Watch Out for Frauds, Maintain Secrecy: CVC to Banks

                    
 Source :Outlook  :NEW DELHI | DEC 07, 2010

Concerned over incidents of largescale frauds, the Central Vigilance Commission has directed all Chief Vigilance Officers of banks to maintain confidentiality of their passwords.

It has asked all CVOs to deal "ruthlessly" with people found to be careless and advised necessary action.

"It has been observed by the Commission that bank employees in certain cases are still not keeping secrecy of their passwords. Instances are still coming to the notice of the Commission where frauds of large amount have been committed by misusing the passwords of employees," the CVC said in a recent circular.

The Commission said it has to be ensured that all employees keep their passwords secret and change them as frequently as possible. The banks may evolve systems and procedures to ensure the same.

"Instances of casual approach by any password holder should be dealt with ruthlessly by the concerned bank and as the same may put huge funds at risk," the anti-corruption watchdog said in a communique issued to all CVOs of banks.

The Commission has asked the vigilance officers to regularly monitor the issue and report its compliance on a monthly basis.

Each bank issues passwords separately to its employees to ensure safe and trouble-free working.

Interestingly, the CVC noticed two cases of impersonation and sent a warning cum caution letter to all concerned organisations.

In a first instance, a person claiming himself to be K V R Reddy, IRS, Additional Commissioner (South), Central Vigilance Commission had visited the office of CVO, Union bank of India, Mumbai attempting to get details of some accounts pertaining to Hyderabad region.

Whereas, another person by the name and designation of Dr R Dayal Yadav, Director-Research and claiming to be working in the name of the President of India and under the lens of CVC was found to be sending e-mails to officers of Oil India Limited (OIL) and Numaligarh Refinery Ltd (NRL), Assam either asking for certain details or making a programme of visits or inspections.

"The persons (referred to above) are not associated with the CVC in any capacity whatsoever," it said asking all CVOs to exercise caution in entertaining such persons of dubious identity and inform all subordinate or field offices to be alert.

Bank of America fraud settlement to go ahead

Source :Kuala Lumpur News:Wednesday 8th December, 2010


The Bank of America has agreed to pay nearly $140 million to settle a fraud case. 

The US Department of Justice has accepted a deal following a four-year investigation by US authorities into anti-competitive practices by the Bank of America in which employees rigged bids in the marketing of financial contracts linked to municipal bonds. 

The municipal bonds were sold by government departments, local councils and non-profit groups in the US to raise money for local services, including schools. 

Prosecutors said there had been a criminal conspiracy to rig bids on investments linked to the bonds. 

The Bank of America was the only financial institution to voluntarily admit to wrongdoing. 

It was granted amnesty from prosecution in return for cooperation in the investigation.

Frauds cost clients Rs 4000 crore

Wednesday, February 17, 2010
A United Nations officer issued a cheque
on his nationalized bank account.

The cheque bounced despite his having
deposited a big sum a few days back.

He complained to the bank only to be
told that Rs 75,000 was withdrawn in
a number of transactions in Romania,
a country he has never visited.
The police suspect that the account was
hacked on internet.

This is not the lone case of fraudulent
activity in an Indian bank. Bank fraud is
a big business in today's world. With more
educational qualifications, banking is becoming
impersonal and an increase in banking sector has
given rise to this white collar crime.

In many cases, the involvement of bank officials,
as deliberate colluders, is also suspected.
With the introduction of internet universal
banking, the number of bank frauds has more
than doubled in five years. There were 10,450 cases
of such cases in 2004-05, which rose to 13,914
in 2005-06 and 23, 914 in 2008-09.
The figures are as per cases recorded with
the Central Bureau of Investigation.

It is assumed that there are many more cases,
which are settled at the banks' end and no
complaints are lodged officially.

The frauds have cost the depositors Rs 779 crore in
2004-05. It almost doubled to Rs 1381 crore the next
year. In 2008-09, the figure rose to Rs 1883 crore.
The figures given - Rs 4,043 crore in these deals -
are again not conclusive.

The actual figure may be much more.
Both bank and forensic officials are baffled
at this massive level of fraud. In 2004-05,
there were 96 cases in which over Rs 1 crore
was swindled away in each transaction.

This rose to 212 in 2008-09.

Apparently no depositor is safe.

