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‘
Banking system occupies an important place in a nation's economy. A banking
institution is indispensable in a modern society. t plays a pivotal role in economic
development of a country & forms the core of the money market in an advanced
country.

Banking industry in ndia has traversed a long way to assume its present stature. t has
undergone a major structural transformation after the nationalization of 14 major
commercial banks in 1969 & 6 more on 15 April 1980. The ndian banking system is
unique & perhaps has no parallels in the banking history of any country in the world. ‘
Banks are the engines that drive the operations in the financial sector, which is vital for
the economy. With the nationalization of banks in 1969, they also have emerged as
engines for social change. After ndependence, the banks have passed through three
stages. They have moved from the character based lending to ideology based lending to
today competitiveness based lending in the context of ndia's economic liberalization
policies & the process of linking with the global economy.
While the operations of the bank have become increasingly significant banking frauds in
banks are also increasing & fraudsters are becoming more & more sophisticated &
ingenious. n a bid to keep pace with the changing times, the banking sector has
diversified its business manifold. & the old philosophy of class banking has been
replaced by mass banking. The challenge in management of social responsibilit y with
economic viability has increased.

ñ
 
‘
!"#$ is any dishonest act & behavior by which one person gains or intends to gain
advantage over another person. raud causes loss to the victim directly or indirectly.
raud has not been described or discussed clearly in The ndian Penal Code but sections
dealing with cheating. Concealment, forgery counterfeiting & breach of trust has been
discusses which leads to the act of fraud.

raud is defined u/s 421 of the ndian Penal Code & u/s 17 of the ndian Contract Act.
The essential elements of frauds are the following:

1. There must be a representation & assertion;

2. t must relate to a fact;
ñ. t must be with the knowledge that it is false or without belief in its truth; &
4. t must induce another to act upon the assertion in question or to do or not to do
certain act.


‘ 

‘
"%&'%(‘ !"#$) constitute a considerable percentage of white-collar offences being
probed by the police. Unlike ordinary thefts & robberies, the amount misappropriated in
these crimes runs into lakhs & crores of rupees. Bank fraud is a federal crime in many
countries, defined as planning to obtain property or money from any federally insured
financial institution. t is sometimes considered a white collar crime.
The number of bank frauds in ndia is increasing substantially with the passage of time
as all the major operational areas in banking represent a good opportunity for
fraudsters with growing incidence being reported under deposit, loan & inter-branch
accounting transactions, including remittances.
With more educational qualifications, banking becoming impersonal & increase in
banking sector have gave rise to this white collar crime.‘According to the data compiled
by the Reserve Bank of ndia (RB , the money lost to such scams has doubled in the past
four years. n the current financial year, banks lost Rs 2,289 crore (till December), while
the loss was Rs 1,057 crore in 2007-08.

As per our broad analysis the under mentioned four major elements are responsible for
the commission of frauds in banks:

1.‘ Active involvement of the staff-both supervisor & clerical either independent of
external elements or in connivance with outsiders.
2.‘ ailure on the part of the bank staff to follow meticulously laid down
instructions & guidelines.
ñ.‘ External elements perpetuating frauds on banks by forgeries or manipulations
of cheques, drafts & other instruments.
4.‘ There has been a growing collusion between business, top banks executives, civil
servants & politicians in power to defraud the banks, by getting the rules bent,
regulations flouted & banking norms thrown to the winds.

4
 
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 ‘

¯
 

A rogue trader is a trader who acts independently of others Ȃ &, typically, recklessly Ȃ
usually to the detriment of both the clients & the institution that employs him or her. n
other words a rogue trader is a highly placed insider nominally authorized to invest
sizeable funds on behalf of the bank; this trader secretly makes progressively more
aggressive & risky investments using the bank's money, when one investment goes bad,
the rogue trader engages in further market speculation in the hope of a quick profit
which would hide or cover the loss.
Unfortunately, when one investment loss is piled onto another, the costs to the bank can
reach into the hundreds of millions of rupees; there have even been cases in which a
bank goes out of business due to market investment losses. The following table shows
some of the largest rogue trader losses in the world:

"*+‘ ,))‘ %)-'-#-',%‘ "!&+-‘".-'/'-0‘ +%-+%.+‘

ick Leeson, £827 ikkei
Barings Bank 6.5 years jail
1995 million index futures
John Rusnak, £691 Allied rish foreign
7.5 years jail
2002 million Banks exchange options
Toshihide £557 Resona U.S. Treasury
4 years jail
guchi, 1995 million Holdings bonds
Yasuo
$2.6 Sumitomo
Hamanaka, copper 8 years jail
billion Corporation
1996
Gianna
Gray, David 16 months jail, ñ years &
AU$ñ60 ational foreign
Bullen, 8 months jail,
million Australia Bank exchange options
Vince acarra, 2 years & 4 months jail
Oct 0ñ - Jan 04
Chen Jiulin, $550 China Aviation
jet fuel futures 4 years & ñ months jail
2005 million Oil
Jérôme 5 years prison of which
$7.2 Société European stock
Kerviel, 2006Ȃ 2 years are suspended -
billion Générale index futures
2008 may still appeal ruling
Boris Picano-
̀751 Groupe Caisse nvestigation in
acci, Oct Equity Derivatives
million d'Epargne progress
2008

5
")+‘
‘
Shivraj Puri was an employee at Citibank Gurgaon for seven years. He duped investors
for a sum of at least Rs.400 crore. He created ñ accounts in the name of Premnath, Sheila
Premnath & Diskha Puri, his relatives, in Citibank Gurgaon apart from 15 other accounts
in various other banks. By showing a forged Securities & Exchange Board of ndia (SEB)
letter offering high returns of 20-24% he conned high-net-worth investors to transfer
their money to these accounts. He tried making money by investing these large sums in
ifty futures & options. His trading plan failed miserably as he had not hedged his
positions on the ifty derivatives. The ifty was very volatile during September to
ovember 2010, showing a monthly gain of 11.6% in September & a fall of 10.2% in
ovember. Puriǯs trades were on the wrong side of the transaction each time, expiring
as out-of-the-money trades. This led to heavy trading losses exceeding 400 crores.
(Refer annexure 1)







  

One way to remove money from a bank is to take out a loan, a practice bankers would be
more than willing to encourage if they know that the money will be repaid in full with
interest. A fraudulent loan, however, is one in which the borrower is a business entity
controlled by a dishonest bank officer or an accomplice; the "borrower" then declares
bankruptcy or vanishes & the money is gone. The borrower may even be a non-existent
entity & the loan merely an artifice to conceal a theft of a large sum of money from the
bank. These loans are either taken under the name of a non-existent entity or the
borrower declares bankruptcy or he vanishes. Loans can also be taken by hiding past
credit history filled with financial problems.

