Prepaid cards: Help for financially excluded or finance for terrorists?

PARIS - Prepaid payment cards were seen as a positive development, helping those excluded from the banking system and providing a convenient financial tool, but their use in the Paris terror attacks has revealed a troubling dark side.

The attackers used an anonymous prepaid card to rent hotel rooms outside Paris the night before the November 13 strikes that killed 130 people, according to Tracfin, the French body tasked with combating money laundering and the financing of terrorism.

It was a way to avoid being detected by intelligence agencies.

Prepaid cards have been one of the fastest growing segments of non-cash payments in recent years, and now authorities are concerned they may have become a tool that criminals use to keep their activities hidden and launder their funds.

Stamped with the Visa or MasterCard logo and protected with a PIN code, the cards allow users to withdraw funds at ATMs, as well as make purchases in stores and online.

However, unlike traditional debit cards, they must be charged in advance with funds.
They also don't bear a person's name, and if the amounts are not too large, no name is ever linked with the card.

In Europe it is currently possible to use without showing identification non-rechargeable cards for payments of up to 250 euros ($265) or up to 2,500 euros per year for rechargeable cards.

Benefits, gifts, wages

With online bill payments becoming more the norm, as well as the surge in online shopping, access to a payment card of some sort has become crucial in many countries. 

In the United States, they have become ubiquitous as many government benefits are now disbursed to prepaid cards. Some $148 billion was paid out that way last year according to the US Federal Reserve, although cards have to be registered to receive benefit payments.

And more and more US companies have begun issuing their employees prepaid cards to pay wages, thus cutting expenses related to using cheques and avoiding problems with workers who don't have a bank account.

Non-rechargeable cards have gained popularity as gift certificates, with companies also using them to entice or reward clients.

Volkswagen, for example, is offering US owners of its cars caught up in its emission cheating scandal a $500 prepaid Visa card.

In France, prepaid cards have found a niche with parents, as even minors can use them for payments.

"This allows parents to control the finances of their children," says France's Banque Postale, which has offered the cards since 2008.

A survey by the Pew Charitable Trusts found that a majority of low-income US users of prepaid cards also saw them as a means to control their spending, and avoid stiff overdraft fees that banks charge on traditional cards.

It is hard to say just how popular the cards have become in Europe as authorities don't break out payments by debit or prepaid cards.

However, a 2014 survey by the Bank of Italy found that nearly 17 percent of households had used prepaid cards, or about one in four that used payment cards.

Consulting firm CapGemini, in its latest publicly available report on the sector, estimated that prepaid cards accounted for 11.4 billion transactions worldwide in 2012, or nearly 4 percent of the total.

Untraceable

When issued by banks in Europe, the prepaid cards are usually linked to a bank account, thus making recharging convenient and ensuring transactions are traceable.

But EU directives aiming to boost competition opened up the sector to firms outside the banking sector, and 48 were registered, for instance, at the end of 2014 in France.

These companies have been behind the mushrooming of prepaid cards for sale in supermarkets and newsagents.

Available to anyone at least 18 years of age, some of these cards can be recharged with cash at newsagents and used to make transfers abroad.

And all that without having to show an ID.

That is why Bruno Dalles, the head of Tracfin, the French body tasked with combating money laundering and the financing of terrorism, said this past week he would seek to have prepaid card transactions "appear on our radar".

Anonymous prepaid cards "are used in the underground economy, in organised crime," said Dalles. "It is a tool which replaces cash, which is very discrete, untraceable. That is something we need to change."

French authorities have said they plan to reduce the amounts that cards may be charged with before identification becomes mandatory by decree early in 2016.

But if authorities want to fully eliminate the risk of their use by extremist groups,  "...identification should be needed from the first euro", said Frederic Jeannin, chief executive of Ticket Surf, a firm which provides online payment services.

He believes that part of the problem is that firms operating throughout Europe are only monitored in their home base.

Another is that prepaid card issuers also have no idea what the card is used for. When a charge comes through, the issuer sees only the merchant's bank.

Ticket Surf works directly with websites, which means they can monitor payments and shut off sites they suspect to be laundering money.

