column was published in the
Dec. 15, 1999)
Organized crime a threat to banking system
By Leo Knight
crime in this country took a substantial hit last week in
two-year investigation involving the RCMP and police forces from
Ontario and Quebec, dubbed Project Osada II, resulted in the
take down of 37 significant players in the Eastern European or
Russian "maffiya." But, unfortunately it is but a mere
drop in the bucket of filth that is organized crime in this
the same time police were trying to warn the public about debit
card fraud being done by elements of Asian organized crime,
primarily the Dai Huen Jai or Big Circle.
the surface the two events might seem to be unconnected, but the
debit card warning came as a result of a seizure made in October
during the Osada II project. Police seized two machines which
are essentially tampered-with versions of the ordinary keypads
we all use daily at stores.
keypads allow the consumer's PIN to be recorded and stored in
the unit for an eventual upload into a computer. This is
combined with a "skimmer" which reads and records all
the information contained about you on the magnetic stripe on
your debit or credit card.
Toronto newspaper then duly reported the entire debit card
system had been compromised which caused Supt. Ben Soave, the
RCMP chief organized crime investigator in Ontario, to deny this
was the case at a hastily-called news conference.
called the incident "isolated" and said the system was
inherently safe. No doubt this was prompted by the Canadian
Banker's Association whose collective bowels must have turned to
ice when the news broke in the Toronto media.
this is only guesswork by the police. Information about debit
card readers has been circulating for some months now.
know of a case in Calgary, which occurred at the beginning of
October, where a female student used her debit card at an
electronics store at seven o'clock in the evening. By seven the
next morning her bank account was being accessed at ATMs, in
restaurants and other retail outlets.
she brought the matter up to her bank, she was referred to the
Calgary police who were of little assistance since the amount
involved was under $5,000, an unofficial benchmark for busy
police departments and large Mountie detachments in fraud cases.
she was a student who worked part-time to get through
university, she didn't lose much money in relative terms, but to
her it might well have been thousands. It took her two months of
fighting with the bank to get reimbursed, a decision that was
only made last week.
the early part of the summer, the Canadian Banker's Association
issued an alert about the hand-held "skimmers"
referred to by Soave at his press conference.
information was provided in a document destined for law
enforcement agencies only. Presumably the bankers didn't want
you to know about the danger organized crime poses to public
confidence in our banking system.
the document clearly demonstrates that what Soave referred to as
"isolated" is anything but. The bulletin refers to a
"skimmer" seized by an Asian Investigation Unit in
Toronto. The skimmer is not much bigger than a pager. It is
designed to be worn on a belt, in a waiter's waistband or in any
one of a hundred ways.
me quote from the banker's bulletin: "This skimming device
is manufactured solely for the purpose of reading, capturing and
transmitting full magnetic stripe data obtained illegally from
legitimate credit and debit cards.
pocket skimmers are capable of capturing hundreds of pieces of
credit/debit card account data ... this data can be sold or
encoded on a counterfeit card within hours without the knowledge
of the legitimate card holder."
how the scam works.
gang member approaches a store clerk, a waiter or a gas station
attendant, someone who generally speaking doesn't make that much
money. The person is given the skimmer and told to swipe as many
customer cards as possible through it over the course of a
when the skimmer is given back to the gangster, the employee is
given cash for each number swiped. Depending on the type of
card, it can be as much as $50 for the swipe of a gold credit
card. Easy money for someone making $8 or $10 an hour. And how
easy is it for the employee to swipe your card into a skimmer?
often do you give your credit card to a waiter? Or your debit
card to a gas station attendant? How often do you actually pay
attention to what that person does or indeed, how often are you
not even in the same part of the room as your card, such as in a
restaurant or a pub?
of the interesting points of all of this is the clear
demonstration of the globalization of organized crime. The
apparent co-operation between the Dai Huen Jai and the maffiya
is a sign of the new order of things. Profits go up if the
gangsters aren't at war with each other. The gangsters are
beginning to realize this.
gangs will do business with Hells Angels. In Quebec the Angels
are in bed with the Irish mob and the Italians. The Russians,
perhaps the most ruthless of the lot, will do business with
intelligence reports indicate that the Eastern European crime
groups are involved in murder, extortion, drug trafficking,
counterfeiting, prostitution, money laundering, organized
immigration fraud and tobacco and weapons smuggling. Nice
far too long the politicians of this country have ignored the
threat of organized crime. Primarily because the citizenry
aren't really bothered by it, believing it doesn't affect the
it does. As evidenced by what happened in Toronto, organized
crime activity threatens our very banking system and the police
and the bankers are very nervous about it. So too, should you
Consider that the next time you hand your Visa card to a waiter.