INTERNET BANKING RESTRICTIONS IN FORCE IN COSTA RICA

7 December 2007

No transfers to anyone who is not already on the account holder's list as $8 million in fraud disclosed


Serious concerns about the viability of efficient Internet banking transactions in Costa Rica, home to many online gambling firms, have again surfaced according to a report in the English language AM Costa Rica this week.

The newspaper reveals that the Banco Nacional is now reacting to reports from over six months back. Apparently the latest moves come a day after a senior government prosecutor recommended that banks should cancel most Internet-accessible bank accounts.

Some confusion has been caused by what the bank says in a statement, and what it has implemented in practice. In its statement, the Banco Nacional said that it would only permit Internet transfers with a daily limit of 500 000 colons (some $1 000) unless a customer requested more. In addition, the bank said it would require customers to change Internet passwords every 30 days instead of every six months.

But in practice, the bank is restricting transfers to anyone who is not already on the customer's 'favourites' list. In order to be placed on the favorites list, the customer must make a transfer to that account. So the procedure effectively freezes electronic commerce, opines the newspaper.

Bureaucratic red-tape requirements when opening a new account have also grown, according to some customers. The additional paperwork includes either a statement from an employer showing a steady income or an accountant's certification of the individual's net worth. This is to prevent fraudsters from opening an account for the sole purpose of receiving an illicit transfer.

The chief prosecutor, Francisco Dall'Anese, has disclosed that Internet bandits had stolen at least $8 million and shipped the money via the Internet to Ethiopia or Romania.

In August investigators detained some 16 persons, claiming that they were part of a syndicate using the Internet to steal bank passwords and defraud bank clients. The arrests were related to 13 cases of Internet fraud, although officials admitted at the time that they have more than 150 active investigations ongoing regarding similar issues.

Spokespersons for Banco de Costa Rica could not be reached, and the bank's Web site showed no changes in policy earlier this week. However, there have been reports of denied transactions. Banco de Costa Rica is at the centre of last July's theft of $ 215 000 from the account of an expatriate employee in Costa Rica.

Both public banks have been criticised for slow reaction to complaints.

A.M. Costa Rica quotes one of its readers who lost $22 000 from a Banco Nacional account the same morning that the money was deposited. An arrest was made in that case because a person who had the funds transferred to his account showed up at a bank branch to claim the money.

A.M. Costa Rica has suggested in news stories that "phishing" might be used as a cover for inside bank thefts. Phishing is the technique of acquiring someone's bank information, including password, by electronic means, including fake Web pages. News stories have noted that some of the illegal transfers involve sums far in excess of the daily limits maintained by the bank.

That means thieves are able to circumvent the bank's security and override the computers. Local banks have been criticised for not adopting basic banking security procedures commonly in place in other countries.

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