News Risk Management22 Aug 2018

India:Cooperative bank loses $13.5m in two days to hackers

22 Aug 2018

India's Pune-based Cosmos Bank lost INR94 crore ($13.5m) through a malware attack on its server over two days and the cloning of thousands of its Visa and Rupay debit cards, reported the Economic Times.

According to chairman Milind Kale, the fraudulent transactions were carried out on 11 and 13 August by hackers originating in Canada. In two days, they withdrew a total of INR78 crore from various ATMs in 28 countries, including Canada, Hong Kong and a few ATMs in India, and another INR2.5 crore was taken out within India," he said. On August 13, hackers again transferred INR13.92 crore in a Hong Kong-basd bank via fraudulent transactions.

The bank discovered the incident on 11 August when there were unusual repeated transactions taking place through Visa and Rupay cards at ATMs. It has since filed a police report and appointed a professional forensic agency to investigate the fraud.

It has also suspended ATM operations, Internet and mobile banking services. Mr Kale said customers should not panic as ‘savings, term deposits, recurring accounts of all the stakeholders are fully safe.

He said the malware attack was on the operative switch for payment gateways of the bank’s Visa and Rupay debit cards, while the core banking system was not affected.

According to reports, the core banking system of Cosmos bank receives debit card payment requests via the switching system, but during this malware attack, a parallel proxy switch was created and all the fraudulent payment approvals were passed by this proxy system.

The stolen money is apparently still within the account of the Hong Kong-based bank, and Cosmos Bank is in touch with them to request that they stop movement of the money.

Mr Kale said the attack was not against any bank but against the banking system and was done at international level in a very "coordinated way". As many countries are involved, getting the funds back will completely depend on coordinated efforts of all the agencies.

Final figures of the losses incurred by Cosmos bank will be known only after reconciliation with Visa and Rupay.

Cosmos Bank, established in 1906, is India’s second oldest and second largest cooperative bank behind Saraswath Cooperative Bank Ltd.

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