Major network of payment card fraudsters dismantled

With the support of Europol, 56 suspected members of a major network of payment card fraudsters (38 in Bulgaria, 17 in Italy and 1 in the Netherlands) have been arrested in a coordinated raid across Europe this week. This major police operation was led by Italy and Bulgaria and was coordinated from the Operational Centre at Europol headquarters in The Hague. Earlier arrests carried out since the investigation started brings the total number of suspects arrested up to 105.

During the successful operation, the key suspects involved in the organised crime group were arrested and an illegal payment card factory, in Plovdiv, Bulgaria,  raided. In Bulgaria alone, more than 300 police officers were involved and in total 400 officers were active on the day in an operation spanning several European countries.

The now dismantled organised crime group was very sophisticated and behind an advanced and very profitable scam which has affected thousands of card holders in 20 European countries. Their modus operandi (skimming) involved stealing people’s credit and debit card numbers and PIN codes by implanting card reading devices on ATM machines. It is estimated that this criminal group realised about 1 500 000 euros a month through their illegal activities - equal to 50 000 euros per day. This was done by conducting illegal transactions overseas - mainly in the Dominican Republic and Peru – using the skimmed cards’ details.

The investigation, codenamed ‘Cloning Connection’, was run by the Italian State Police (Polizia Postale e delle Comunicazioni & Squadra Mobile Teramo) and the Italian Carabinieri(Comando CC Antifalsificazione Monetaria and Gruppo CC Ostia-Roma) with valuable support from the Bulgarian General Directorate Combating Organized Crime. Since the start of the investigation, which began in December 2010, Italian law enforcement authorities performed sophisticated investigative measures, including cross-border observations and analysis of 240 000 phone calls. The investigative measures in Bulgaria, which were carried out under the codename SHOCK2, focused on the localisation of suspects and the identification of the illegal production of equipment used by criminals across Europe to skim payment cards. The Bulgarian authorities (Supreme Cassation Prosecutor’s Office, Counter Organized Crime General Directorate, and the Regional Directorates of the Ministries of Interior in Plovdiv, Sofia, Stara Zagora, Kustendil, Dobrich, Blaroevgrad and Pazardzik) focused on the cross-border dimension of the criminal structure by analysing contacts between group leaders and suspects active abroad. During the investigation the factory illegally producing skimming devices was identified near Plovdiv.

Complex analysis of illegal transactions, CCTV pictures and money flows were also carried out. Since the start of the operation two years ago, 49 arrests had been made in Italy, bringing the total number of arrests in relation to this operation up to 105.

On the action day, 11 December 2012, Europol’s Operational Centre was manned by representatives from Italian and Bulgarian authorities in addition to Europol analysts and specialists. The Operational Centre kept direct contact with squads in the field via Europol officers who were present with a mobile office deployed in Bulgaria. The mobile office enabled the fast exchange of intelligence via secure connections. Besides hosting operational meetings and running the Operational Centre, Europol’s experts have also provided significant levels of  analytical, technical and logistical support. The Europol officers involved will be part of the core team in the European Cybercrime Centre (EC3) which will officially open on 11 January 2013 at Europol in The Hague.

“The operation shows that Europol and its law enforcement partners are determined to crack down on this serious crime. Again, one of the most significant criminal groups active in this field has been taken out of business due to an excellent example of international police cooperation”, said the Deputy Director of Europol, Mr Michel Quillé. He added, “Payment card fraud is a global challenge. Criminals with access to compromised payment card data distribute the data worldwide. In such cases, cross-border cooperation and coordination of international investigations is crucial to effectively tackling this problem”.

Operation Cloning Connection is the latest significant example of a successful action against card skimmers. In July last year, 77 arrests related to another such operation - Night Clone - took place across Europe and in the U.S.A.

Compromising of payment card data

Organised crime groups are always looking for criminal opportunities and for some time they have been targeting the vulnerability of payment cards with magnetic strips. Within the EU, criminals’ work has been made more difficult with the full implementation of EMV technology (chip and PIN), but criminals have since exploited a loophole in these security arrangements by making illegal transactions with EU-issued cards in non-EMV compliant regions, such as the USA, South America and the Russian Federation.

Payment card fraud is an extremely lucrative business, as reported by Europol in its 2011 Organised Crime Threat Assessment (OCTA). The EU is the world’s largest market for payment card transactions and it is estimated that organised crime groups derive more than 1.5 billion euros a year from payment card fraud in the EU.