ATM fraud: Complex web of 4 gangs - indianexpress.com - 23 Jun 2012

Two Ludhiana men nabbed in Kerala; over two dozen on police radar

With the arrest of two more persons by Kerala Police in that state today in the unique ATM fraud case, it has come to light that there were a total of four gangs making withdrawals to dupe Federal Bank of India of crores of rupees. The two arrested today are Sumit Arora and his cousin Ashish Arora, residents of Ludhiana. They were earlier members of the gang run by Sumit Gupta, who was arrested along with four others by the Mohali Cyber Crime Cell on Thursday.

The duo parted ways with Gupta and formed their own gang. As per police sources, there are over two dozen miscreants involved in the four gangs. While two gangs have been busted by the Mohali and Kerala police, investigations are on to nab the other two gangs.

Significantly, all key members of the four gangs including the original mastermind, who also trained Sumit Gupta, are from Ludhiana.

Meanwhile, the Mohali Police today produced the five accused arrested by it in a joint operation with Kerala Police on Thursday before a local Court.

All the five have been remanded to police custody till June 25. Preliminary investigation revealed certain facts:-

Federal Bank of India

Had Federal Bank of India adhered to the revised RBI guidelines issued in March, it would have saved itself the loss of crores of rupees. In March RBI had issued guidelines to private banks to do away with the feature of retrieving currency notes by their ATM machines if the customer does not collect the amount within 30 seconds. While a majority of private banks removed this feature from their ATM machines, Federal Bank of India did not introduce the same. “The miscreants knew this fact clearly. As per the guidelines if the uppermost note is not collected after withdrawal within 30 seconds, the machine retrieves the note and flashes a message of failed transaction,” said Mohali SSP (Cyber Crime Investigation) Pradeep Kumar. As per the revised guidelines, RBI had advised the removal of the feature of ATM machines retrieving notes after 30 seconds.

Private bank staff role

The Mohali Cyber Crime Cell probe has revealed that some employees of a private bank charged money from the accused to open fictitious accounts. Some other staff, in order to please their seniors, opened bank accounts without confirming the identities. “In order to meet the heavy targets set by the bank, some employees did not exercise caution at the time of opening bank accounts of the accused,” said SSP Pradeep Kumar.

Accused lived lavishly

The accused, the majority having business backgrounds, led lavish lifestyles. They used to fly to Delhi, Rajasthan, Kerala to make the withdrawals. After making the fraudulent withdrawals, they used to live in the state for four to five days and return.

To avoid getting caught, they used to make withdrawals from several Federal Bank of India ATM machines in the same state. “They used to live in five star hotels and make expensive purchases after each successful fraudulent withdrawal,” said a senior police officer.

Sharp, over-ambitious

Those arrested till now or those at large have no banking background. According to the police, these accused are extremely sharp, street smart and were over-ambitious. “That they had a banking background which helped them in finding this lacuna in the ATM machines has not come to light till now. However, these accused wanted to earn money without putting in much effort,” said a senior cop.

How did they do it?

The accused used to get accounts opened in private banks and obtain ATM cards. These were used to withdraw money from Federal Bank of India (FBI) ATMs. In one transaction ( eg Rs 10,000 withdrawal), they used to leave the last note (eg Rs 100) inside the ATM machine. As the machine flashed the message “failed transaction”, they would claim a refund of the entire Rs 10,000 from the private banks. While the private banks used to refund the amounts, FBI was denied the refund of the actual amount withdrawn (Rs 9,900) as the private banks used to rely on the “failed transaction” slip/ message.