Taiwan battles cyber scammers ??

Annual losses to fraud in Taiwan are nearly 1 percent of its GDP, the highest among developed countries. It is being driven by new fraud models that use advanced technology, but would be unworkable without the help of key insiders: bank workers.

Taiwan’s white-collar fraud infiltrating banks

by 盧沛樺 , Jamie Yang, Wenrong Chang

When Yeh Yi-far (葉益發), chief prosecutor of the Taoyuan District Prosecutors Office, saw the words “Chenggong Branch” for the first time in an encrypted chat used by a fraud ring on messaging software Telegram, he was extremely skeptical.??

“Was it really possible that a bank worker was in cahoots with a fraud ring?” Yeh wondered.

The scenario was even more implausible given that the branch belonged to CTBC Bank, a big bank that gives employees at least four months’ salary as year-end bonuses. What also bothered Yeh was that “trust” is the lifeline of the financial sector, with bank workers the last line of defense against fraud.

But as more evidence was gathered, the truth became undeniable. In January 2023, Yeh asked a local court for a warrant to search CTBC’s Neihu Branch, and after checking three proxy accounts, the clues all pointed to a 26-year-old woman surnamed Chu (朱).

It was the first search of a bank in the history of domestic fraud, and since then, six CTBC branches and one branch of Union Bank of Taiwan have been searched and three people have been indicted.

Bank accomplices: allowing NT$30 million transfers

That bank staffers fell into the hands of fraudsters is perhaps the most concerning development amid a widespread outbreak of fraud in Taiwan.?

After years when banks were typically not involved in telecom and internet fraud schemes, why do fraud rings now need bank insiders on their side??

It’s because “telecom and internet fraud and investment scams are converging,” speculated Minister without Portfolio Lo Ping-cheng (羅秉成), who heads the Executive Yuan’s anti-fraud office.

The result has been a dramatic jump in fraud not only in Taiwan but across the globe. The Global Anti-Scam Alliance’s (GASA) latest estimate is that global losses to scammers exceeded US$1 trillion in 2022, 20-times higher than in the previous year.

Lo believes the huge surge reflects a shift in the type of fraud being committed, going from low-value e-commerce and credit card scams to much more lucrative fake investment schemes, necessitating methods to move larger sums of money.

As the amounts involved in the scams have risen, they have been?increasingly likely to exceed bank transfer limits. Fraudsters have faced similar problems when their victims have tried to transfer big sums, with bank tellers finding a way to block the remittances.

Consequently, fraud rings had to come up with a new tactic, and decided to entice and collude with specific bank workers, who are uniquely positioned to raise the amounts that can be transferred from proxy accounts to designated accounts.

Yeh explained that investment scams often involve transfers that add up to more than NT$100 million. The fraud rings are desperate to transfer the stolen funds as quickly as possible, and simply buying up the passbooks of proxies was inadequate to handle such large amounts, Yeh said.

The scammers therefore needed bank staff on the inside to help fraud ring proxies get through the vetting process to have their daily transfer limits increased from NT$30,000 to NT$30 million (US$1 million).?

The worst among developed countries

According to a recent survey in Taiwan, eight of every 10 people in Taiwan occasionally or regularly get phone calls or text messages from scammers.

A GASA survey found that losses from fraud schemes in Taiwan in 2022 exceeded NT$200 billion, about 0.9 percent of GDP. That was the 15th highest in the world, but the highest among developed countries, due in part to the development of a technically proficiency fraud network.?

Fraud in Taiwan has become a form of organized crime built on technology with the help of several types of white-collar workers, including internet marketers who keep up with what’s hot, engineers who can quickly expand websites, telecom salespeople who can quickly obtain phone numbers and get through ID verification, and bank workers.

“Right now, organized crime is engaging in digital transformation, moving from street killings to economic crimes,” said National Policy Agency Director-General Huang Ming-chao (黃明昭), making catching the criminals even more challenging

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