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Monday, 4 February 2013

Cyber crime involving RTGS



RTGS - Online Fraud


Recently we came across a cyber fraud in the later part of December 2012 where the money was robbed from the account of a Co-operative Bank in a Nationalised Bank using RTGS. 


After this there is no news on the above subject. Further investigation and its outcome are not known. The Bank’s names were also withheld.

Again on 2nd February 2013 one more fraud involving RTGS came to surface and in both the cases the amount touches crore rupees. 


Some of the questions that haunt me day in and day out are:
  1. Are we heading in the right direction?
  2. Whether, really the regulators/banks have given a very deep level of thought to the safety and security of money deposited with the banks by its customers?
  3. Whether there is a well defined policy in the Banking industry/RBI, protecting the interest of the customers? Response time etc.
  4. Whether the Banks have sensitized their call center executives/grievance redressal staffs about quick action to be taken in case of a complaint about fraudulent transaction?
  5. Whether the common man should opt out of Online banking in the absence of adequate safety and security in the banking system?

What is Real Time Gross Settlement (RTGS)?

It is the fastest way of transferring money from one bank to another on a real time in the Banking system. This payment is final and can not be revoked.

As per the vision document on payment and settlement systems vision document 2009-2012 of RBI “Safety, security, soundness and efficiency of the payment systems assume critical importance from the angle of systemic stability”

RTGS is considered as one of the safest and fastest mode of money transfer considering its various checks / control systems.

RTGS Remittance:

This can be done in two ways
  1. Giving a physical request for transfer of money.
  2. By online banking.


The following information is required to remit money through RTGS:
  1. Amount to be transferred.
  2. Account no. to be debited.
  3. Name of the beneficiary bank.
  4. Name of the beneficiary customer.
  5. Account no. of the beneficiary customer.
  6. IFSC code of the receiving branch.


Useful information to Criminals for RTGS fraud:
  1. Your bank account no.
  2. Your specimen signature. (if he uses the RTGS form for transfer of money)
  3. Your username and password of online banking. (if he uses online banking for transfer of money)
  4. Mobile no. registered with the bank. (Criminal had not deactivated the SIM card of the victim in this case.)

Mulund Case:

When it happened? The victim was in his office and he received SMS alert of RTGS transaction taking place and within a span of 45 minutes 1 Crore was stolen from his account.

Poor initial response: In his complaint the victim said when he “contacted the bank to freeze further transactions from my account, it asked that he first submit a police FIR"

Golden Hour: In such a horrifying situation whether the person should contact the Bank and stop further loss or he should go to the police station physically and lodge a formal complaint giving more time to the cyber criminals to clean his account.

No clear policies: This is where the Banks lack clear policies. The call centre staffs should be sensitised and any complaint of fraud should be attended by senior officials who can take decisions instantly to avoid further damage.

Investigation: Let us start this conversation with a Pat on Mumbai Police who have discovered the trail within a short time by arresting 11 persons and in the process teaches us a lesson on the basics of Banking.

The stolen money was transferred in 12 different account.

The 1st person called Periera was arrested whose account had only ` 600/- for the past 6 months and suddenly a credit of ` 30 Lacs appeared.

Bank’s alert monitoring system should detect such transactions i.e. unusually large credit and prompt action needs to be taken.

Another man involved when visited a cooperative bank to withdraw the stolen money slipped away before the police arrived on suspicion.

The Bank should train their staff in handling a fraudulent person in such a situation.

Rs. 39.50 Lacs was withdrawn from 4 different accounts. As per Police officers the said 4 accounts were opened with fake documents.

Banks has to increase their CASA to avail cheap funds and in the process violate KYC norms prescribed by RBI. This is the very basic step in Banking and also the main loophole in Banking Fraud.

Investigators have found that bank accounts were opened using fake documents and identities viz.. PAN card, voter’s identity card, electricity and telephone bill and stayed in rented premises.

