Senate sets investigation
BDO Unibank Inc. (BDO) advised customers on Friday to report unauthorized transactions from their accounts, saying the bank has obtained information about possible automated teller machine (ATM) fraud.
In an advisory, BDO said it has received reports of potentially compromised ATMs, with cardholders reporting losses.
In reaction, the Senate has called for a hearing to investigate the reported ATM glitches at the two banks to avert the spread or recurrence of similar incidents at other banks.
“Customers with unauthorized transactions may reach out to the bank via formal channels so that their cases may be properly investigated and, where confirmed as impacted, may be reimbursed,” it said.
BDO assured the public it is exerting efforts to protect its cardholders and their transactions.
Incoming Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said the central bank “will need to check it first.”
Espenilla is the current deputy governor for the Supervision and Examination Sector, which oversees BSP-supervised financial institutions like BDO. He will be taking over the reins of the BSP as governor on July 3.
This incident came a week after BPI deactivated its online services and ATMs that lasted for two days to rectify an internal error that double-posted transactions made between April 27 and May 2.
BDO claims ‘an ordinary incident’
In a statement, BDO President Nestor Tan downplayed the glitches, saying such incidents are nothing out of the ordinary.
“ATMs are compromised every now and then, and banks take the precautionary measure of disabling cards if
we have reason to believe they may have been compromised,” he said.
Tan added that issues such as this will be addressed with the EMV implementation, referring to the global standard for chip-based credit and debit card transactions that are supposedly more difficult for fraudsters to hack into, compared with magnetic strip cards. The embedded chip contains unique transactions details that are activated each time the card is used. It is also protected by additional layers of security.
“This is a security protocol, moving cards from magnetic stripes to chips, which will make them secure. It is just a matter of time until the industry completes the implementation,” he said.
The BSP has set a June 30 hard deadline for banks that are not yet EMV-compliant to push the banking industry towards full adoption of the technology at a much faster pace.
In the interim, the central bank said non-compliant or partially compliant banks are mandated to book provisions for probable fraud losses starting September 30 this year until full compliance is achieved.
Senator Francis “Chiz” Escudero, chair of the senate committee on banks, financial institutions and currencies, however, said his committee has decided to schedule the hearing for June 21, following the latest reports about BDO’s ATMs.
The BPI glitches had already prompted Senate President Aquilino Pimentel 3rd to file a resolution asking the Senate committee on banks to look into the incident and determine the real reason for the error.
According to Pimentel, the system error poses serious risk as it occurred even after the BPI assured the public that the so-called internal data processing error was not a case of hacking.
He also insisted that local banks must be on the lookout for a possible cyber attack as hackers worldwide have already victimized a number of banking institutions despite safeguard measures to pre-empt the commission of the crime.
Pimentel said he had told Escudero that his committee also needed to investigate the BDO ATM incident given that the security and integrity of the banking sector is at stake.
“The matter of the security and integrity of our banking sector has now become an urgent topic to examine and be transparent about,” he added.
Apart from the BPI and BDO incidents, the senate president also cited the recent arrests of foreigners caught tampering with ATMs.
He added that the incident should give sufficient reason and justification for the senate to hear and investigate the matter.
Escudero, for his part, said that given the reported BDO incidents which followed the systems error at the BPI last week, he is now compelled to call for a hearing on the matter in order to apprise the public of the real status and condition of the banks.
“Investigation is also needed to placate speculation on this issue that may negatively impinge upon or affect the banking sector as a whole,” Escudero added.
with JEFFERSON ANTIPORDA