REMCO

RemittanceToken: Technical Details

The RemittanceToken operates on a private permissioned network using a programmable token to transfer money leveraging on direct API connections with the destination banks and mobile wallets in various jurisdictions. The system allows pre-authorized partners to generate tokens on the network for distribution to end users or their agents. These tokens can be programmed with various denominations and currencies and buyers/senders will use a mobile or online app to initiate the money transfer, thus the sender will perform the actual transfer.

A system diagram is presented in Fig. 1, and a sequence diagram is shown in Fig. 2. The system will route the order to the remittance organization for fulfillment, transparently and in real time. The system further provides both parties real-time knowledge of the token value and usage throughout the life span of the token.

• RemittanceToken Purpose
The token address will store the value and thus replace the traditional card pins or numbers. Because a token’s long address may not be practical due to the realities of the limitations of mobile phones and computer gadgets, the token address is linked to a set of random integers and other identifiable attributes that will be either handed over to the buyer (underneath the UV-ink scratch-off surface on a card) or transmitted to their phone in real-time.
•RemittanceToken Generation
RemittanceToken integer address generation follows a random sequence, while the root address follows distributed ledger process. The Token is locked to the remittance organization that distributes it to the agent. If the server were compromised, all token information is encrypted, and moreover, the logic for activation can only be triggered by an agent and only after receiving the payment for the “digital good funds” associated with one or more RemittanceTokens. All transactions pass through https protocol. Server infrastructure is hosted in a secure location that requires biometric accessibility.
Figure 3, below, graphically shows some of the process (Please refer to whitepaper)

RemittanceToken Activation and Usage Commission Setting:
The system allows authorized remittance or stored value partners to generate and set the token value and other characteristics, such as currency type and a commission structure for all stakeholders. The subsequent usage of the activated token is then recorded on a distributed ledger on a multichain blockchain platform (see Appendix 1) as well as on the partner’s database and parties can have access to usage records through an API. The token can be used on the platform of partners, with back-end integration to the blockchain node for validation, transaction record-keeping and transparent insight into the remaining value of the token.

Note that although the VTNGlobal model includes a retail scratchcard, RemittanceTokens can be transferred using virtual cards (for which the codes associated with a card can be electronically sent) or some other distribution method. This might be totally invisible to the senders depending on the approaches taken by partners.

•RemittanceToken Security
The token instrument has no value until activated by an authorized partner or an agent. The risk exposure is negligible because an inactive token cannot be used. To activate the token, the agent has to access an online interface at which point the system knows which agent and which remittance organization to which the token belongs.

•RemittanceToken Client (Sender) Compliance
RemittanceToken is designed to dissuade potential criminal behaviors by employing the most up-to-date AML/CFT procedures, specifically:

1.RemittanceToken’s system allows remittance organizations to set usage limits based on their internal AML procedures regarding the total amount of money from any sender per day/week/month and agents cannot authorize overrides.

2.As a prerequisite for using the card, the system requires proper KYC for both the sending and receiving parties, as defined by the various jurisdictions, often tied to a tiered schedule based on the amounts being transmitted. This requires the first-time user to upload identity documents which the system then verifies. This information is required only once unless the system detects that the Identification has expired, and then prompts the sender for updated documentation. In addition to the AML limits set by authorized remittance organizations, the RemittanceToken system takes it a step further to log suspicious activities for further review.

3.The RemittanceToken platform retains certain data points as required by recordkeeping rules including properly identifying persons conducting transactions, maintaining paper trails and filing Currency Transaction Reports with USA authorities (for cash transactions over $10,000).

4.RemittanceTokens also have inbuilt splitting detection to prevent structuring, which is the practice of executing financial transactions in a calculated pattern to avoid triggering reporting requirements.

•Recipient Verification
The system will only process transactions that have satisfied the local KYC requirements in the sending and receiving jurisdictions. Traditionally, the only way to verify the Identification of the recipient in many developing country jurisdictions is by going to local agents (oftentimes banks) to pick up the funds. In recent years however this has improved and become automated for those with bank or mobile money accounts and the RemittanceToken system verifies the recipient directly with the regulated financial institution holding the account. The KYC verification “passes through” with system-to-system processes, virtually eliminating judgment errors. Since this automated approach does not work for every individual in every country, the RemittanceToken can also accommodate more old-fashioned methods of KYC for recipients. These methods will vary from country to country.

•User’s Freedom
The most overlooked participants in remittance transactions are the senders. Senders value their time since they are most often gainfully employed and time-constrained and they will find this product appealing because it allows them to send money 24/7 with the assurance that it will not be subject to extensive credit card fraud checks which waste their time and rob them of their self-respect. The role of self-esteem cannot be underestimated. Most senders are law-abiding citizens, many are professionals and they feel persecuted via the forced association with a few bad actors whose behaviors resulted in broad and stringent procedures by remittance organization to add additional layers of scrutiny to prevent fraud or chargeback.
Senders want to get the money to their family on their terms. The RemittanceToken processes and methods allow senders to buy the tokens from remittance organizations or enter any participating store request the token, denomination, pay the activation fee and leave. The sender can then use the token at the appropriate time at work, at home or wherever they may be, with full assurance of acceptance.

•Multiple Recipients
Diasporans potentially want to send money to more people than what the remittance organization realizes and this undermines CFT/AML efforts to know the beneficiary. Senders have never been given the opportunity to send small amounts to multiple family members due to the high transaction fees and the cumbersomeness of the process. Instead, senders now most commonly send a lump sum to the most trusted member of the family to distribute. The reality is that senders often prefer to keep the amount they sent to sister A, private from brother B. In most Diasporan cultures, senders would prefer a system that allows them to send money to multiple family members independent of each other, at a reasonable cost.

The Remittance Token methods and processes enable a sender to transfer part of the value to multiple recipients at a significantly low fee compared to the traditional way of sending money and this provides better, more granular data for regulators. Splitting the value is practical because it is all “digital good funds”; there are no credit card, ACH fee involved once the Remittance Token is purchased and activated. Please note that for recipients without an account at a licensed bank or mobile money institution there may be additional fees upon cashing out at an agent.

•Monitoring
The Remittance Token has inbuilt monitoring mechanisms such as tracking the number and value of tokens sold and the activities on each token. The system also tracks card usage and commissions due to each agent.