World wide heist show weakness in financial security

Friday, May 10, 2013

"Lawyers can steal more money with a briefcase than a thousand men with guns and masks," said Don Vito Corleone in Mario Puzo's "The Godfather."

To be fair, ponzi schemers like Bernie Madoff are no slackers, either, when it comes to white-collar crime.

But when it comes to cash, an old expired cash card or hotel key card can put a gun to shame.

The latest proof? $45 million in cash stolen from ATMs in 27 countries from Canada to Russia in a matter of hours.

Those flash mobs -- usually unnanounced choreography, organized over the Internet and posted on YouTube, are entertaining, but the same organizational techniques were used to pull off the latest heists, one for $5 million in December and another in February for about $40 million.

How did they do it? First, hackers got into bank databases, raised or eliminated withdrawal limits on pre-paid debitcards and created access cards, which were then loaded onto any old plastic card with a magnetic stripe.

The "flash mob" then fanned out across the globe, emptied out ATM machines, kept a cut locally and laundered the cash through expensive purchases or shipped it to the ringleaders.

They didn't get away with it, completely, thanks to security cameras at the ATMs and since some of them posted pictures of themselves online with stacks of cash. One of the ringleaders, found with a suitcase of about $100,000 in cash, was reportedly killed in the Dominican Republic last month, and the investigation, and arrests, continue.

More secure technology exists, such as smart cards containing chips that are virtually impossible to modify, for now, but since the United States continues to use the old magnetic cards, they're still in use around the world.

When ATM fraud was first investigated about 30 years ago, up to $100 million in cash was stolen a year. By 2008, that had climbed to about $1 billion.

While no individual actually lost any money in the $45 million heist, financial institutions certainly did, and will have to respond by raising fees and imposing new, more intrusive and restrictive security measures.

When it comes to crime, cybercrime especially, we all pay.

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