6
D  
‘
Wire fraud is defined as attempting to defraud using electronic means, such as a
computer or telephone. What must be proved is that the person knowingly & willfully
devised or intended to devise a scheme to defraud. Since the advent of the internet,
there are literally thousands of crimes that fall under the definition of wire fraud.

Wire transfer networks such as the international, interbank fund transfer system are
tempting as targets as a transfer, once made, is difficult or impossible to reverse. As
these networks are used by banks to settle accounts with each other, rapid or overnight
wire transfer of large amounts of money are commonplace; while banks have put checks
& balances in place, there is the risk that insiders may attempt to use fraudulent or
forged documents which claim to request a bank depositor's money be wired to another
bank, often an offshore account in some distant foreign country .

")+‘
Terrance J. Holmes of Ohio was convicted on January ñ, 2007 for his involvement in a
wire fraud. Between Jan 2001 & eb 2002 Holmes owned & operated a company, GPS
Computer Services from Ohio & offered various brands of laptops & notebook
computers for sale via an internet website maintained by GPS computer service & by
means of E-Bay, an internet auction website. The websites advertised the computers at
highly discounted prices of $400 to $700 whereas the retail price quoted by the
manufacturer ranged from $1100 to $1600. The company got orders from at least 1187
customers totaling approximately $964,560. Holmes & his company failed to deliver or
supply the computers as promised. The employees of GPS Computer Services were
instructed by Holmes to give various excuses to customers in order to delay any
remedial action they might have taken. On January ñ, 2007, Terrance J. Holmes finally
pleaded guilty.
(Refer annexure ñ)

7

    
There are a number of cases each year where the bank itself turns out to be uninsured
or not licensed to operate at all. The objective is usually to solicit for deposits to this
uninsured "bank", although some may also sell stock representing ownership of the
"bank". Sometimes the names appear very official or very similar to those of legitimate
banks. or instance, the "Chase Trust Bank" of Washington DC appeared in 2002 with no
license & no affiliation to its seemingly apparent namesake; the real Chase Manhattan
bank, ew York. There is a very high risk of fraud when dealing with unknown or
uninsured institutions .

  

DD fraud is usually done by one or more dishonest bank employees that are the Bunko
Banker. They remove few DD leaves or DD books from stock & write them like a regular
DD. Since they are insiders, they know the coding, punching of a demand draft. These
Demand drafts will be issued payable at distant town/city without debiting an account.
Then it will be cashed at the payable branch. or the paying branch it is just another DD.
This kind of fraud will be discovered only when the head office does the branch -wise
reconciliation, which normally will take 6 months. By that time the money is
unrecoverable


‘
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‘‘33‘ 5‘‘‘6!‘789‘
The allegation was that the accused persons cheated the Bank in as much as
they had induced the Bank authorities to credit the Demand Draft amounts in the
account of the firm by falsely representing that Oil Tins covered by those Demand
Drafts have been consigned to the Railways. t was contended on behalf of the
Appellant - State that the accused Respondents cheated the Bank in as much as they
induced the Bank authorities to credit the amounts of Demand Drafts in the account
of firm by representing that the Oil Tins relating to those demand drafts had been
consigned to the Railways. The practice followed by the Bank in the case of the firm
of the accused respondent was to give credit to the firm for the amounts of Demand
Drafts without production of Railway Receipts. There was no cogent evidence to
show that at the time when the accused sent the Demand Drafts they did not have the
intention to send subsequently the Railway Receipts in respect of Oil Tins which were
actually delivered to the Railways. The Supreme Court held that it may be that the
accused could not keep up the delivery of Oil Tins to the Railways & no tins could
be dispatched in respect of the said 1ñ Railway Receipts but that fact can give rise
only to a civil liability of the accused. t is not sufficient to fasten a criminal liability
on them. To hold a person guilty of the offence of cheating, it has to be shown that his
intention was dishonest at the time of making the promise. Such a dishonest intention
cannot be inferred from the mere fact that he could not subsequently fulfilled the
promise.

8
 
‘ ‘‘
‘
x  ¯
 

‘

 
‘A cheque or any other negotiable instrument that has been materially & maliciously
altered to affect a fraud. Usually either the name of the payee or the amount of the check
is changed. raudsters usually alter cheques by changing the name (in order to deposit
cheques intended for payment to someone else) or the amount on the face of a cheque (a
few strokes of a pen can change 100.00 into 100,000.00, although such a large figure
may raise some eyebrows).
Sometimes, instead of tampering with a real cheque, some fraudsters will attempt to
forge a depositor's signature on a blank cheque or even print their own cheques drawn
on accounts owned by others, non-existent accounts or even alleged accounts owned by
non-existent depositors. The cheque will then be deposited to another bank & the
money withdrawn before the cheque can be returned as invalid or for non-sufficient
funds.

‘ ]   ‘
A booster cheque is a fraudulent or bad cheque used to make a payment to a credit card
account in order to "bust out" or raise the amount of available credit on otherwise-
legitimate credit cards. The amount of the cheque is credited to the card account by the
bank as soon as the payment is made, even though the cheque has not yet cleared.
Before the bad cheque is discovered, the perpetrator goes on a spending spree or
obtains cash advances until the newly-"raised" available limit on the card is reached.
The original cheque then bounces, but by then it is already too late.

‘ x   
‘
Cheque Kiting exploits a system in which, when a cheque is deposited to a bank account,
the money is made available immediately even though it is not removed from the
account on which the cheque is drawn until the cheque actually clears.
Deposit 1000 in one bank, write a cheque on that amount & deposit it to your account in
another bank; you now have 2000 until the cheque clears.

n-transit or non-existent cash is briefly recorded in multiple accounts.

A cheque is cashed &, before the bank receives any money by clearing the cheque, the
money is deposited into some other account or withdrawn by writing more cheques. n
many cases, the original deposited cheque turns out to be a forged cheque.
Some perpetrators have swapped checks between various banks on a daily basis, using
each to cover the shortfall for a previous cheque. This practice is commonly known as
&'-+‘120'%(3
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9
")+‘
‘
Disappearing ink has been used to commit cheque frauds. n such cases the ink is
altered in such a way that it disappears in several hours or days. or example, an
individual writes a cheque to himself using Bank Aǯs account for say Rs.5100. He
writes the digit 5 with the disappearing ink & the remaining digits in normal ink.
The cheque is then deposited in Bank Bǯs account where Rs.5100 is added, but by
the time it reaches Bank A for clearance the cheque will only read Rs.100, & only
Rs.100 will be debited from the account.
Cheque Washing means theft of a cheque in transit, followed by the use of
chemicals to remove the ink removing all the parts other than the signature &
filling it to his/her advantage.
Cheque fraud may come from an employee itself. An employee on Banner Bank
was convicted for writing 5 corporate cheques to her own birth name from her
desk as a loan servicing agent.

