Interview with Dr. Zeno Dahinden, CEO of e-dinar (part 2)

Part 2 of an interview with Dr. Zeno Dahinden, CEO of e-dinar.

(Q) Does e-dinar have established mints in the United Arab Emirates or Indonesia?

We do most of our minting with Emirates Gold in Dubai. We have some local minting operations in Indonesia and are looking for ways to mint silver dirhams in Malaysia to avoid import and custom duties on silver.

(Q) Can you say that the e-dinar system is free from any financial or counter party risk like those associated with the banking industry?

Yes, absolutely. Since we always have more bullion in stock than we have in circulation, there are no financial counter party risks.

(Q) Regarding compliance, I know that e-dinar is not a bank however your customer identification and AML rules are very strict (verified customer name & address and source of funds required)

You are right, we are quite strict both in our Customer Acceptance Policy as well as our transaction control with regard to third-party transactions. This is to discourage unwanted elements before they enter the system which we have successfully done. We incidentally modeled our Customer Acceptance Policy based on GoldMoney´s policy which is among the strictest in the industry.

Even though our Customer Acceptance Policy slows down the growth in new accounts, our key customers appreciate the strict controls we have in place and thus feel more secure given our tight control of operational risk. Operational risk is incidentally at the core of the new Basel II regulations from the BIS (Bank of International Settlement).

(Q) Why Dubai and what are the advantages of being located in Dubai?

Dubai is where the action is. Today, Dubai is the key business and trade hub for the Middle East, the Subcontinent and South-East Asia.

The main advantages of being in Dubai are:

• Centre of bullion trade for the Middle East and Asia (Dubai is also called the ´City of Gold´)
• Excellent security and governance of bullion trade (the expropriation that occurred in the US during the depression would be unthinkable in Dubai)
• Very business friendly allowing 100% foreign ownership
• Ideally situated for our target groups both through its trade hub function as well as its time zone (e.g. 80% of the East-West trade passes through Dubai)
• No VAT or income taxes

(Q) Regarding financial compliance, what jurisdiction´s regulation does e-dinar follow?

e-dinar follows UAE Financial Regulations. Even though e-dinar is not a bank, we require full compliance with key UAE (United Arab Emirates) financial regulations to:

prevent any kind of criminal behavior or wrong doing

best protect the long-term interests of our customers

avoid potential business disruption as a result of regulatory compliance issues

(Q) As a new account holder, am I required to send you certified copies of my proper legal identification before wiring funds to my e-dinar account?Yes, absolutely. As a matter of fact, we do not publish our bank details on the e-dinar website. You therefore have no choice except to go through our Customer Acceptance Process as follows:

All e-dinar customers must - in addition to their contact information entered online - send us a certified photocopy of their passport or ID card before we release our bank contact details to them.

Small account holders who plan to buy less than 1000 USD in total gold and silver can scan and email their certified copies of passport or ID card. Large account holders who plan to buy more than 1000 USD in total gold and silver need to send their certified copies by postal mail.

(Q) May I ask approximately how many account holders are currently in the e-dinar system?

Out of approximately 9000 customer accounts in total, we have roughly 6000 active accounts, i.e. accounts with a gold or silver balance.

(Q) Can you offer us any stats on how much gold or silver is currently on deposit backing the electronic units?

At present, we do not publish figures on total bullion in storage. What I can tell you is that roughly 45% of all in-exchanges remain in long-term bullion storage under the custody of e-dinar while 55% are, within one year of deposit, out-exchanged or for the most part redeemed in gold dinars and silver dirhams, bullion bars and sometimes custom medallions

(Q) If my online account contains 10 e-dinar and 10 e-dirham, can I redeem the electronic version into actual gold dinar and silver dirham and have your shop send them to me?

While one electronic e-dinar corresponds to one physical gold dinar, one physical silver dirham costs approximately 30% more than an electronic e-dirham (due to proportionally higher minting costs). We will naturally send your dinars and dirhams to your postal address (additional shipping and handling fees apply).

Smaller orders can occur through our web store and be sent by postal mail while larger orders should go through e-dinar and will be delivered by VIA MAT Securitas. If you do not have gold in your e-dinar account, you can pay your web store balance via bank transfer.

(Q) Can you tell us, are the majority of e-dinar online accounts used by individuals, merchants and/or companies for online commerce?

Most of our accounts are held by individuals. Over the last two years, we have begun to build up a small but growing number of large merchant accounts, some of them in international trade and the bullion and coin business.

In addition, we have been awarded a contract with the Malay Opposition Party to supply them with gold dinars and silver dirhams as well as DGC services. Since their recent victory in four states, they plan to expand their Ar-Rahn gold dinar outlets from currently 11 to 100. (ref. http://www.e-dinar.com/html/img/kelantan.jpg )

Excerpt from Wikipedia: On the 20th of September, Kelantan became the first state to launch gold dinar coins. It features the Kelantanese state crest, the date of production, as well as the weight and purity of the gold used on its face. The DEK is similar to the original dinar in weight and purity of gold used. The coins can be bought and sold at the Kelantan Corporation Bhd (Perbadanan Kelantan Bhd) and all eight Ar-Rahn Islamic pawnshops in the state.

(Q) How is the value in a user´s account displayed? What denomination?

