News

Taiwan police arrest two suspects in ATM fraud, seeking several more

October 15, 2003

TAIWAN - The National Police Administration's Criminal Investigation Bureau has arrested two people, Soong Jen-chao and Chou Shi-hsuan, who reportedly headed the gang behind the recent ATM card fraud at Bank of Taiwan.

According to a report in the Taipei Times, police are now trying to identify another six or seven suspects by reviewing security videotapes from 62 ATMs nationwide.

Soong was arrested in Feng-yuan while withdrawing cash from a Taiwan Cooperative Bank with a forged ATM card on Oct. 10. Chou Shi-hsuan was arrested at the Taichung branch of Cosmos Bank on Oct. 14.

The police said that Chou Shi-hsuan had been questioning the Cosmos Bank's clerks because she could not access her account. The clerks realized the account had been frozen because it was linked to a criminal investigation so they called the police.

Police found seven forged ATM cards on Soong. In total, the couple had 1,400 forged cards, police said.

Police officials said Soong, Chou Shi-hsuan and their colleagues targeted ATMs in bank lobbies, replacing the bank's skimmers on the lobby doors -- which records information from ATM cards when customers swipe their cards to enter the lobby -- with their own.

Police said the gang also installed hidden cameras to record PINs of card users.

After interrogating Soong and Chou Shi-hsuan, the police said that the gang installed their own skimmers and hidden cameras at a Bank of Taiwan's ATM kiosk in Tainan between Sept. 6 and Sept. 7. Police believe similar installations were made to two Taiwan Cooperative Bank ATMs in Tai-chung and a Land Bank of Taiwan ATM in Hsinchu.

The fraud was first detected at the Bank of Taiwan's machine in Tainan on Oct. 10.

According to the Taipei Times, Premier Yu Shyi-kun ordered government agencies to present measures to counter ATM fraud.

"With the advance of modern technology, the agencies concerned should carefully study and analyze the motives and new methods of crime committed via electronic and high-tech devices," Cabinet Spokesman Lin Chia-lung quoted Yu as saying after the premier listened to a briefing by Vice Minister of Finance Susan Chang on the fraud case.

According to Chang, as of Oct. 14, 257 depositors with accounts at 24 banks had lost a total of NT$30 million ($884,173 U.S.) from their accounts; the Ministry of Finance has paid out about NT$2 million ($58,944 U.S.) in compensation to 19 depositors.

Minister of Finance Lin Chuan asked banks to remove card-swipe entry system on doors to lobbies. "Following the recent card fraud, the card-swipe entry system has proven to bring more security concerns than convenience," he said at an Oct. 14 press conference.

Signs will be posted on doors to bank lobbies containing ATMs to caution card users about the policy change, Lin said. The measure is one of the conclusions reached by the Bankers' Association, according to the Taipei Times.

The ministry dismissed speculation that high-ranking management at the Bank of Taiwan would be reshuffled, but it promised to safeguard the interests of depositors. After the police gather all the details of the widespread fraud, other banks may also be entitled to seek compensation from the state-run Bank of Taiwan, Lin Chuan said.

All domestic banks have agreed to bring forward by six months plans to replace magnetic stripe ATM cards with integrated chip (IC) cards, said Gary Tseng, the ministry's director-general of the Bureau of Monetary Affairs.

(See related story ATM fraud driving move to chip cards in Taiwan)

"The IC card replacement plan will be completed by the end of next June, while magnetic cards will no longer be used after the ATMs are upgraded to accept only IC cards by the end of next year," Tseng said.

Financial authorities believe that IC cards with multiple encryption systems are more difficult to forge than normal magnetic cards. The plan was originally scheduled to take up to five years.

The Bankers' Association, which plans to establish a working group and coordinate with the police to crack card fraud, asked banks to keep a log of how their ATMs are used to prevent irregularities, Tseng said.