The Cayman Islands is being targeted by foreign criminals who come to the islands as tourists, but who intend to defraud the financial system, Crown prosecutors said Friday.
“This island has been targeted specifically,” Crown Counsel Toyin Salako said. “These people are specifically coming to the island to do that. They’re not coming here on holiday.”
Ms. Salako was speaking during the sentencing hearing for two Canadian nationals, Adam Mokdad and Hakim Benamara, who have pleaded guilty to conspiracy to defraud retail banks in the islands by using “cloned” credit cards to attempt to withdraw cash.
In this case, the most recent of several similar instances since 2013, the two men tried to withdraw cash from ATMs on Jan. 31 and Feb. 1
The suspicious cards, which turned out to be gift cards with stolen credit card information placed on them, were retained by the bank’s teller machines. Police found the two men at a local hotel where a quantity of Starbucks gift cards and a credit card reader were recovered.
The two men, who will be sentenced on Tuesday, did not withdraw any money.
Prosecutors said it appeared the two were after only relatively small amounts of cash.
In 2014, court testimony revealed a case in which a Malaysian defendant who was arrested here claimed he was being controlled by individuals in Kuala Lumpur. Kok Keat Lee had 78 cloned cards and was sentenced to 16 months in prison. He pleaded guilty to obtaining US$2,576.18 by deception.
Grand Court Justice Charles Quin said it was merely luck that the 78 bogus cards did not get used to defraud local businesses or banks. Three other defendants in the case also received 16 month sentences.
In another case before the court earlier this year, three Romanians, an American and a U.K. citizen were alleged to have conspired to defraud local banks using cloned cards nearly 400 times.
In that case, Ms. Salako said there were 59 attempts to take cash from an ATM at Butterfield Bank, although most of the attempts were unsuccessful. There were another 340 attempted withdrawals at Cayman National Bank.
At Cayman National, some $16,675 was taken in 51 fraudulent transactions. If all of the attempts had succeeded, nearly $100,000 would have been withdrawn, prosecutors said.
On Friday, Ms. Salako said the reason the Crown believes Cayman has been the target of credit card fraudsters in recent years is that, unlike many European and Canadian banks that have updated security procedures to detect cloned credit cards, Cayman financial institutions often do not have updated systems.
“This island specifically is quite vulnerable … because the ATM machines are not updated,” she said.
Last year, Butterfield Bank became the first local retail bank in Cayman to convert its cash cards to a chip and pin system.
Bank officials said an embedded microchip in the new cards, used together with a security code, will make the withdrawals more secure by validating both the card and the cardholder electronically.
The system would prevent the use of gift cards, which would not be recognized as the user’s.
The Butterfield cards still have a magnetic strip, since many retailers in Cayman do not yet use the chip and pin technology.