10
]    
 
Essentially a confidence trick, a fraudster uses a company at their disposal to gain
confidence with a bank, by appearing as a genuine, profitable customer. To give the
illusion of being a desired customer, the company regularly & repeatedly uses the bank
to get payment from one or more of its customers. These payments are always made, as
the customers in question are part of the fraud, actively paying any & all bills raised by
the bank. After certain time, after the bank is happy with the company, the company
requests that the bank settles its balance with the company before billing the customer.
Again, business continues as normal for the fraudulent company, its fraudulent
customers, & the unwitting bank. Only when the out standing balance between the bank
& the company is sufficiently large, the company takes the payment from the bank, & the
company & its customers disappear, leaving no-one to pay the bills issued by the bank.

11
x  
Credit card fraud is widespread as a means of stealing from banks, merchants & clients.
A credit card is made of three plastic sheet of polyvinyl chloride. The central sheet of the
card is known as the core stock. These cards are of a particular size & many data are
embossed over it.‘ Credit card frauds are the cases where one uses other's credit cards to
purchase goods or services using the funds of other accounts, without their
authorization. t's a sort of identity theft. According to RCMP, around 2ñ% of credit card
frauds happen by the way of theft & ñ7% of the credit card frauds happen due to
counterfeit card use. Criminals often make use of the latest technologies to Dzskimdz the
data stored on the credit card's magnetic strip. Credit cards fraud manifest in a number
of ways.
They are:

‘ Genuine cards are manipulated.

‘ Genuine cards are altered.
‘ Counterfeit cards are created.
‘ raudulent telemarketing is done with credit cards.
‘ Genuine cards are obtained on fraudulent applications in the names/addresses
of other persons & used.

t is feared that with the expansion of E-Commerce, M-Commerce & nternet facilities
being available on massive scale the fraudulent fund freaking via credit cards will
increase tremendously.
,#%-+!1+'-‘.!+$'-‘."!$)‘"!+‘&%,:%‘")‘:;'-+‘<2")-'.)3‘

")+‘
Mukul Garg & his fiancée, Alisha Sharma of Delhi cloned old credit cards & used them to
purchase designer clothes. Javed Chauhan, an Assistant Manager with Standard
Chartered Bank, claimed that a fraudulent transaction was made using his credit card.
The bank blocked his card. On further enquiry it was found that the card is being used at
one of the designer stores in a mall. They had been repeatedly visiting the mall & were
caught the next day when they turned up at the same store again to make a purchase.

(Refer annexure 5)

12
       
Theft of identity has become an increasing problem; the scam operates by obtaining
information about a victim, then using the information to apply for identity cards,
accounts & credit in that person's name. Often little more than name, parents' name,
date & place of birth are sufficient to obtain a birth certificate; each document obtained
then is used as identification in order to obtain more identity documents. Government -
issued standard identification numbers such as "Social security numbers, PA numbers"
are also valuable to the identity thief.
Unfortunately for the banks, identity thieves have been known to take out loans &
disappear with the cash, quite content to see the wrong persons blamed when the debts
go bad.

   

These take a number of forms varying from individuals using false information to hide a
credit history filled with financial problems & unpaid loans to corporations using
accounting fraud to overstate profits in order to make a risky loan appear to be a sound
investment for the bank.
Some corporations have engaged in over-expansion, using borrowed money to finance
costly mergers & acquisitions and overstating assets, sales or income to appear solvent
even after becoming seriously financially overextended. The resulting debt load has
ruined entire large companies, such as talian dairy conglomerate Parmalat, leaving
banks exposed to massive losses from bad loans.

")+‘
‘
Two brothers Sardainis, both from Sylmar bilked out $5 million from lenders by
pledging as collateral properties which they did not own & also forging & fabricating a
lot of documents to keep their false claim. The brothers allegedly fabricated fraudulent
reconveyances to create the false impression that the other loans on the properties had
been paid off & that there was sufficient equity to secure the loans.

(Refer annexure 2)

1ñ
< 
 
Phishing is a way of attempting to acquire sensitive information such as
usernames, passwords & credit card details by masquerading as a trustworthy entity in
an electronic communication. Communications purporting to be from popular social
web sites, auction sites, online payment processors or T administrators are commonly
used to lure the unsuspecting public. Phishing is typically carried out by e-mail or
instant messaging, & it often directs users to enter details at a fake website whose look
& feel are almost identical to the legitimate one. Phishing is an example of social
engineering techniques used to fool users, & exploits the poor usability of current web
security technologies. Attempts to deal with the growing number of reported phishing
incidents include legislation, user training, public awareness, & technical security
measures.

Phishing operates by sending forged e-mail, impersonating an online bank, auction or

payment site; the e-mail directs the user to a forged web site which is designed to look
like the login to the legitimate site but which claims that the user must update personal
info. The information thus stolen is then used in other frauds, such as theft of identity or
online auction fraud.
A number of malicious "Trojan horse" programmers have also been used to snoop on
nternet users while online, capturing keystrokes or confidential data in order to send it
to outside sites.

")+‘
‘
n a recent case, Safura Mokhtar a travel agent in Malasia was victimized with a phishing
campaign at the time an email came to her in ovember 2010. The mail asserted it was
from HSBC bank. t required her to instantly log-in & update her contact information
due to security reasons. She filled in her information and hit the link given in the mail.
After some time she was informed by HSBC about a money-transfer from her account.
The bank did not refund her & passed on the case to inancial Meditation Bureau (MB).
Many such phishing cases happen all around the world.
Precautionary Measures: Customers should know that banks don't dispatch e-mails to
clients asking for confirming their account details. They shouldnǯt follow a web -link
included in any dubious e-mail. f any such e-mail is received, the customer should
confirm with his/her bank before taking any action.