Just like the Background verification is done before disbursing loan even for opening bank account Background verification needs to be introduced by the Banking industry to avoid such happenings.

The accused had used cyber café in commiting the fraud.

Strict regulations need to be enforced for cyber cafes.

A new rule of keeping the soft copy of photograph of the person using cyber café In addition to verifying ID proof needs to be introduced. This may help police in their investigation and deter cyber criminals.

One more pat for the Police – While searching for another culprit at Malad the Police found that he left the residence 2 years ago still the police team verified the room in which he stayed 2 years ago and found a wedding invitation of him containing true identity and another address. This led to his arrest.

While doing any investigation do not build a mental block like “this is not possible” Had the Mumbai police left without searching the room his arrest would have been next to impossible.

This person had procured 2 PAN cards in different names and used the same as KYC document to open bank accounts.



Caution: Till the time this is solved, please protect your username, password, account no. and specimen signature.

NEWS LINK:
http://rbidocs.rbi.org.in/rdocs/RTGS/PDFs/FAQs%20on%20RTGS.pdf

http://articles.economictimes.indiatimes.com/2008-09-19/news/28460027_1_bank-accounts-corporation-bank-real-time-gross-settlement Sep 19, 2008


http://articles.economictimes.indiatimes.com/2012-11-12/news/35067104_1_fund-transfer-rtgs-real-time-gross-settlement  Nov 12, 2012

http://articles.economictimes.indiatimes.com/2013-01-14/news/36331675_1_national-electronic-funds-transfer-real-time-gross-settlement-rtgs-transactions  Jan 14, 2013

http://timesofindia.indiatimes.com/city/mumbai/Cops-crack-Rs-1crore-bank-fraud/articleshow/18313968.cms  Feb 3, 2013

http://www.indianexpress.com/news/efraud-rs-46-lakh-transferred-to-12-accounts/1068624/0  Feb 03 2013

http://timesofindia.indiatimes.com/city/mumbai/Bank-fraud-Man-dodges-police-trap/articleshow/18342884.cms Feb 5, 2013

http://timesofindia.indiatimes.com/city/mumbai/Rs-1-crore-stolen-using-mobile-in-Meerut/articleshow/18358299.cms  Feb 6, 2013

http://timesofindia.indiatimes.com/city/mumbai/Scanner-on-25-year-old-in-Rs-1cr-scam/articleshow/18376703.cms Feb 7, 2013

http://articles.timesofindia.indiatimes.com/2013-02-07/mumbai/36971074_1_cyber-cafe-cyber-police-sim-cards  Feb 7, 2013

http://timesofindia.indiatimes.com/city/mumbai/Wedding-invite-leads-to-second-arrest-in-1crore-e-banking-fraud/articleshow/18393385.cms  Feb 8, 2013

http://www.dnaindia.com/mumbai/report_two-sisters-aide-arrested-for-rs1cr-online-fraud_1797592  Feb 8, 2013

http://timesofindia.indiatimes.com/city/mumbai/Wedding-invite-leads-to-second-arrest-in-1crore-e-banking-fraud/articleshow/18393385.cms  Feb 8, 2013

http://timesofindia.indiatimes.com/city/mumbai/Refused-help-card-fraud-victim-plays-cyber-cop/articleshow/18392989.cms  Feb 8, 2013 NON RTGS

http://timesofindia.indiatimes.com/city/mumbai/Man-who-gave-SIM-to-hacker-in-Rs-1cr-e-fraud-6-others-held/articleshow/18410548.cms Feb 9, 2013

http://www.dnaindia.com/mumbai/report_call-centre-employee-held-in-rs1-crore-e-fraud-case_1797991  Feb 9, 2013

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/rs-1-cr-e-fraud-fake-pan-cards-used-to-open-several-bank-accounts/articleshow/18425411.cms  10 Feb, 2013

http://timesofindia.indiatimes.com/city/mumbai/11-in-custody-police-expect-more-arrests-in-e-fraud-case/articleshow/18456477.cms Feb 12, 2013

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