Syndicates use ‘mules’ to get cash from ATMs

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Syndicates involved in automated teller machine (ATM) fraud have started to deploy “mules” to illegally withdraw cash using ATM cards that have been cloned mostly in shopping malls, according to an officer of the Philippine National Police’s Anti-Cybercrime Group.

In the few years that it has been monitoring ATM fraud, the group has uncovered suspects who turned out to have been paid by syndicates to withdraw cash using cloned cards, said Chief Insp. Jay Guillermo, the head of the group’s intelligence and investigation unit.

And since they know they are being monitored by authorities, the syndicate bosses have resorted to recruiting other people to do the withdrawing, exactly like a “mule,” said Guillermo, employing the term that anti-illegal drug enforcement authorities use to refer to a person who carries illegal drugs for a drug syndicate.

From PSG to mule

Guillermo said investigators were looking into the possibility that Raphael Marcial, the Presidential Security Group (PSG) soldier who was arrested last week, was a mule sent out by an ATM fraud syndicate.

When he was arrested last Friday, Marcial was found to be carrying a scanner device that police said was used to clone ATM cards as well as a number of cloned cards bearing different names.

Guillermo said Marcial’s circumstances indicated that he was a mule, but declined to give other details in deference to the investigation being conducted by the Makati police.

According to an investigator, the initial investigation has found that Marcial had incurred huge gambling losses in a casino and was forced into the ATM fraud trade to pay off his creditor.

Paid commissions

Marcial, a Navy officer and a graduate of the Philippine Military Academy, has been charged with violating the e-Commerce Law.

According to Guillermo, mules are paid commissions by the syndicates responsible for the ATM bank fraud which is carried out through the cloning of ATM cards by installing card readers and hidden cameras in ATMs to capture data from an ATM card.

He said the syndicates often targeted for card cloning ATMs located in the periphery of malls or boutiques, and often struck just before payday.

“If payday falls on the 15th of the month, they’d strike before that,” he said.

“Many employees make withdrawals in malls. So without people even noticing it, [the fraudsters] fit in skimming devices during early morning, or in the evening,” he said.

Knowing what they do now, mall management should post guards, or install surveillance cameras in the vicinity of these ATMs, Guillermo said.

P220 million lost in 2013

Guillermo could not say how many ATM fraud syndicates are operating in the country.

At a hearing last Wednesday of the Senate public order committee, officials said some P220 million was lost to ATM fraud in 2013. They said card cloning activities began in 2011.

Guillermo, who showed in PowerPoint presentation during the hearing the different ways by which card cloning is carried out, said skimming devices were brought in from either the United States or Europe.

“They’re easy to bring in because they look like pagers or cell phones,” he said.

Instead of focusing only on contraband, customs personnel should be on the lookout for these devices in the baggage of incoming passengers at the airports, Guillermo said.

Better technology

He also strongly agreed with Bangko Sentral ng Pilipinas Circular No. 808 mandating all banks to shift from the magnetic strip to the EMV chip technology for ATM cards by January 2017.

Developed by Europay, MasterCard and Visa, EMV uses payment chip cards that contain an embedded microprocessor that provides strong security features and other capabilities not possible with traditional magnetic-strip cards, according to www.emvco.com.

“The magnetic strip is prone to fraud,” Guillermo said. “The EMV technology is better because it has many security features.”

For better coordination with the police, he said banks should not think twice about reporting ATM fraud to the authorities.

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