(Refer Annexure 6)

14
~  

,%+0‘2"#%$+!'%( is generally regarded as the practice of engaging in financial
transactions to conceal the identity, source, and/or destination of illegally gained money
by which the proceeds of crime are converted into assets which appear to have a
legitimate origin. n the ndian Penal Code the statutory definition is wider. t is common
to refer to money legally obtained as Dzcleandz, & money illegally obtained as Dzdirtydz.
Money laundering occurs over a period of three steps:

‘ 2".+*+%-‘= n the beginning the criminal inserts the money into a financial
institution, usually in the form of cash deposits. This is the toughest part of the
process because large amounts of cash can raise lots of eyebrows at a bank &
they are required by law to report unusually large transactions.
‘ "0+!'%(‘Ȃ This is done to make the money hard to follow. t's deposited in
many different accounts in countries around the world & the frequency of the
withdrawals/deposits is often changed to throw the police off the track.
Expensive items like cars, homes, & diamonds are bought to make it even more
difficult to determine exactly where the money came from in the first place.
‘ %-+(!"-',%‘= The money re-enters the mainstream economy & it appears as
though it came from a legal business. or example, ordinary goods may be sold
at a particular price but the invoice will value them much higher. The money
obtained from that sale would be put into an account with the dirty money &
the fake invoice would account for both the legal & illegal funds.

n the banking sector these operations work in various forms. One variant involved
buying securities (stocks & bonds) for cash; the securities were then placed for safe
deposit in one bank & a claim on those assets used as collateral for a loan at another
bank. The borrower would then default on the loan. The securities, however, would still
be worth their full amount. The transaction served only to disguise the original source of
the funds.

15
 
‘ ‘

‘
A Bank employee gains the confidence of his superiors by voluntary helping them in
making entries in ledgers & other records & gains their confidence. After sometime, the
employee opens an account in another Bank in his name. Later, he issues a cheque on
his account in the Bank in which he is working & deposits the cheque in his account in
other Bank. When the other Bank sends a cheque to his own Bank for clearance, he
quietly removes the cheque & destroys it. When the other Bank does not receive back
the cheque, it credits the amount in his account. At the time of reconciliation, the other
Bank raises a credit on his own Bank. As the cheque is not traced, the amount is kept in
suspense account. When Head Office writes to the branch for reconciliation, he destroys
that letter also.
Another modus operandi is that the Bank employee makes false credit entries in his
account & withdraws large amounts from the same. He himself posts entries in the
ledger & checks the books at the end of the day & balances the same.
Often illiterate & ignorant villagers, widows and women folk approach Bank employees
to assist them in effecting transactions. When they wish to deposit cash, the Bank
employee prepares the pay-in-slips, keeps the pass book in his possession & does not
deposit the amount & misappropriates the same. or this purpose, he chooses an
account in which there are mostly deposits & very few withdrawals.

Some of the other common examples of such kinds of frauds by the bank employees are-
‘ Lower level employees who help the cashier at the counter often commit theft of
small amounts from the cashier's box.
‘ Often, regular customers approach peons & attendees during rush time for help
& assistance. They often hand over the cash along with the cashbook to the
peon, who goes inside the counter & pays the amount to the clerk & returns the
pay-in-slip duly stamped. After a few genuine transactions & gaining the trust of
the client, he pockets the amount, forges the signature of the official on pay-in-
slip, puts the stamp on it & returns to the party.
‘ Employee commits theft of DD forms & hands them over to an outsider. He also
provides the branch code numbers & specimen signature of the Bank officers to
the criminal.
‘ Employee operates a dormant account by withdrawing the amount by forging
signatures of the client.
‘ Employee obtains the signatures of a party on a blank cheque or a withdrawal
form assuring him that he will fill in the details later & draws the higher
amount.
‘ A fraudulent credit entry is interpolated in the account & the amount is
withdrawn.

16
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‘

‘ 
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 ‘ ‘


 ‘


‘‘ ‘ ‘  

‘
‘‘
‘
‘ '5-+.;‘.!'*+
The information technology is changing very fast. The normal investigator does
not have the proper background & knowledge .special investigators have to be
created to carry out the investigations. The B of USA have a cell, even in latest
scenario there has been cells operating in the Maharashtra police department to
counter cyber crimes. C.B. also have been asked to create special team for
fighting cyber crimes.
‘ %-+!%"-',%"2‘.!'*+
A computer crime may be committed in one country & the result can be in
another country. There has been lot of jurisdictional problem a though the
nterpol does help but it too has certain limitations. the different treaties &
conventions have created obstructions in relation to tracking of cyber criminals
hiding or operation in other nations
‘
,5).+%+‘.!'*+>‘
The computer satellite computer link can be placed or located anywhere. The
usual crime scene is the cyber space. The terminal may be anywhere & the
criminal need not indicate the place. The only evidence a criminal leaves behind
is the loss to the crime.
‘ ".+2+))‘.!'*+>
The major advantage 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 & in strict sense faceless.
There are certain spy softwareǯs which is utilized to find out passwords & other
vital entry information to a computer system. The entry is gained through a
spam or bulk mail.

17
  
‘ ‘ 
‘
‘
Despite all care & vigilance there may still be some frauds, though their number,
periodicity & intensity may be considerably reduced. The following procedure would be
very helpful if taken into consideration:

‘ All relevant data-papers, documents etc. Should be promptly collected. Original

vouchers or other papers forming the basis of the investigation should be kept
under lock & key.
‘ All persons in the bank who may be knowing something about the time, place a
modus operandi of the fraud should be examined & their statements should be
recorded.
‘ The probable order of events should thereafter be reconstructed by the officer,
in his own mind.
‘ t is advisable to keep the central office informed about the fraud & further
developments in regard thereto.

The Reserve Bank of ndia had set-up a high level committee in 1992 which was headed
by Mr. A Ghosh, the then Dy. Governor Reserve Bank of ndia to inquire into various
aspects relating to frauds malpractice in banks. The committee had noticed/observed
three major causes for perpetration of fraud as given hereunder:

‘ Laxity in observance of the laid down system & procedures by operational &
supervising staff.
‘ Over confidence reposed in the clients who indulged in breach of trust.
‘ Unscrupulous clients by taking advantages of the laxity in observance of
established, time tested safeguards also committed frauds.
‘ n order to have uniformity in reporting cases of frauds, RB considered the
question of classification of bank frauds on the basis of the provisions of the PC.
Given below are the Provisions & their Remedial measures that can be taken.

18

 
‘ ‘‘ 
‘

Cheque fraud is one of the largest challenges facing businesses & financial institutions
today. With the advancement of computer technology it increasingly easy for criminals,
either independently or in organized gangs, to manipulate cheques in such a way as to
deceive innocent victims expecting value in exchange for their money.

A significant amount of cheque fraud is due to counterfeiting through desktop

publishing & copying to create or duplicate an actual financial document, as well as
chemical alteration, which consists of removing some or all of the information &
manipulating it to the benefit of the criminal. Victims include financial institutions,
businesses that accept & issue cheques, & the consumer. n most cases, these crimes
begin with the theft of a financial document. t can be perpetrated as easily as some one
stealing a blank cheque from your home or vehicle during a burglary, searching for a
canceled or old cheque in the garbage, or removing a cheque you have mailed to pay a
bill from the mailbox.

