At least 10 local victims hit, hundreds of thousands of dollars stolen
At least 10 Cayman Islands residents have had their email accounts hacked and their bank details stolen by criminals who fraudulently transferred funds to foreign bank accounts.
One victim, in the largest single case in Cayman, had more than $300,000 stolen from their account. Several different Cayman Islands banks were hit by the scam. The only connection between the victims is that they used the same international email provider, which investigators declined to name.
It is understood that there have been victims of the same scam in other countries.
In every case in the Cayman Islands, the victim had previously sent legitimate wire instructions to their bank via email, along with a copy of their signature, requesting a cash transfer to a foreign bank.
The emails have been uncovered by hackers, who used the data to make a second wire transfer, moving the cash around a network of accounts and into the pockets of a fraudster, often before the crime has been detected.
“Hundreds of thousands of dollars have been fraudulently wired from the Cayman Islands to the U.S., Hong Kong, Singapore, Malaysia, Denmark and other jurisdictions. By the time attempts are made to recall the fraudulent wires, the funds have been collected and it is too late,” said police in a statement.
In many cases, it is the bank, not the individual, that foots the bill for the theft, though it is not clear if the banks are legally required to do so in the Cayman Islands.
No one from the Bank of Butterfield, one of the territory’s biggest banks, was able to comment by press time Thursday. The bank does reassure customers on its website: “If you are a victim of fraud, you have legal protection, which means that you will not be liable for any losses unless you have acted fraudulently or without reasonable care.”
Investigators in the Cayman Islands’ Financial Crime Unit are urging people not to use email to send their bank details – even if their bank allows them to do so.
They are also reminding banks to do due diligence on wire transfers that are conducted by email and to call customers to confirm that the transfer is legitimate.
Even that is not a foolproof defense against fraud. In one incident involving a Cayman Islands customer, investigators say the bank had called to confirm the transfer. However, the criminals had changed the telephone number on the wire instructions and arranged for someone to answer the call, telling the bank that the account holder was in a meeting and unable to come to the phone.
Detective constable Sherry Francella said it was clear that both the computer hackers and the fraudsters were from overseas. She said police in Cayman were liaising with Interpol and police forces around the world, as well as examining the IP addresses of the victims, in an effort to establish a connection.
Police internationally are facing similar incidents on a daily basis.
Computer-based account hacking has been highlighted as the ultimate 21st century crime, with bank robbers no longer required to don ski masks and arm themselves in risky high street heists.
“They don’t even have to leave their computer,” Detective Francella said.
She said the crime often involved middle men, known as mules, who allow their bank accounts to be used as the initial recipient of a fraudulent transfer in return for a small percentage of the cash.
The mules are not necessarily part of the criminal gang and are often unwitting participants, commonly recruited through small ads in local newspapers.
A typical scam involves a fake “secret shopper” assignment, recruiting people to allow cash to be transferred into their account. They are then asked to transfer the cash to “test the reliability” of a commercial wire transfer service, such as Western Union, and are allowed to keep a portion of the cash in return. The use of mules allows criminals to launder the money while remaining one step removed from the illegal transaction.
Once the cash is moved from the mule’s account, it is very hard to track, said Detective Francella.
“We are in touch with Interpol and with police in Malaysia, Hong Kong and elsewhere, but the money has often been moved several times before they can do anything. They are telling us they get hundreds of cases like this every day.”
The best defense for Cayman Islands residents against this type of crime is to not use email for banking transactions, she said.
“A telephone call to the bank could save hundreds of thousands of dollars and heartache in the long run,” police said in a statement.
Financial crimes officers can be contacted on 949-8797.