There is a growth of financial crimes in China in recent years, and their scale, form, and complexity have greatly increased. Many large-scale illegal internet finance fundraisings have a scale of tens of billions of RMB; the scale of the P2P platform is quite huge as well, ranging from tens of millions to billions. These are all "concentrated" major cases; the main criminal entity is often an institution (i.e. company), and it is not difficult to catch the culprits.
However, another type of financial crime is easy to detect, but difficult to crack down and rectify; this is the crime concerning bank cards. The main reason is that bank card crimes are highly dispersed, like locusts all over the wilderness, which is difficult to eliminate from the roots.
According to China’s UnionPay, in 2017, UnionPay accumulatively assisted the public security organs in investigating and handling 31,800 cases, and inspected that about 936,600 bank cards were involved; the amount of money investigated accounted for RMB 458.2 billion. In 2017, the UnionPay online fraud rate was 1.36BP, which was significantly lower than the global and Asia-Pacific average. However, since 2018, the statistical analysis of the UnionPay Big Data shows that telecom fraud cases, bank card thievery, illegal cashing, fraudulent use of other bank cards, and online consumer fraud cases are still quite common. The modus operandi has the following characteristics: first, the telecommunication fraud situation is serious, of which more than 90% are caused by the disclosure of personal information, which has become the main source of crime; second, the various risks are intertwined and the internet channels are used to create fake cards through apps; there are also unlicensed institutions encroaching on merchants’ funds; third, the crimes in the mobile internet payment has increased significantly; the fraudulent use of social network platforms, fraudulent apps, and malicious QR codes have become one of the most worrying issues for users.
In addition, UnionPay also said that with the increasingly complex criminal activities in the economic field, financial payment crimes have emerged continuously, and show new features such as high technology, fast dissemination, and cross-border cross-network implementation. UnionPay has linked the national public security organs to strengthen the analysis of bank card crimes, and jointly established the Joint Laboratory for Combating and Prevention of Financial Payments Crimes with the Ministry of Public Security, conducting research on fraudulent card identification services, and bank card crimes, thereby aiding the prosecution of bank card criminal activities.
Although UnionPay and the Chinese public security department have begun to crack down on bank card crimes, the actual situation of related crimes may exceed the imagination of the regulatory authorities, and the harm has reached the level that may cause systemic financial risks. Some media have sent reporters as undercovers in bank card frauds for several months, and the facts found are astonishing. According to reports, in Guangzhou and Shenzhen, there are criminal organizations that are specifically counterfeiting bank cards; the bank card replicator can be obtained with mere RMB 8,000. When the bank card replicator is connected to the computer, a card copying program will appear on the desktop of the computer. Once the bank card is swiped on the replicator, the information in the card, including password can be duplicated on another card in just 10 seconds!
A certain bank card information trader has sent a directory through QQ to display the bank card information in hand. Among them, there is 38,000 depositor information in Shanghai, 17,500 in Shanxi, 150,000 in Shandong, and 40,400 in Zhejiang, covering almost all provinces and cities in the country, and involving various banks, containing millions of information of leaked bank card information. The information includes the bank card number, card balance, bank card password, the account opening date, account holder's name, address, ID card number, and even the phone number. According to media verification, every piece of information purchased is accurate, including the name, address, card number, and phone number; even the bank card password is no longer a secret.
Other than copying and stealing bank cards, there are also the problems of withdrawing money and money laundering. In Xuzhou, Jiangsu Province, “money launderers” who have copied bank cards can whitewash “black money”. Some media reporters saved RMB 10,000 in the copied bank card in advance, and the money launderers took out the POS machine and began to check the balance of the card. After withdrawing the money, the money launderer asked the reporter to confirm the card ticket and then give the cash to the reporter. Money launderers generally take 40% or even 50% of the amount of money spent. The reporter checked the bank card and found that RMB 10,000 had been withdrawn, but where it was taken, what machine was used to take it but could not be found out, and RMB 10,000 had disappeared. The money launderers said that the POS machines used were all modified ones; the entire “money laundering” process is only a few minutes; the whole transaction process is conducted in cash, and never through bank card transfer.
It is worth noting that in the past, most of the bank cards that were replicated and stolen were mostly magnetic stripe cards. The magnetic stripe card design was flawed and the security level was very low; the bank has updated its technology and implemented chip cards. However, the criminal syndicates are said to be able to crack this technology, and the replicates of the chip cards can now be produced.
If the above media investigation is true, it will be a frightful message. Regardless if you are a multi-millionaire or the richest person, with bank card fraud everyone might be ended up in poverty. With so many financial experts and people studying finance, is there any meaning in their work? In reality, the financial system is a quagmire, and any brilliant statistical figure can be completely lost in such quagmire.
Anbound research team reminds that some of the basic facts in the above information deserve attention:
(1) Internet security measures of the existing financial system are completely ineffective, and millions of confidential information are traded publicly; (2) internet security regulations of the existing financial system are completely ineffective, and the leakage of bank customer information has been happening for decades; (3) "chip card is safer" is nonsense; (4) things that criminals can do, China’s enemies can do it more easily; while China's financial security is not completely unsound, it is not built on solid ground; (5) China's financial security may be the worst in the world; in other countries the victims have their money off the credit cards stolen; the money stolen for the Chinese victim here is the bank card’s money, which means the victims’ entire property. (6) Network passwords are of no use at all; thanks to QQ and Taobao, everything is publicly tradable.
Final Analysis Conclusion:
Seeing the above-mentioned shocking information, perhaps the relevant departments should quickly adjust their thinking. In addition to cleaning up and rectifying, it is also necessary to do something more urgent; should such an urgent matter be focusing on cleaning up the problems of the financial system, or crack down on bank cards’ information leakage problem? In our view, the former is related to the health of the financial system, while the latter is related to the existence of the financial system. The relevant departments should weight on these two issues and take action.