Types of Cheque raud:

,!(+!0‘

‘ or a business, forgery typically takes place when an employee issues a cheque
without proper authorization. Criminals will also steal a cheque, endorse it &
present for payment at a retail location or at the bank teller window, probably
using bogus personal identification.

,#%-+!1+'-'%(‘‘
2-+!"-',%‘‘

‘ Counterfeiting can either mean wholly fabricating a cheque --using readily

available desktop publishing equipment consisting of a personal computer,
scanner, sophisticated software & high-grade laser printer -- or simply
duplicating a cheque with advanced color photocopiers.
‘ Alteration primarily refers to using chemicals & solvents such as acetone, brake
fluid & bleach to remove or modify handwriting & information on the cheque.
When performed on specific locations on the cheque such as the payee's name or
amount, it is called-spot alteration;

"<+!;"%('%(‘‘

‘ This problem primarily has to do with people purposely writing cheques on

closed accounts (their own or others), as well as reordering cheques on closed
accounts (their own or others).

19
'(%)‘1,!‘?"$‘.;+@#+>‘

Below are several signs which may indicate a bad cheque. While one sign on its own
does not guarantee a cheque to be counterfeit, the greater the number of signs, the
greater the possibility that the cheque is bad.

1.‘ The cheque lacks perforations.

2.‘ The cheque number is either missing or does not change.
ñ.‘ The type of font used to print the customer's name looks visibly different from
the font used to print the address.
4.‘ Additions to the cheque (i.e. phone numbers) have been written by h and.
5.‘ There are stains or discolorations on the cheque possibly caused by erasures or
alterations.
6.‘ The numbers printed along the bottoms of the cheque (called Magnetic nk
Character Recognition, or MCR, coding) is shiny. Real magnetic ink is dull & non
glossy in appearance.
7.‘ The MCR encoding at the bottom of the cheque does not match the cheque
number.
8.‘ The MCR numbers are missing.
9.‘ The name of the payee appears to have been printed by a typewriter. Most
payroll, expenses, & dividend cheques are printed via computer.
10.‘ The word VOD appears across the cheque.

;+@#+‘ !"#$‘'<)‘1,!‘-;+‘,%)#*+!‘

raud professionals have become increasingly skilled & sophisticated, thanks to

advances in readily available technology such as personal computers, scanners & color
photocopiers. Criminals today can defraud you & your financial institution quite easily
with a blank cheque taken from your cheque book, a canceled cheque found in your
garbage, or a cheque you mailed to pay a bill. Therefore, it is important to follow a
common-sense, logical approach with the way you use & store your cheques.

1.‘ Make sure your cheques are endorsed by your financial institution & incorporate
security features that help combat counterfeiting & alteration.
2.‘ Store your cheques, deposit slips, bank statements & canceled cheques in a
secure & locked location. ever leave your chequebook in your vehicle or in the
open.
ñ.‘ Reconcile your bank statement within ñ0 days of receipt in order to detect any
irregularities. Otherwise, you may become liable for any losses due to cheque
fraud.
4.‘ Unless needed for tax purpose, destroy old canceled cheques, account
statements, deposit tickets, ATM receipts (they also frequently have your
account number & worse yet, your account balance). The personal information
on it may help someone impersonate you & take money from your account.
5.‘ f your home is burglarized, cheque your supply of cheques to determine if any
have been stolen. Look closely, because thieves will sometimes take only one or
two cheques from the middle or back of the book. The longer it takes to detect
any of your cheques have been taken, the more time the criminal has to use them
successfully.
6.‘ f someone pays you with a cashier's cheque, have them accompany you to the
bank to cash it. f at all possible, only accept a cheque during normal business
hours so you can verify whether it is legitimate. Make sure you obtain
identification information from the individual

20
 7.‘ Use your own pre-printed deposit slips, & make sure the account number on
your slip is correct. Thieves occasionally alter deposit slips in the hope you won't
notice & the money goes into their account.
8.‘ ever endorse a cheque until you are ready to cash or deposit it. The
information can be altered if it is lost or stolen.

'<)‘1,!‘+-+.-'%(‘,#%-+!1+'-‘;+@#+)>‘

1.‘  - By fanning through a group of returned cheques, a counterfeit may

stand out as having a slightly different color than the rest of the cheques in th e
batch.
2.‘  
 
‘- Most cheques produced by a legitimate printer are perforated
& have at least one rough edge. However, many companies are now using in-
house laser printers with MCR capabilities to generate their own cheques from
blank stock. These cheques may have a micro-perforated edge that is difficult to
detect.
ñ.‘  ‘
‘
 - Most, but not all, forgers lack the ability to encode with
magnetic ink the bank & customer account information on the bottom of a
cheque. They will often substitute regular toner or ink for magnetic ink, which is
dull & non-reflective. Real magnetic ink applied by laser printers is the exception
& may have a shine or gloss.

f a counterfeits MCR line is printed or altered with non-magnetic ink, the banks
sorting equipment will be unable to read the MCR line, thus causing a reject
item. Unfortunately, the bank will normally apply a new magnetic strip &
process the cheque. But banks cannot treat every non-MCR cheque as a
fraudulent item because millions of legitimate cheques are rejected each day due
to unreadable MCR lines.

4.‘ 
‘
  - The nine-digit number between the colon brackets on the
bottom of a cheque is the routing number of the bank on which the cheque is
drawn. The first two digits indicate in which of the 12 ederal Reserve Districts
the bank is located. t is important that these digits be compared to the location
of the bank because a forger will sometimes change the routing number on the
cheque to an incorrect ederal Reserve Bank to buy more time.


 
‘ ‘ ‘

‘ 
‘

Credit card fraud is bad business. n 2004, credit card fraud cost US merchants 2,664.9
million dollars (Celent Communications). Credit card fraud is a significant problem in
Canada, too. The credit card loss total for 2007 was $ñ04,255,215, according to the
RCMP. And while 'no-card' fraud is growing, most credit card frauds are still being
committed using lost, stolen or counterfeit cards. Whether you have a brick-&-mortar
business or an online one, credit card fraud is costing you money. So what can your
business do to prevent credit card fraud?

21
‘
3‘++<‘0,#!‘.!+$'-‘."!$)‘)"1+3‘
Keep your credit cards in a purse or wallet close to your body where it can't easily be
snatched away. Ladies, make sure your purse is zipped. f you're shopping in a high
traffic area, carry a smaller purse. Thieves can take pictures of your credit card with a
camera or cell phone, so don't leave your credit card exposed any longer than necessary.