Chances of swindling increase seemingly
with the size of the bank. A multi-crore
fake cheques scam estimated to the tune of
Rs 52 crore was exposed in the Kanpur main
branch of the State Bank of India last August.
Seven bank officials, including one assistant
general manager and two chief managers were
suspended. The bank's audit team found that
the fraud involved clearing of fake cheques in
the bank account of an influential petrol pump
owner. He is believed to have fled the country.


This is stated to be the biggest fraud
in the Kanpur-Lucknow region.

This banking fraud is basically classified as
fraud by insider and fraud by others.

It involves a highly placed insider nominally
authorized to invest sizeable funds on behalf of
the bank; as it happened in the Kanpur case.
This person secretly makes aggressive and risky
investments using the bank's money and when one
investment goes bad, he engages in further market
speculation in the hope of a quick profit, which
would hide or cover the loss. Many such transactions
found their way even to the stock market though
investments in other speculative activities are
also not uncommon.

Unfortunately, when one investment loss is
piled onto another, the costs to the bank
can reach into hundreds of crore of rupees.

Remember, many of the US and western banks
went out of business for such activities in 2008.

The banking fraud is classified as fraudulent
loans, wire frauds, forged or fraudulent documents,
uninsured deposits, theft of identity, demand draft
frauds, forgery and altered cheques, accounting fraud,
bill discounting fraud, credit card fraud, fraudulent
loan applications, phishing and internet frauds.

While some of these existed in one or the other form
even earlier, the magnitude was far less. New technology
has added to the woes of the investigators as it
not only involved complex accounting processes but
also complicated technology and software applications.

A computer crime may be committed in one country and
its result can be found in another country.

There has been a lot of jurisdictional problem
and though the Interpol helps, it too has its
limitations. Different treaties and conventions
have created obstructions in relation to tracking
of cyber criminals hiding or operating in other nations.

It is described as a no-scene crime. The usual crime
scene is the cyber space. The terminal may be anywhere
and the criminal need not indicate the place. The only
evidence a criminal leaves behind is the loss to the bank.
The major advantage the criminal has in instituting a
computer crime is that there is no personal exposure,
no written documents, no signatures, no fingerprints
or voice recognition. The criminal is truly and in the
strict sense faceless.

There are certain spy softwares which are utilized
to find out passwords and other vital entry information
to a computer system. The entry is gained through a spam
or bulk mail. This is called phishing.

A number of programmes called "Trojan horse"
programmes have also been used to snoop on the
internet users while online, capturing keystrokes
or confidential data.

The information thus stolen is then used in
other frauds, such as theft of identity or
online fraud. Though using debit and ATM card
is stated to be safe by banks, technological
experts say that pin numbers and other details
can easily be cloned or pilfered and misused as
one feeds the machine.

The experts also advice not to put
credit card ATM details ever on the internet
for any kind of transactions. The information
travels to a chain of computers and could be
intercepted at any point.

International internet transactions are
always fraught with risk. The CBI and banks
are now putting their heads together to
create a firewall and improve the forensic
techniques. However, the nature of transaction
that has to allow access to the accounts of
the banks pose a daunting challenge. Some elements
have suggested closing the direct internet transactions
at least at international level.
It is a matter of probe whether terrorist
groups are part of cyber crime or not.

The existing Indian laws are not at all adequate
to counter cyber crimes. The Indian Penal Code,
Evidence Act, and Criminal Procedure Code have no
clue about computers when they were codified.

The IT Act is there but it is inadequate.

Banks are clueless at stopping this crime.

The alternate is to utilize the banking services
in the conventional paper method till a
foolproof system evolves.

By Shivaji Sarkar

Frauds cost clients Rs 4000 crore

 February 11, 2010
A United Nations officer issued a cheque on his
nationalized bank account. The cheque bounced
despite his having deposited a big sum a few days
 back. He complained to the bank only to be told
that Rs 75,000 was withdrawn in a number of transactions
 in Romania, a country he has never visited.

The police suspect that the account was hacked on
internet. This is not the lone case of fraudulent
activity in an Indian bank.  Bank fraud is a big
business in today's world. With more educational
qualifications, banking is becoming impersonal
and an increase in banking sector has given rise
to this white collar crime. In many cases,
the involvement of bank officials, as deliberate
 colluders, is also suspected.
With the introduction of internet universal banking,
 the number of bank frauds has more than doubled in five years.

  There were 10,450 cases of such cases in 2004-05, which
rose to 13,914 in 2005-06 and 23, 914 in 2008-09.