As mentioned before, our accounts are measured in weights of gold and silver. The gold balance is displayed in e-dinar (1 e-dinar = 4.25 grams of 24 carat gold), in ounces and in grams of 24 carat gold. For silver, the balance is displayed in e-dirham (1 e-dirham = 3 grams of 999 silver), in ounces and in grams of 999 silver. Both gold and silver balances are also displayed in USD, EUR, AED, CHF and JPY.

(Q) I´m sure you are aware of the legal issues involving e-gold right now, do you have an opinion or any comment on that situation?

Even though e-gold might have been somewhat lax with Customer Acceptance and the type of businesses they support, I can certainly vouch for Doug Jackson´s personal integrity (he never failed me and I could always depend on his word) and I applaud his visionary and pioneering role in the promotion of DGC. I wish him all the best and hope that he will be vindicated once the dust has settled.

(Q) Is it possible to open an e-dinar account, transact business both receipts and spends in e-dinar without any verification of the customer´s identity?

All customers of e-dinar must comply with our Customer Acceptance Policy (CAP). This means that every customer must first deliver proof of his or her identity before any transaction can take place.

(Q) Is e-dinar set up to communicate with customers using PGP?

PGP is available as an option. Every customer can provide a PGP key as part of user registration. If the PGP key is present in the customer profile, all communication between the e-dinar system and the customer´s email address will be encrypted. This is particularly recommended if the customer is using auto-notification (an account function whereby the system is sending email notifications upon receipt of funds).

(Q) Is there any minimum transaction size on an e-dinar account?

There is no minimum transaction size. e-dinar can be used for micro payments as well as large transactions.

(Q) e-dinar provides a secure merchant interface (for integration into shopping cart software). Is this feature popular with users?

e-dinar offers two interfaces for automation. The merchant interface can be used for integration of e-dinar payments into shopping cart software and the API allows automated access to the account (retrieve account balance, account history, issue automated spends). Both interfaces have several configuration options including callback function and are used by a growing number of customers. Naturally, the merchant interface is the more popular.

(Q) Who is your preferred customer?

Our preferred customers are:

• individuals who want to keep some of their long-term savings in bullion as protection against inflation
• bullion and coin dealers that we supply with bullion, dinars & dirhams and custom products
• international trade companies
• governments such as the Malay Opposition Party that we supply with DGC services and gold dinars & silver dirhams

(Q) Do you have a target demographic audience which you would like to attract?

Our demographic target groups are the Middle East and South East Asia, increasingly also China. We hope to attract more companies in international trade as well as government agencies that want to promote the gold dinar.

(Q) Are e-dinar accounts promoted as online savings accounts which offer an alternative to Islamic banking?

Yes, our gold and silver accounts are 100% halal and, in our view, the only acceptable alternative to banking from an Islamic point of view, be it ´Western´ or ´Islamic banking´. I see in ´Islamic banking´ not much more than an insignificant variation of ´Western´ banking and certainly not an acceptable alternative to it. The only difference is in the semantics and the models used to calculate the bank´s profit (please note that the biggest Islamic banks are major commercial banks such as HSBC and Citibank). Short of changing the underlying money from paper to gold and silver, ´Islamic banking´ cannot possibly be halal.

The only acceptable form of money from an Islamic perspective is gold and silver – there is no doubt about that.

(Q) Does e-dinar do any offline advertising such as newspapers, magazines, signage or television?

With the exception of some newly emerging global magazines, we do not pursue an active advertisement strategy but rather depend on passive marketing through newspapers and TV, particularly in Malaysia and Indonesia.

(Q) Can I fund my e-dinar or withdraw funds through a third party exchange agent?

There are some third party exchangers for e-dinar. Funding accounts directly through e-dinar is naturally more cost effective and probably also safer.

(Q) How does an e-dinar account accrue fees? Is there an annual storage fee or is it based on the amount in the account?

A storage fee of 1% per annum applies to every account. This fee is covering storage and insurance costs. The storage fee is calculated based on the average account balance and is deducted monthly from the account.

(Q) I think the dinar & dirham shop online is an excellent idea. The operation seems very convenient for users. Do you sell and ship a lot of the gold dinars or silver dirham? How popular are those sales with account holders?

Yes to both questions. We do ship a lot of gold dinars and particularly silver dirhams and those sales are very popular with our account holders.

In spite of (or maybe because of?) all the resistance that we have met along the way, the gold dinar and silver dirham are today among the most talked and written about modern ´coins´. Search in Google under Gold Dinar and Islamic Gold Dinar to verify this for yourself.

I would like to close this interview with another quote from Loretta Napoleoni

(Rogue Economics; Seven Stories Press, NY, 2008; p. 341).

After painting an almost apocalyptic picture of the world during the first 340 pages of her book, she goes on to formulate on the last two pages the only realistic alternative she sees to today´s rogue economics as follows: (freely translated from German)

The post-globalization era will require a clear separation between the state and the individual:

• The state will have a monopoly on foreign and financial politics based on the Shari´a financial model with a new currency standard coupled to gold
• The gold dinar will become the overall measure of stability for all other currencies and will find worldwide recognition
• Shari´a economics (which forbids the use of money to make money) will regulate all business transactions and will challenge and eliminate the self-serving aspects of rogue economics (such as 500 trillion USD worth of derivatives)

I would like to thank Dr. Zeno Dahinden for taking the time to answer my questions.

DGCmagazine