After you make a purchase put your credit card away immediately. Confirm you have
your credit card back in your possession before you leave the store or restaurant.

3‘;!+$‘"%0-;'%(‘:'-;‘0,#!‘.!+$'-‘."!$‘%#*?+!‘,%‘'-3‘
Rather than toss your credit card billing statements directly into the trash, shred them
to keep dumpster divers from getting their hands on your credit card number. The same
thing applies to old credit cards that have expired or been cancelled. You might even put
the shredded pieces in different trash bags to thwart clever thieves who can put
shredded pages back together.

3‘,%A-‘)'(%‘?2"%&‘.!+$'-‘."!$‘!+.+'<-)3‘
To avoid credit card fraud, always verify the amount on your credit card receipt before
signing it. f you get a credit card receipt that has blank spaces in it, write $0 in those
spaces or draw through them before putting your signature on the card. Otherwise, the
cashier could write in an amount & send the purchase to your credit card issuer.

3‘
/,'$‘('/'%(‘,#-‘0,#!‘.!+$'-‘."!$‘'%1,!*"-',%3‘
Only give out your credit card number or other sensitive information on calls you
initiate to customer service using the number on the back of your credit card. Don't
return calls to a phone number left on your answering machine & don't give your credit
card number to anyone who calls you requesting the number. Credit card thieves have
been known to pose as credit card issuers & other businesses to trick you into giving out
your credit card number.

3‘ +‘)"1+‘:'-;‘0,#!‘.!+$'-‘."!$‘,%2'%+3‘
Don't click on email links from anyone pretending to be your bank, credit card company,
or other business that uses your personal information, even if the email looks legitimate.
These links are often phishing scams & want to trick you into entering your login
information on their fake website.

Only enter your credit card number on secure websites that you can be 100% sure are
legitimate. To be sure a website is secure, look for a lock in the lower right corner of
your internet browser.

3‘+<,!-‘2,)-‘,!‘)-,2+%‘.!+$'-‘."!$)‘'**+$'"-+203‘
The sooner you report a missing credit card the less likely it is that you'll have to pay for
any fraudulent charges made on your credit card. Write down your credit card
companies' customer service number now so you'll have it if your credit card is ever
missing.

3‘+/'+:‘0,#!‘?'22'%(‘)-"-+*+%-)‘+".;‘*,%-;3‘
Unauthorized charges on your credit card are the first indicator of credit card fraud. f
you notice a charge you didn't make, no matter how small, report the charge to your
credit card issuer immediately. Your credit card issuer will tell you whether you should
close your account to avoid credit card fraud.

22

 
‘ ‘ 
‘‘

‘ 
‘

‘ Watch out for Dzphishydz emails. The most common form of phishing is emails
pretending to be from a legitimate retailer, bank, organization, or government
agency. The sender asks to Dzconfirmdz your personal information for some made-up
reason: your account is about to be closed an order for something has been placed in
your name, or your information has been lost because of a computer problem.
Another tactic phishers use is to say theyǯre from the fraud departments of well -
known companies & ask to verify your information because they suspect you may be
a victim of identity theft! n one case, a phisher claimed to be from a state lottery
commission & requested peopleǯs banking information to deposit their Dzwinningsdz in
their accounts.
‘ Donǯt click on links within emails that ask for your personal information. raudsters
use these links to lure people to phony Web sites that looks just like the real sites of
the company, organization, or agency theyǯre impersonating. f you follow the
instructions & enter your personal information on the Web site, youǯll deliver it
directly into the hands of identity thieves. To check whether the message is really
from the company or agency, call it directly or go to its Web site (use a search engine
to find it).
‘ Beware of Dzpharming.dz n this latest version of online D theft, a virus or malicious
program is secretly planted in your computer & hijacks your Web browser. When
you type in the address of a legitimate Web site, youǯre taken to a fake copy of the
site without realizing it. Any personal information you provide at the phony site,
such as your password or account number, can be stolen & fraudulently used.
‘ Protect your computer with spam filters, anti-virus & anti-spyware software, & a
firewall, & keep them up to date. A spam filter can help reduce the number of
phishing emails you get. Anti-virus software, which scans incoming messages for
troublesome files, & anti-spyware software, which looks for programs that have
been installed on your computer & track your online activities without your
knowledge, can protect you against pharming & other techniques that phishers use.
Look for programs that offer automatic updates & take advantage of free patches
that manufacturers offer to fix newly discovered problems.
‘ Only open email attachments if youǯre expecting them & know what they
contain. Even if the messages look like they came from people you know, they could
be from scammers & contain programs that will steal your personal information.
‘ Know that phishing can also happen by ph one. You may get a call from someone
pretending to be from a company or government agency, making the same kinds of
false claims & asking for your personal information.
‘ f someone contacts you & says youǯve been a victim of fraud, verify the personǯs
identity before you provide any personal information. Legitimate credit card issuers
& other companies may contact you if there is an unusual pattern indicating that
someone else might be using one of your accounts. But usually they only ask if you
made particular transactions; they donǯt request your account number or other
personal information. Law enforcement agencies might also contact you if youǯve
been the victim of fraud. To be on the safe side, ask for the personǯs name, the name
of the agency or company, the telephone number, & the address. Get the main
number from the phone book, the nternet, or directory assistance, then call to find
out if the person is legitimate.

2ñ
‘ Job seekers should also be careful. Some phishers target people who list themselves
on job search sites. Pretending to be potential employers, they ask for your social
security number & other personal information. ollow the advice above & verify the
personǯs identity before providing any personal information.
‘ Be suspicious if someone contacts you unexpectedly & asks for your personal
information. tǯs hard to tell whether something is legitimate by looking at an email
or a Web site, or talking to someone on the phone. But if youǯre contacted out of the
blue & asked for your personal information, itǯs a warning sign that something is
Dzphishy.dz Legitimate companies & agencies donǯt operate that way.
‘ Report phishing, whether youǯre a victim or not. Tell the company or agency that the
phisher was impersonating.

 ‘
‘
3‘ ,(#+‘!"$+!‘6'-'‘ "%&‘=‘;'/!"B‘#!'8‘

24
EW DELH: Shivraj Puri was a vain trader, with incompetence to match, said executives
at brokerage houses that dealt with the Citibank employee arrested for duping investors
of at least 400 crore.

Puri, who was based in the Gurgaon branch, made large, unhedged bets on ifty futures
& options & obsessively stuck to his doomed trading plan despite being warned to
change course, three people connected with transactions by the disgraced trader said.

