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Bank frauds constitute 80% of cybercrimes

In three years, the Superintendency of Banks received 9,861 complaints of fraudulent transactions

SD. In order to talk about what was bothering him, first he had a demand: "Take the battery out of your cell phone." He was paranoic; he thought they were watching him. His tranquility went up in smoke when he discovered that they had stolen his banking data, cloned his credit cards and even took out loans in his name.

His case is within the universe of clients who are victims of fraud through the theft of their banking information, which although in 2012 it went down in Latin America and the world of 18 cents lost for every 100 dollars paid down to five cents for each 100 paid, the crime continues being a threat. In the region Mexico, Brazil, Colombia and Venezuela have managed to be the leaders of the fraud rates.

For the Dominican Republic, the attacks on the clients of financial institutions make up 80% of the cases of cybercrimes., according to the Attorney General, with the principle consequences being the cloning of cards and money transfers, without discarding the very used "phishing."

Between October 2010 and December 2013, the Superintendency of Banks received 9,861 complaints of fraudulent transaction from cardholderes. And in order to find out the situation of its readers, Diario Libre carried out a survey on its webpage which drew 131 participants, and 44% said that at some time they had been the victim of data theft of their banking information.

For 2013, The number of credit cards in the Dominican Republic was approximately 2.5 million. Over the last ten months, the new Specialized Prosecutor for High Technology Crimes, seized more than 3,000 cards that were in the hands of criminals, according to a report from the head of this agency, John Henry Reynoso Ramirez. During the same period they received 562 complaints of cloning.

A fast and stealthy business

After dining in a restaurant, 'Susana' and 'Alberto' paid their bills with their respective credit cards. Days later, the bank called 'Susana's' father to warn him that his daughter's credit card was used at a gasoline station. The detail was that she does not have a car. The result: the cards belonging to her and 'Alberto' were cloned at the restaurant.

Colonel Licurgo Yunes, the director of the Department for Investigating High Technology Crimes, is reserved when he is asked to explain how the cloning gangs operate. He explains that they use an instrument called a "beeper" to copy the information from the magnetic strip of the card.

Although with the cloning they can make carry out large scams, the commander says that the criminals do not have to do a lot to install a complex system.. "When you are dealing with bank fraud, we are talking about gangs that already know how this system works and the only thing they want is to obtain money one way or another. They are young (in the majority) between 20 and 30 years of age, then there are those between 30 and 50, but this is more of a young person's crime, of technology, of knowledge," says Yunes.

In May 2013, United States authorities arrested seven Dominicans that were part of an international information pirates who used information from debit cards to steal US$45 million.

At the beginning of 2014, the Central Directorate of Criminal Investigation (Dicrim) dismantled two clandestine laboratories in the sectors of 27 de Febrero and Espaillat, which were used to clone credit and debit cards and then scam banks, merchants and cardholders. There were 697 cards ready to use or in the process and electronic equipment to clone the magnetic strips and the numbers.

What is broken in the system?

Just in 2011, credit card fraud cost RD$341.6 million to the Dominican financial system.

Magistrate Reynoso pointed out that there have been cases in which the lack ofr internal controls of personnel that work in a given bank has permitted the theft of personal data. In this sense, he said that the Prosecutor has met with the Association of Commercial Banks (ABA) and its affiliates have reinforced their internal security.

Diario Libre asked the ABA in order to learn about the efforts to protect the information of their client lists and who these affect the fraud in the sector, but the Association prefers not to talk about this issue. They allege that it is a delicate issue for the banks.

Given the refusal, this newspaper consulted several banks in order to learn about their security practices. In the Popular Bank, which has one of the best client lists in the country, Esteban Martinez-Murga, their Communications Manager, explained that the company is the first financial entity in the nation to implement chip technology in their cards, introducing the Visa Debit Card with this device in January 2012.

"According to information suppli4ed by the international card brands, in the markets in which the use of the chip has extended, fraud by falsification has been reduced to the smallest possible expression because the chip is so difficult to clone," he pointed out.

Mercedes Canalda, the executive president of the Adopem Savings and Loan Bank, indicated that although the banks today are supervised and exercise internal controls, the return of the money stolen does affect them. "It is estimated that 50% of the total frauds that are from credit cards have to be returned to the client and this produces a loss for the banks," she said.

Jesus Benedicto Diaz, the president of Banesco Dominicana, an international bank with a presence in the Americas and Spain, said that the crimes that are committed with credit cards "constitute a problem not only for the clients and for the financial entities, but also for the national and international economic system."

"In Banseco we make important and constant investments on technological and mechanical innovations in security with the aim of minimizing the impact and reduce damages. We also work with a mentality of getting ahead of those who commit the crimes," he assured the reporters.

What do the banks do?

In order to learn some of the mechanisms for the protection of information used in the country, Diario Libre consulted a person very familiar with banking technology, who explained that the financial entities have security systems, which while there are more costly systems which guarantee a greater level of protection, are the ones most used at the local level.

He cited the authentication of the cardholder with fixed and variable passwords, among these are the so-called "tokens" which generate random passwords based on algorithms.

Another way is the application for predictive analysis of fraudulent behavior qhich establishes a patron which suggests risky events, a less costly mechanism and which permits that a representative contacts the cardholder if he sees suspicious movement.

These and other processes keep the banks in a constant renovation in order to deal with the thievery of the information that they handle of thousands of customers, a crime that the authorities say they are pursuing.