In a scandal that threatens confidence in the safety of our banking institutions, hundreds of people in Karachi and Islamabad have lost tens of millions of rupees in ATM fraud. According to reports, skimming devices were placed in individual ATMs which allowed criminals to access the banking information of customers and withdraw their money. Some reports indicate that the money was withdrawn in China. This raises many troubling questions about the security of the money we have entrusted to banks. One would think it is the responsibility of banks to ensure ATMs are not compromised, something which should not be difficult to do given that they are all equipped with CCTV cameras. A couple of weeks ago two individuals, one of whom was Chinese, were caught installing a skimming machine at an ATM. In two other cases over the last year, Chinese nationals have been caught in similar skimming operations. That in itself should have led to checking all ATMs for possible hacking. One of the skimming machines was placed at an ATM in an upscale Karachi mall. Neither the bank nor the mall has been able to explain how this could be done in full public view. In fact, there has been a disturbing silence about the ATM thefts. When such a large amount of money has been stolen – and from so many bank accounts – red flags should have been raised at the bank. Yet in many cases the theft was only tracked when the individual account holders themselves complained. The FIA is now investigating the hacking under the Cyber Crime Act and complaints have been filed with the State Bank of Pakistan. It is the duty of the SBP to not only ensure that all stolen money is returned immediately to all affected people but to investigate if the banks themselves were guilty of negligence. While this may be the largest such case of ATM fraud, the problem has long existed in Pakistan and other countries, and seemingly no measures have been taken to counter this or ensure bank customers are protected. There have been some reports claiming that the technology used by ATMs is now obsolete, making it vulnerable to hacking. The entire banking system is based on confidence. That confidence has now been shattered. If our money is not safe in banks, there will be a rush to withdraw it. This could lead to a run on the banks. It is essential that the banks try to regain the trust of their customers by explaining to them how such an incident could take place and what measures they plan to introduce to ensure the safety of ATMs.
