Three arrested in first internet bank robbery

[William Knowles <wk () C4I ORG>]

http://www.independent.co.uk/news/Digital/Update/2000-08/first230800.shtml

By Jason Bennetto, Crime Correspondent

23 August 2000

Organised criminals are believed to have carried out the first
internet "bank robbery", stealing hundreds of thousands of pounds.

The online bank Egg, which has 1.2 million customers, is understood to
be the target of the professional hackers. Understood to be part of a
organised crime syndicate, the hackers are believed to have removed
several hundreds of thousands of pounds from Egg, which is owned by
Prudential.

If the fraud is confirmed it will send shock waves through the
Internet banking world, whose security has already been questioned
after a string of online security lapses that have hit several major
companies, including Barclays. If the online robbery is proven it will
also be the first time hackers have managed to remove money from a
bank.

Details of the cyber break-in remained vague last night, but the
criminal hackers are not believed to have taken money from
individual's accounts.

The suspected fraud came to light after officers from the National
Crime Squad carried out a series of early morning raids at seven homes
mostly in the Milton Keynes area in Buckinghamshire yesterday. Three
men in their 30s were arrested and were being questioned by police
last night.

Computer equipment and documents were taken from addresses in
Lidlington, Bedfordshire, Milton Keynes, Pottersbury,
Northamptonshire, and Newport Pagnell, Buckinghamshire. A small
quantity of drugs and cash was also seized.

The 7am raids, codenamed Operation Skoda, followed a six month inquiry
by the National Crime Squad into internet banking fraud. They were
assisted by computer experts from a civilian consultancy company.

Detective Sergeant Mick Randall, who led the operation, said: "This
has been a very complex investigation involving organised criminals
who we believe have been using the internet as a medium for committing
serious crime and for targeting the relatively new internet banks."

A NCS spokesman added: "They were professional in their approach. Our
concern is that this is not the only attempt to infiltrate Internet
banking. We believe it is an attempt by organised crime to exploit a
new area that could be worth millions potentially.

"They got away with some money. It was substantial but not huge
amounts. It is the first case of internet banking fraud that we have
dealt with. This is an area we are beginning to expand into as
organise criminals move into hi-tech crimes."

Egg was the first internet bank to operate exclusively via the
electronic highway and the telephone. It was an instant success and
has quickly attracted hundreds of thousands of customers and has
spawned scores of rivals. Egg floated earlier this year and has just
launched an insurance arm. A spokeswoman for the company declined to
comment.

Concern about the rise in hi-tech crime has prompted the Home Office
to set up a new squad to tackle the problem, which will include
officers from the NCS, the National Criminal Intelligence Service,
Customs and the Serious Fraud Office.


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