Bank stops scams in tracks / 100 accounts frozen after warning system detects dodgy transactions

A Bank of Nagoya computerized account monitoring and warning system aimed at preventing telephone billing scams has successfully frozen more than 100 accounts suspected of being used in such scams over a 17-month period through March.

The computerized system, jointly developed by the second-tier regional bank and NEC Corp., is the country's first of its kind and has been used to detect unusual transactions that are telltale signs of such scams.

The system checks transactions if they fall into 17 different categories, which include the frequent withdrawal of money from an account that has accepted deposits from a number of people, using ATMs in remote areas and the withdrawal of the maximum amount possible from an account that has been inactive after large deposits have been made.

If an abnormal transaction is detected, bank personnel contact the owner of the account and other banks from which deposits are made.

If the Bank of Nagoya concludes after investigating those involved that the accounts are highly likely to have been used in a crime, the bank informs police and freezes the accounts to prevent further activity.

In one case, when the bank contacted an owner of an account where suspicious transactions were detected through the alarm system in March, the owner said that the bank book and the cash card were lost. So the bank froze the account.

However, as requests to transfer hundreds of thousands of yen into the account were made even after the bank's inquiry, the Nagoya bank contacted the banks where the transfer requests originated, and concluded that the transfers were requested as the result of a telephone billing scam. The money that was requested to be transferred was then returned to the senders.

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Other banks should follow suit


More than 100 billion yen is believed to have been swindled as a result of telephone billing scams over the past four years.

In response to the proliferation of the scams, the government in January last year introduced fines of up to 500,000 yen for customers who received payments to let others use their accounts under their name, and allowed people to transfer only up to 100,000 yen in cash using ATMs.

Despite these measures, about 25.1 billion yen was swindled from credulous customers last year.

The Bank of Nagoya's system is groundbreaking because it can quickly freeze a suspicious account, which is an important tool used by fraudsters.

The bank is said to have spent several tens of millions of yen on the development and introduction of the system.

However, major commercial banks are reluctant to introduce a similar system due to the cost involved.

Meiji University Prof. Masaru Takagi, who worked for Fuji Bank that was merged with the Mizuho Financial Group, said these costs should not be the only concern for the banks.

"Because financial institutions have a larger social responsibility, the Japanese Bankers Association should urge its member banks to introduce such a system," he said.

With this kind of fraud only likely to continue, financial institutions will consider employing a similar system.

(May. 10, 2008)

http://www.yomiuri.co.jp/dy/national/20080510TDY02307.htm