Wed, Oct 15, 2003 - Page 1 News List

Banks to review security, scrap magnetic cards

By Joyce Huang and Ko Shu-ling  /  STAFF REPORTERS

The card-swipe entry system on doors to rooms of automated teller machines (ATMs) will be scrapped by next Monday to prevent criminals duplicating cards, financial authorities said yesterday.

"Following the recent card fraud, the card-swipe entry system has proven to bring more security concerns than convenience," Minister of Finance Lin Chuan (林全) told a press conference yesterday.

Signs will be posted on doors to bank lobbies containing ATMs to caution card users about the policy change, Lin said. The measure is one of the conclusions reached by the Bankers' Association yesterday.

Lin made the remarks after the Cabinet expressed its expectation that the association and the finance ministry will come up with a scheme to punish those responsible and compensate those who lost money as a result of the fraud.

"The Ministry of Finance should make efforts to find out who is responsible for the mess and mete out appropriate punishments," Cabinet Spokesman Lin Chia-lung (林佳龍) quoted Premier Yu Shyi-kun as saying at the Executive Yuan.

The ministry dismissed speculation that high-ranking management at the Bank of Taiwan would be reshuffled, but it promised to safeguard the interests of depositors. After the police gather all the details of the widespread fraud, other banks may also be entitled to seek compensation from the state-run Bank of Taiwan, Lin Chuan said.

All domestic banks have agreed to bring forward by six months plans to replace ATM cards with integrated circuit (IC) cards, said Gary Tseng (曾國烈), the ministry's director-general of the Bureau of Monetary Affairs.

"The IC card replacement plan will be completed by the end of next June, while magnetic cards will no longer be used after the ATMs are upgraded to accept only IC cards by the end of next year," Tseng said.

Financial authorities believe that IC cards with multiple encryption systems are more difficult to forge than normal magnetic cards. The plan was originally scheduled to take up to five years.

The Bankers' Association, which plans to establish a working group and coordinate with the police to crack card fraud, asked banks to keep a log of how their ATMs are used to prevent irregularities, Tseng said.

According to Lin Chia-lung, Yu has ordered the National Police Administration to form an investigation task force to crack the case as soon as possible.

"As most financial crimes are committed via electronic or high-tech devices, the administration should study various types of financial crimes and hammer out pre-emptive measures," Yu said.

Yu also expressed concern about accounts opened using false names and requested the finance and interior ministries to study the possibility of providing information on such accounts to banking institutions.

To prevent similar problems in the future, the finance ministry must conduct a full-scale review of the financial system, Yu said.

"We plan to set up an inter-ministerial special task force to deal with the crackdown on financial crime that employs high-tech skills to restore financial order," Lin Chuan said.

To avoid causing panic, the finance minister refused to update the media on losses from the ATM card fraud, but he expressed optimism about the police's ability to catch the criminals.

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