Billion dollar online banking scam unravels

Authorities have arrested two individuals in Switzerland and another two in San Francisco in connection with an Internet banking scam worth some $US3.9 billion, said the International Chamber of Commerce (ICC), which monitors banking fraud.

The scam involved Web sites designed to mimic those of transaction clearing system Euroclear France SA and financial information service Bloomberg, said Chris Spillett, an information analyst at ICC's commercial crime bureau.

"What [the fraudsters] have done is gone to a free Web server,, and mimicked the sites, for example,," said Spillett. Investors were lured into transferring funds, believing they were dealing with reputable institutions.

Several apparent victims of the scam have come forward, said Spillett. "One is a US businessman who's lost about $US70,000 ... he's gone bankrupt; it's quite serious really."

Spillett gave no details about the arrests, but said he believes the suspects were involved in the scheme but were not its masterminds. "I think it will be quite impossible to track down who's behind this," he said.

ICC, a membership group that represents banks, brokerages, and financial institutions, has no regulatory powers of its own, but passes information about scams to the relevant authorities, said Spillett. The group has informed the US Securities and Exchange Commission about the current case.

"We're very happy to see that the ring has been broken," said Euroclear spokesman Conor Leeson. He added that the ISP (Internet service provider) hosting the fraudulent sites shut them down "within days" of being made aware of them late last year.

But perpetrators of such scams are hard to identify, and can easily jump to another ISP, he said. "How can you monitor something as large and unwieldy as the Internet?"

"Unfortunately it's not new to the Internet, scams of this nature. The Internet is a tool, which unfortunately seems to facilitate fraudsters. It's something all financial institutions need to be aware of," Leeson said.

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More about BloombergEuroclear FranceFinancial InstitutionsICCInternational Chamber of CommerceSecurities and Exchange Commission

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