3 held for siphoning off money from ATMs

KATHMANDU, MAR 26 -

Nepal Police on Sunday arrested three Indian nationals from Mahendranagar, Kanchanpur, for withdrawing cash illegally from ATM s using fake debit cards.

A team of the Central Bureau of Investigation (CIB) on Monday brought the arrestees to Kathmandu for further investigation. The police said the arrested trio withdrew cash using fake Nepal Investment Bank Limited (NIBL) debit cards. As more than two dozen ATM cards of both Nepali and Indian banks were seized from the detainees, the police suspect they might have withdrawn cash from other banks as well.

The police, however, did not disclose the names of the arrested individuals as doing so may give leeway to others involved in the case to escape.

NIBL confirmed the cash withdrawal, but said it did not cause a major loss to the bank. A senior NIBL official said the individuals withdrew around 150,000 from the bank. “As they were arrested before they could withdraw more money, there has not been any problem with other accounts and debit cards,” the official said.

After the incident, the bank has imposed an ATM withdrawal limit of Rs 5,000 a day. “We will continue this provision probably for a few more days until the problem is resolved,” said a bank source.

The bank termed the incident ‘data compromise’, which means the racketeers were able to gain access to the bank’s clients’ data. “We are investigating on how they got access to the clients’ data. For this, we have taken help from the risk analysis team of Visa,” said another NIBL official.

After a customer last week complained that his money was withdrawn from India without his knowledge, the bank had started monitoring the cards being used in India, the source said. “About 1,000 cards are used in India daily,” said the source. “After the monitoring, we disqualified 35 of them.”

After finding that attempts were being made to withdraw cash even using the disqualified cards, the bank informed the police. “We tracked them by limiting the amount they could withdraw and informed the police,” the source added.

The bank said the individuals frequently withdrew money from Mahendranagar as well as from bordering Indian towns, which raised suspicion.

Of late, incidents of fraud through the use fake ATM cards are increasing. “Such incidents have taught us that we have to be more alert to ensure security of the card system,” said Rajan Singh Bhandari, president of Nepal Bankers’ Association. He said such incidents are taking place due to ill intention of a few individuals.

Nepal Rastra Bank (NRB) officials, however, say the banks have deficiencies in managing operational risks. “We have found several cases in which a single person has been given access to the clients’ data,” said a senior NRB official.

“The banks should have a clear risk management plan about how much access to the clients’ data should be given to a single person.”

Given the central bank already issuing information technology guideline and directing banks to conduct system audit, NRB officials said the banks should follow the directions and the guidelines properly to avoid operational risks. “We are looking into possible operational risks during supervision and we have also increased the amount of capital charge for operational risks from 2 to 5 percent of the gross income made in the previous year,” said the NRB official.

Source: The Kathmandu Post