The figures are as per cases recorded with the Central

 Bureau of Investigation. It is assumed that there are
many more cases, which are settled at the banks' end
and no complaints are lodged officially.

The frauds have cost the depositors Rs 779 crore in 2004-05.
 It almost doubled to Rs 1381 crore the next year.
In 2008-09, the figure rose to Rs 1883 crore.
The figures given - Rs 4,043 crore in these deals -
are again not conclusive. The actual figure may be
much more. Both bank and forensic officials are baffled
 at this massive level of fraud. In 2004-05, there were
96 cases in which over Rs 1 crore was swindled away in
each transaction. This rose to 212 in 2008-09.

Apparently no depositor is safe. Chances of swindling
increase seemingly with the size of the bank.

A multi-crore fake cheques scam estimated to the
tune of Rs 52 crore was exposed in the Kanpur main
 branch of the State Bank of India last August.

Seven bank officials, including one assistant general
manager and two chief managers were suspended.
The bank's audit team found that the fraud involved
clearing of fake cheques in the bank account of an
 influential petrol pump owner. He is believed to
have fled the country. This is stated to be the
biggest fraud in the Kanpur-Lucknow region.

This banking fraud is basically classified as
fraud by insider and fraud by others.

 It involves a highly placed insider nominally
authorized to invest sizeable funds on behalf
of the bank; as it happened in the Kanpur case.
This person secretly makes aggressive and risky
investments using the bank's money and when one
investment goes bad, he engages in further market
speculation in the hope of a quick profit, which
would hide or cover the loss. Many such transactions
found their way even to the stock market though
investments in other speculative activities are
also not uncommon.

Unfortunately, when one investment loss is
piled onto another, the costs to the bank can
 reach into hundreds of crore of rupees.

Remember, many of the US and western banks went
 out of business for such activities in 2008.

The banking fraud is classified as fraudulent
loans, wire frauds, forged or fraudulent documents,
uninsured deposits, theft of identity, demand draft
frauds, forgery and altered cheques, accounting fraud,
bill discounting fraud, credit card fraud, fraudulent
loan applications, phishing and internet frauds.

 While some of these existed in one or the other
form even earlier, the magnitude was far less.

 New technology has added to the woes of the
investigators as it not only involved complex
accounting processes but also complicated
technology and software applications.


A computer crime may be committed in one country
and its result can be found in another country.
There has been a lot of jurisdictional problem
and though the Interpol helps, it too has its limitations.

 Different treaties and conventions have created obstructions
in relation to tracking of cyber criminals hiding or operating
in other nations.

It is described as a no-scene crime.
The usual crime scene is the cyber space.
 The terminal may be anywhere and the criminal
 need not indicate the place. The only evidence
a criminal leaves behind is the loss to the bank.
 The major advantage the criminal has in instituting
 a computer crime is that there is no personal exposure,
 no written documents, no signatures, no fingerprints or
voice recognition. The criminal is truly and in the
strict sense faceless.

There are certain spy softwares which are
 utilized to find out passwords and other vital
  entry information to a computer system.
 The entry is gained through a spam or bulk mail.
 This is called phishing. A number of programmes
called "Trojan horse" programmes have also been
used to snoop on the internet users while online,
 capturing keystrokes or confidential data.

The information thus stolen is then used in other frauds,
such as theft of identity or online fraud. Though using debit
 and ATM card is stated to be safe by banks, technological
experts say that pin numbers and other details can easily be
 cloned or pilfered and misused as one feeds the machine.

The experts also advice not to put credit card ATM details
ever on the internet for any kind of transactions.
The information travels to a chain of computers and
 could be intercepted at any point.

International internet transactions are always
fraught with risk. The CBI and banks are now putting
 their heads together to create a firewall and improve
 the forensic techniques. However, the nature of
 transaction that has to allow access to the accounts
of the banks pose a daunting challenge. Some elements
have suggested closing the direct internet transactions
at least at international level. It is a matter of probe
whether terrorist groups are part of cyber crime or not.

The existing Indian laws are not at all adequate to counter
cyber crimes. The Indian Penal Code, Evidence Act,
and Criminal Procedure Code have no clue about computers
 when they were codified. The IT Act is there but it is
inadequate. Banks are clueless at stopping this crime.

The alternate is to utilize the banking services in the
 conventional paper method till a foolproof system evolves.
Shivaji Sarkar.