A slew of arrests of foreigners in connection to ATM fraud has exposed the vulnerability of Nepali customers and lax security mechanisms opted by the banking sector in the country. 

On Sunday, the CIB arrested two Indian nationals—Niranjan Mehta, 33, and Itedar Khan, 23,—for illegally drawing amounts from customers. The duo would feign innocence on using the ATM and ask other customers to help them. Central Investigation Bureau has arrested 11 foreigners in the past two years on charge of ATM hacking and illegal withdrawal of money. In the meantime, they would press extra buttons without the notice of customers and eventually withdraw the amount. 

On November 10 last year, a CIB team nabbed two Turkish citizens Muhareem Uzun, 52, and Selahattin Yabar, 32, who had flown into Nepal with high-tech gadgets including  a card skimming device, hidden cameras and card writers. They had brought along ATMs of foreigners and also cloned the cards of Nepali customers before withdrawing hefty amounts. 

Nine Europeans, including four Romanians, three Turks and two Bulgarians, have been arrested in the past two years, according to the CIB. 

“Increasing numbers of people are using banking channels and ATM is a most convenient way for cash withdrawal,” said CIB chief Deputy Inspector General of Police Nawa Raj Silwal. “And innocuous customers have often been targets of those fraudsters.” In an interesting case in November 2014, Mehmat Gulen, a Turk, was found to have stolen data using a card skimmer device and cloned ATM cards to withdraw money from various banks in Nepal, India and Thailand. While in Nepal, Gulen had used fake Master Card, Visa debit and credit cards to sweep away Rs2.6 million and $5,000 from ATM kiosks of Apex Development, Himalayan and Standard Chartered banks.

The CIB often launches investigations whenever victimised individuals and banks lodge complaints about fraud or suspicious transactions. 

Police believe that sophisticated hackers attach devices like hidden cameras or fake ATM keypad to the ATM machines to skim pin numbers. They would then use the data to clone the cards. They have seized a laptop, mini magnetic strip reader/writer and numerous ATM cards from the hackers like Uzun and Gulen. Amid the growing security threats, the banks have been constantly urging customers to change their pin numbers at regular intervals while keeping tab on any suspicious interactions in ATM booths.

Gyanendra Prasad Dhungana, CEO of Nepal Bangladesh Bank, believes that basic precautions such as secret handling of pin numbers will be enough to secure one’s bank account. “Apart from the customer awareness, our banks have upgraded to chip-based ATM cards. But the problem with this is that the entire ATM machine has to be replaced and this might take some time,” said Dhungana, who is also the vice-president of the Nepal Bankers’ Association.