DzHe was a novice with no clear strategy,ǯǯ said a derivative analyst who pored through
Puriǯs trades to understand how the losses totalled up. DzHe was trading in volatility
without the right amount of hedges & got hammered when the ifty moved against him.
Puri started out with a bad premise, & as most rogue traders do, he met his nemesis
thinking that he could beat the market. t was foolish. ǯǯ

Puri was arrested last week for peddling fake investment schemes that promised
assured returns of 20-24 % to wealthy clients & companies such as Hero Corporate
Services Ltd. Since ET OW broke the story on December 28, market regulator Sebi,
stock exchanges & other regulatory agencies have been investigating how the scam was
perpetrated & the role of the brokerages he dealt with.

Puriǯs trades unraveled during September & ovember when the ifty & its underlying
volatility was huge. The 50-share indexǯ movement between its highest & lowest levels
was 72ñ points in September , when it closed at 6,0ñ0, gaining 11.6%, its best monthly
gain since May 2009. Volatility in the index, which whipsawed, was much worse.

The ifty reversed in ovember, when it fell just 2.6%, but still showed an intra -month
movement of 648 points, or 10.2%. Puriǯs Ǯshort gamma tradesǯ were on the wrong side
each time, the people said. Such a trade involves writing call or put options. While a
trader earns a fee for selling the option, his downside, if not hedged, remains
unprotected if the index moves in the opposite direction. n Puriǯs case, he faced huge
margin calls on his derivative positions, the people said. n many other transactions, a
vast majority of Puriǯs index options expired as out-of-the-money trades, thereby
reducing his premium paid to zero, they added.

Puri never traded in cash markets or took deliveries. He was Dzheavily leveraged,ǯǯ one
relationship manager at a brokerage said. Dz60% of the time his margin positions were so
critical that we had to call him repeatedly to fund them.ǯǯ On act ive days, & there were
many, turnover from Puriǯs leveraged transactions touched 1,000 crore, trading logs
shown to ET OW reveal. That is equivalent to the turnover of a mid -sized brokerage on
Dalal Street.

Puri held accounts in at least three brokerages, among them Religare Securities, L &
Bonanza Portfolio. The first two declined to comment for this story. Bonanza Portfolio
Chief Executive Shiv Kumar Goel did not respond to phone calls.

Puriǯs trading losses exceeded Rs 100 crore with a Delhi-based broker-age, where he
had two demat-cum-trading accounts. Once the losses exceeded Rs 70 crore, senior
brokerage officials tried to dissuade Puri from taking further positions, or at least revisit
his strategies, people with the knowledge of the conversations said. Puriǯs response was
typical of a trader who refuses to believe the market has moved against him. DzPaise
aapke hain ya mere?ǯǯ he retorted. Dzt is none of your business; let the losses happen.ǯǯ

The trading & the losses continued after the brokerage ensured that the money for the

25
transactions was coming from Puriǯs own accounts, the people said. The three brokerage
houses have said they adhered to rules requiring them to verify the antecedents of
investors. Religare said it informed regulators when daily transactions exceeded
prescribed limits. By all accounts, Puri was a valuable client at a time when the fee on
options trading was wafer thin. One of the brokerages earned Rs 12 crore in less than a
year dealing with him. Such was the pace & ferocity of trading that Puri shelled out Rs 8-
10 lakh each day in the last three months as broking fee.

3‘ !"#$#2+%-‘,"%)‘?0‘"%‘'%)'$+!‘

LOS AGELESȄTwo brothers were taken into federal custody this morning on charges
that they bilked private lenders out of more than $5 million by pledging as collateral
properties they did not own & fabricating numerous documents to support their false
claims.

Henrik Sardariani, 42, & his brother, Hamlet Sardariani, 40, both of Sylmar, were
arrested without incident at the Coral Tree restaurant in the Brentwood section of Los
Angeles this morning by special agents with the ederal Bureau of nvestigation & RS -
Criminal nvestigation. The Sardarianis are expected to make their initial court
appearances this afternoon in United States District Court.

A federal grand jury indicted the Sardarianis on riday, charging them with conspiracy,
three counts of wire fraud, six counts of unlawful monetary transactions, & five counts
of identity theft. According to the indictment, which was unsealed after their arrests this
morning, the Sardarianis used their fraudulent scheme to obtain well over $5 million
from the victim lenders in under eight months.

The indictment alleges that, to obtain the loans on several properties, the Sardarianis
created fraudulent deeds of trust, corporate records & other documents to make it
appear that they held title to the properties. The brothers allegedly fabricat ed
fraudulent reconveyances to create the false impression that the other loans on the
properties had been paid off & that there was sufficient equity to secure the loans. The
fraudulent reconveyances bore forged signatures & fraudulent stamps of notaries
public, according to the indictment which further alleges that the Sardariani brothers &
a co-conspirator presented these fraudulent reconveyances to title companies & victim
lenders.

n order to obtain one of the loans, Henrik Sardariani allegedly falsely represented that
the loan was needed for less than one month so he could extend a pre-existing escrow &
that the money would be returned to the lender at the close of the pre-existing escrow.
Sardariani allegedly promised that the money would never leave escrow & that the
victim would receive a substantial payment when the loan proceeds were deposited into
the pre-existing escrow. However, according to the indictment, after the victim wired
$2.5 million to the escrow account, Henrik Sardariani arranged for $1.9 million of the
money to be wired to an account in Hong Kong.

An indictment contains allegations that a defendant has committed a crime. Every

defendant is presumed to be innocent until proven guilty in court.

26
f convicted of all of the charges in the indictment, each of the Sardariani brothers would
face a maximum statutory penalty of 115 years in federal prison, plus at least two
additional years for the aggravated identity theft charges.

The case against the Sardarianis was investigated by the ederal Bureau of nvestigation
& RS - Criminal nvestigation.

3‘ D'!+‘ !"#$‘")+‘

Gregory A. White, United States Attorney for the orthern District of Ohio, announced
that Terrance J. Holmes, age 42, or ññ0 Yorktown Place, Vermilion, Ohio, was sentenced
today in U.S. District Court in Youngstown, Ohio, in connection with his recent
conviction for Wire raud. Holmes was sentenced to ñ7 months in the custody of the
Bureau of Prisons, to be followed by ñ years of supervised release. Holmes was also
ordered to pay restitution in the amount of $867,ñ40.09, & a $100 special assessment to
the Crime Victimsǯ und.

On December 14, 2006, an nformation was filed charging Holmes with one count of
Wire raud. Holmes entered a guilty plea to the charge on January ñ, 2007.

