Crime Tourism – ATM Skimming Operations

We’ve all been there, choosing our next travel destination. What should be a fun and exciting experience, can sometimes be stressful and overwhelming as there are many factors that can impact on our choice of a travel destination, to name a few: budget, travel companions, timing, weather and popular attractions.

For some people, the decision factors that go into choosing a travel destination are completely different. These people are looking at:

  • Population density
  • Law enforcement officers per capita rates
  • Number of financial institutions
  • Number of gas stations
  • Proximity to airports
  • Different highway routs
  • Popular shopping centers
  • “Cash only” rental properties
  • Used vehicle sales yards
  • Western Union points and many more.

Those people are “Crime Tourists.”

Usually, when we hear the combination of the words “crime” and “tourism” they are being referred to in a context of a tourist falling victim to crimes, but there is another side to that coin. A side which represents crimes committed by the tourist. Crime tourism has many faces and sophisticated schemes. In this article, we will share an overview of one aspect of crime tourism – ATM skimming.

What is ATM Skimming?

ATM skimming is a type of fraud which occurs when an ATM is compromised by a skimming device, usually a card reader being disguised to look like a part of the machine. The card reader saves the victim’s card information and a hidden camera captures the pin code. In a later stage, the stolen card data is replicated into a counterfeit copy for fraudulent use.

Who are these ‘Skimmers’?

For the past decade, an organized crime syndicate has been spreading its operations worldwide with Financial Institutions from the UK, East Europe, South America, Africa, Israel, Thailand, India, and the U.S. all reporting a similar narrative – a Romanian passport holder arrives at his “vacation” destination and skim different devices (ATMs, gas pumps and other POS terminals), stealing money from unsuspecting victims and then launder their funds using cryptocurrency right before they flee the country.

Experts estimate ATM skimming fraud cost consumers more than $1.3 billion annually worldwide. In 2018, there have been more than 25 reports across 17 states of ATM skimming, allegedly being made by Romanians (and these are only the ones who got caught and reported).

The Romanian mafia is no different than any other organized crime; just like any legitimate businesses, it’s designed as a pyramid structure. The Mafia has advisors who work closely with the ‘Boss’ to assign tasks to different crews, their superiors (captains), and soldiers who carry out the work.

In ATM skimming operations, there are three important figures:

  • Domestic Operator (Recruiter): The recruiter is responsible for finding the perfect “target” to carry out the operation. It could be a 20-year-old student who needs a “summer job” to pay for college tuition, a father who’s got into financial hardship and needs to provide for his family, people who owe the Mafia money, and generally anyone who the mafia can extort.
  • Foreign Head of Operations: The Foreign Head of Operations is located in the targeted country and is responsible for setting up the shop, buying/making the skimming devices, finding lodging and transportation solutions, training the soldiers, and gathering intel on potential targets.
  • Soldiers: Carry out the operation on a chosen target and usually work in groups of 4 to 6 people.

How does skimming work?

The skimming operation consists of four stages:

  1. Placing the skimming device – In this stage, two soldiers arrive at the target location, usually after branch working hours, and place a skimming device and a hidden camera on the ATM.
  2. Removing the skimming device – Usually, anywhere between 12 to 72 hours after the skimmer was placed, two different soldiers arrive at the target location and remove the device and the hidden camera.
  3. Using the counterfeit copies – The Foreign Head of Operations will prepare counterfeit copies from the data that was stolen and will send the “soldiers” to various locations to withdraw the funds.
  4. Moving dirty money back to the homeland – placing “dirty” cash back into the financial system, converting it to cryptocurrency, and sending it back to the Mafia.

Why is the US a perfect for ATM skimming?

Loretta Napoleoni, a Macroeconomist studying the connection between terrorism and economy, shared that by interviewing dozens of terrorist and organized crime members she arrived at the following conclusion:

“The ideology and the political vision is decided by the leadership, which generally never more than five to seven people. All the others do, day in and day out, is search for money.”

It may surprise you to learn that about 23% of U.S. citizens still make all their purchases using cash. According to forecasts, by 2021 cash will represent 11.2% of the U.S. GDP.

Since financial institutions are slow to adopt technologies and a 15-year-old machine running a Windows 95 OS is fairly common, the U.S. is the perfect location for skimming. Even though we’ve seen some interesting “Anti-skimming” solutions for ATMs in recent years their have not been implemented in a grand scale.

The Mafia is counting on the fact that it’s impossible to prevent a single nation from visiting a country simply because some of them might end up being involved in illegal activities during their stay. A customs declaration form asking for the purpose of the visit will unlikely read “I’m here to steal!”

The Dark Web allows all skimming devices and tools to be shipped to any address in the country and at the same time find a lodging solution while staying anonymous. This usually isn’t a problem because the Foreign Head of Operations can set up shop and carry out the skimming operation immediately.

Financial institutions don’t have the authority to arrest criminals, and local law enforcement in most cases don’t have the much-needed knowledge or are too slow to react. In cases of successful arrests, the FBI and the U.S. Secret Service do a great job in putting pressure on these criminals to turn in their superiors and even finding higher members in the organization’s chain of command, linking ATM skimming cases to Euro-Asian crime groups.

The issue with getting to the top of the pyramid is that the arrested criminals are afraid to cooperate because it would put themselves and their loved ones in jeopardy. For that reason, they plead guilty and are sentenced to do a relativity short jail time following by deportation back to their home country. Since the soldiers are disposable and new recruits always readily available, the Mafia has zero risk for exposure and incarceration.

In summary, controlling skimming fraud requires patience, ongoing cooperation of financial institutions, software & hardware solutions, and finally local law enforcement. This effort should be led by a federal entity with the support of the justice system to create a centralized solution for monitoring and reacting.

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