"It is important to have financial regulations but it is also important that financial institutions pay attention," said Jeannin.

source: interaksyon.com

Cybercrime ring steals up to $1 billion from banks — Kaspersky

A multinational gang of cyber criminals has stolen as much as $1 billion from as many as 100 financial institutions around the world in about two years, Russian computer security company Kaspersky Lab said on Saturday.

The company said it was working with Interpol, Europol and authorities from different countries to try to uncover more details on what it being called an unprecedented robbery.

The gang, which Kaspersky dubbed Carbanak, takes the unusual approach of stealing directly from banks, rather than posing as customers to withdraw money from companies’ or individuals’ accounts. It said the gang included cyber criminals from Europe, including Russia and Ukraine, as well as China.

Carbanak used carefully crafted emails to trick pre-selected employees into opening malicious software files, a common technique known as spear phishing. They were then able to get into the internal network and track down administrators’ computers for video surveillance.

In this way, Kaspersky said, the criminals learned how the bank clerks worked and could mimic their activity when transferring the money.

In some cases, Carbanak inflated account balances before pocketing the extra funds through a fraudulent transaction. Because the legitimate funds were still there, the account holder would not suspect a problem.

Kaspersky said Carbanak also remotely seized control of ATMs and ordered them to dispense cash at a predetermined time, when a gang member would be waiting to collect the money.

“These attacks again underline the fact that criminals will exploit any vulnerability in any system,” Sanjay Virmani, director of Interpol Digital Crime Center, said in a statement prepared by Kaspersky. “It also highlights the fact that no sector can consider itself immune to attack and must constantly address their security procedures.”

source: interaksyon.com

Withdrawing money from ATMs to cost more starting next month

MANILA - Two of the country's biggest banks are set to increase ATM transaction fees next month to defray the higher cost of "enabling interbank withdrawals and other services."

In an advisory, Metropolitan Bank and Trust Co said its cardholders will be charged P15 when using other banks' ATMs and P7.50 when using Philippine Savings Bank ATMs.

PSBank is the thrift unit of George Ty-owned Metrobank, whose cardholders would however be charged zero if they use its network of ATMs. The new fee structure would take effect on October 1.


The country's second biggest bank in terms of assets, Metrobank closed the first semester with 832 branches and 1,822 ATMs nationwide.

In a separate advisory, Bank of the Philippine Islands (BPI) said its cardholders would be charged P15 per transaction starting next month -- up from P10 -- when withdrawing through any of the ATMs of Bancnet, Expressnet and Megalink.

BPI cardholders however can still withdraw from the bank's ATMs at no cost. The new ATM fee schedule would take effect October 22.

With at least 1,700 ATMs nationwide, BPI is the country's third biggest lender in terms of assets.

“This increase is necessary to enable us to maintain our service standards even for transactions using other banks' ATMs,” the Ayala-owned bank said.

“Since the last fee adjustment in 2005, the costs of enabling interbank/inter-network ATM withdrawals and related services have escalated. It is our commitment to ensure your transactions, wherever and whenever made, will be seamless and efficient,” BPI said.

The Bangko Sentral ng Pilipinas (BSP) said banks have latitude in making product pricing decisions.

However, the BSP could look into it and decide if there’s a need to take action in the public interest, weighing cost, availability and competitive conditions among other considerations, BSP Deputy Governor Nestor A. Espenilla Jr. said.

“It’s a business judgment but that should also consider customer reaction that can have a severe
backlash. So they must decide carefully and responsibly,” he added.

source: interaksyon.com

Bank to install palm-reading ATMs

TOKYO — A regional bank in central Japan will become the country’s first financial institution to adopt automated teller machines that will identify users by their palms.

Ogaki Kyoritsu Bank in Gifu Prefecture said it would install about a dozen palm-scanning biometric ATMs in late September and planned more in the future.

Under the system, developed by Fujitsu Ltd, users will be able to prove who they are simply by scanning their hands and entering a PIN and date of birth, the bank said.

Demand for a system that does not require a cashcard or a passbook increased after the earthquake-tsunami disaster that ravaged northeast Japan last March in which many people lost personal possessions and were left without the means to get at their money.

The bank said it will be only the second in the world to introduce biometric-dependent ATMs, after Ziraat Bank, Turkey’s largest state bank.

source: japantoday.com