Is cash really anonymous? How banknote tracking works

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Cash is king—this motto applies more in this country than in others. Austria remains at the top of the European rankings when it comes to cash payments. One reason often cited for this loyalty to cash is that it is considered safer and more anonymous than card or smartphone payments.

Many people believe that the money trail is lost after withdrawing cash from an ATM: after all, the bank cannot see how many bottles of wine you buy at the supermarket or spend in shady nightclubs. A recent report by netzpolitik.org illustrates that this belief in anonymity is deceptive. According to the report, every single banknote is equipped with sophisticated tracking technology that records its location every time it is scanned.

Telltale serial number

Every banknote has a serial number in the upper right corner that is recorded repeatedly over the many years that a banknote circulates in the economy.

For example, when the banknote is inserted into a cigarette or parking machine or the money counting and sorting machines of shops and cash-in-transit companies. According to netzpolitik.org, all devices with modern banknote processing modules can register serial numbers.

Police use this to track down criminals

Because the serial number of a banknote is recorded so often, its journey can be traced precisely. Law enforcement agencies use this for investigations, for example, in cases of kidnapping, money laundering, or terrorist financing.

There are also efforts to consolidate and store all cash data. Particularly innovative technologies in the field of cash tracking promise that banks and cash-in-transit companies will even be able to search for serial numbers associated with crime automatically. There is even software that sounds an alarm when a bill on a criminal list is scanned somewhere.

Global practice

Countries such as China and the US already track cash in detail. In China, for example, each serial number is directly assigned to the account of the person who withdraws it from an ATM, in some cases together with a facial scan by the camera in the ATM.

In the US, photos and serial numbers of banknotes are sometimes collected in a special database. This has already enabled the police to track down a drug wholesaler by tracking money from his customers.

The German police also have a cash database in which individual “tainted” banknotes are linked to specific individuals. It is even possible to search across Europe. Perhaps you even have such a banknote in your wallet right now.

Start-up tracks banknotes for authorities

These facts are not new. However, Netzpolitik.org has discovered that a company called Elephant & Castle IP GmbH now offers automated tracking technology for authorities. Elephant & Castle IP receives banknote serial numbers with location and time stamps from German cash-in-transit companies. “Our technology makes it possible to trace the history of banknotes at the touch of a button,” says managing director Gerrit Strehle.

“We use data analysis to develop a deep understanding of cash movements and identify payment flows that show potentially suspicious patterns. We ‘listen’ to the cash, so to speak,” said Strehle. The company sells these findings to German law enforcement agencies.

Activists are alarmed

Data protectionists have long warned that such a project could lead to a kind of mass surveillance. They see people’s privacy at risk from the increasing tracking of cash via serial numbers. Comprehensive surveillance would provide deep insights into people’s private lives, even revealing details such as their favorite foods or addictions.