Poor Automatic Teller Machine (ATM) security has made Australia the laughing stock of the world, according to eastern European fraudsters talking to NSW Police.
Criminals say Australia is a soft target because its banks currently do not incorporate EMV (Europay, Mastercard and Visa) chip integration into ATMs, according to NSW Police fraud squad detective superintendent Colin Dyson, speaking at the Cards and Payments Australasia 2011 conference in Sydney today.
EMV chips exist on modern credit cards and are more secure than magnetic strips. Integrating the chips into ATMs would eradicate many unsophisticated attacks that exploit magnetic strips, and force fraudsters to attack EMV chips with more complicated man-in-the-middle interception techniques.
EMV technology is used in most ATMs across the world, but not currently in Australia.
"Romanian crooks have told us Australia is the laughing stock of the world because of the technology in the banks," Dyson said.
A Pakistan-based fraudster echoed similar claims to the NSW Police.
Australian ATMs must be capable of reading EMV chips by 2014 as a requirement of national law. The Commonwealth Bank already has plans to roll out EMV across its 3400-strong ATM fleet under a three-year project, according to Commonwealth Bank electronic crime executive manager Matthew Keaney.
Visa director of country risk managment Ian McKindley said that Australia, Singapore and New Zealand are the only countries not yet required to have EMV in ATMs.
"I have a real concern for Australia," McKindley said, "because once the United States starts chipping comes online, you know where the fraud is going to migrate."
"We are going to harden the rest of the world against fraud, and criminals will go where it is soft."
But the US is struggling to decide who will foot the bill to move to EMV chips, which will also be installed in point-of-sale terminals.
Visa said credit card counterfeit fraud has dropped 60 per cent thanks to EMV chips.
Many of the fraudulent transactions affecting Australians come from Eastern Europe, where criminals buy credit card details harvested by Australian fraudsters, Dyson said. He added that the proceeds of some 50 to 90 per cent of fraud is sent offshore, and that at least 43 per cent of fraud is identity crime.
He said that there is a limited chance for fraud to be conducted in Australia and details are usually traded with overseas criminals who commit the bogus transactions.
Updated at 4:00pm 28 March 2011: comment from Visa added.