The nformation charged that between January 2001 & ebruary 2002, Holmes having
devised & attempted to devise a separate scheme & artifice to obtain money, funds &
other property by means of false & fraudulent pretences, representations & promises
knowingly transmitted & caused to be transmitted by means of interstate wire or other
electronic communication, certain nternet advertisements & nternet e-mail
communications, in violation of Title 18, United States Code Section 1ñ4ñ.

Specifically, between January 2001 & ebruary 2002, Holmes owned & operated GPS
Computer Services in Vermilion, Ohio, & offered various brands of laptop & notebook
computers for sale to the public by means of an nternet website maintained by GPS
Computer Services & via E-Bay, an nternet on-line auction website. Holmes & GPS
Computer Services advertised the computers at deeply discounted prices of $400 to
$700, when the manufacturerǯs suggested retail price for the computers ranged from
$1,100 to $1,600 each.

Holmes & GPS Computer Services accepted orders for laptop & notebook computers
totalling approximately $964,559.86 from at least 1,187 customers via the nternet, by
telephone, by mail & in person at the retail location in Vermilion, Ohio, but failed to
deliver or supply the computers as promised. Holmes instructed GPS Computer Services
employees to give various excuses to customers to stall any remedial actions the
customers might have taken against GPS Computer Services.

This case was prosecuted by Assistant U.S. Attorney Robert W. Kern of the Clevel and U.S.
Attorneyǯs Office, following an investigation by the Elyria Office of the ederal Bureau of
nvestigation, & the Ohio Attorney Generalǯs Office

3‘ %#)#"2‘.;+@#+‘1!"#$#2+%-‘.")+)‘

27
or example, disappearing ink has been used to commit a rare form of fraud. n such
cases, the perpetrator chemically alters the substance so that it disappears in several
hours or days rather than a few minutes. The individual then writes a cheque to
him/herself (or a partner in the scheme) using Bank A's account for a specified amount,
say, $5100. n this amount, the digit  is written with the disappearing ink, & the
remainder of the amount in regular ink. The cheque will be deposited in Bank B's
account, where $5100 will be added, but by the time it reaches Bank A for clearance, the
cheque will then read $100, & only $100 will be debited from that account.

"Cheque washing" involves the theft of a cheque in transit between the writer &
recipient, followed by the use of chemicals to remove the ink representing all parts
other than the signature. The perpetrator then fills in the blanks to his or her advantage.
Sometimes the cheque fraud comes from an employee of the bank itself, as was the case
with Suzette A. Brock, who was convicted of theft for writing five corporate cheques to
her own birth name from her desk as a loan servicing agent for Banner Bank of Walla
Walla, WA.

‘
3‘ !+$'-‘"!$‘ !"#$‘

Mukul Garg (24) & his fiancé Alisha Sharma (2ñ) were apprehended from a mall in Saket
recently following a tip off, H G S Dhaliwal, Deputy Commissioner of Police (South), said,
adding four igerians, who were also part of their gang, were on the run.
The arrest came following investigations into a complaint filed by Javed Chauhan, an
Assistant Manager with Standard Chartered Bank, who claimed that a fraudulent
transaction was made using his credit card.

"On his request the bank blocked the card. On further enquiry it was found that the card
is being used at one of the designer stores in a mall situated in Saket. The customer
promptly visited the store where the imposters were caught by the security staff.
"We found that the two had been visiting the store for the last few days. Police were
informed & they were interrogated thoroughly. They couple said that they had come to
the mall with the intention of purchasing high end designer products with the use of
cloned credit cards," he said.

Some cloned cards with receipts of purchase & designer clothes & mobile phones were
recovered from the couple. A case of cheating, impersonation & forgery has been
registered against them.

The couple hails from Ludhiana & had studied together in one of the prestigious colleges
where they become close friends. Both of them are Commerce Graduates & are pursuing

28
further studies.

Mukul has also been to London to where he completed his management studies in
University of Bedfordshire. Simultaneously he completed his master's degree in
nternational Business Management from University of Middlesex.

Alisha is presently pursuing her MBA degree from one of the renowned institutes of
South Delhi. Both of them belonged to upper middle class families.

Mukul's father is a well-known iron tools trader in Ludhiana whereas Alisha's father is a
senior officer in orthern Railways & Commonwealth Games gold medallist in
Weightlifting.

She is in Delhi since last year & met one igerian ational Kelley & his friends in one of
the malls in Saket. The igerian group asked her to do some shopping for their
girlfriends. She happily agreed & persuaded his friend Mukul to join them.
The igerian group prepared cloned cards & fake Ds & used them for shopping in
various malls‘

3‘ ;');'%(‘")+‘

The HSBC Bank Malaysia Berhad has reported that there's a growing number of
Malaysians adopting nternet banking, nevertheless, owing to this, there's also a
growing number of nternet frauds like phishing in the country. Thestar.com.my
reported this on ebruary 19, 2011.

n one case, 41-year-old Safura Mokhtar a Travel Agent recently was victimized with a
phishing campaign at the time an email came to her in ovember 2010 asserting that it
was from HSBC Bank.

The e-mail, according to Safura, said that she required logging in instantly for making
her contact information up-to-date owing to security reasons. There was also a web-link
in the e-mail that Safura unwittingly hit. She added that since she hadn't conducted
online banking before, she didn't know about the existence of such scams.
Thestar.com.my reported this. Safura, after some time, got intimation from HSBC that
there'd been a money-transfer from her account.

& though she fast reported the episode to the bank, the latter dismissed the idea of
refunding her.

But, the bank passed her case to MB (inancial Mediation Bureau), a body working
independently towards assisting resolve disputes amongst end-users, similar to
Mokhtar in the current instance, & the suppliers of financial services from whom they

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benefited, similar to HSBC in the current instance. B reportedly told Safura that the
time-span for the investigations would be no more than 6-months.

Worryingly, according to Malaysia's cyber-security division, CyberSecurity Malaysia, in

2010, there were 1,426 phishing incidents against 6ñ4 reported during 2009. The
division then noted that 900 or more phishing websites had been detected that attacked
area financial institutions.

Meanwhile, MB outlined that people who became victimized were normally fresh
owners of online-banking accounts along with people who didn't comprehend online
safety.

Hence, as suggestions for avoiding phishing assaults, users require remembering that
banks don't dispatch e-mails to clients asking for confirming their account details.
Moreover, they mustn't follow a web-link within any dubious e-mail rather they should
examine the included URL address carefully prior to hitting the link.

inally, any user getting an e-mail soliciting personal nternet banking information must
notify his bank about it for verification.

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