBM.

Bank of Montreal (BMO), CaixaBank, Commerzbank and Erste Group are now taking part in the project, which is being built on top of the open-source Hyperledger Fabric framework. The platform, dubbed Batavia, was first unveiled in October at the Sibos banking conference in Geneva.

The idea behind the project is to build a system through which international trade transactions can be carried out from start to finish. Instead of paper-based letters of credit, trade finance transactions would be executed through smart contracts – self-executing pieces of code that trigger when certain conditions are met, instead.

Speaking last year to CoinDesk, Beat Bannwart, UBS’s head of product and market development for transaction banking, said that the primary intent was to link the parties involved over the course of a trade transaction more seamlessly.

“We looked at it from a transaction banking point of view, so we involved people from trade, from supply chain finance. But the aim was actually to combine all these different steps into one single solution, where the entire business flow is covered,” he said at the time.

Those behind the Batavia project are aiming to start a test phase involving customers sometime early next year. Though it’s not clear yet who those customers might be, IBM has previously worked with the government of Dubai and banks like Santander and Emirates NBD on research in the area.

UBS image via Shutterstock

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