The onshore and offshore courts of the United Arab Emirates (UAE)—that is to say, the courts in “mainland” UAE and the courts in the free zones of the UAE, respectively—have issued a number of recent convictions for fraud. In one noteworthy case, the Dubai Court held a local bank responsible for an AED 4.7 million (~USD 1.3 million) SIM card swap fraud, serving a reminder to all banks and telecommunication providers of the need to adopt rigorous security protocols.
Recent Onshore Enforcement Activity in the Emirates of Ajman, Dubai, and Ras Al Khaimah
Just this month, the Ras Al Khaimah Court convicted four fraudsters of the theft of more than AED 12,000 (~USD 3,270). In order to gain access to the accounts of unsuspecting victims, the fraudsters impersonated banks and required customers to confirm personal details over the phone in order for accounts to be left active and open.
In November 2019, 25 people were arrested by authorities in Ajman, and another four by authorities in Dubai, for bank fraud. The fraudsters were found to be running four separate call centers that, similar to the scheme prosecuted in Ras Al Khaimah, would call customers and deceive them into divulging bank account details by insisting their accounts or cards needed to be updated. All 29 are due to stand trial.
In a spate of other recent cases, fraudsters have deceived victims into disclosing personal or banking data by claiming the information is necessary in order for cash prizes to be paid out or other luxury item prizes to be redeemed. In some cases, fraudsters made telephone calls or sent text messages purportedly on behalf of a UAE telecoms provider, requiring an urgent response else the relevant prize would be forfeited. In other cases, fake promotions have taken root on social media platforms. This embryonic fraud typology has triggered several recent warnings by UAE authorities, including Dubai Police’s Anti- Economic Crimes Department and the UAE Federal Customs Authority.
Dubai Court Holds Bank Responsible for Customer Losses following Identity Theft
In December 2019, the Dubai Court held a bank responsible for the losses of its customer, who was the victim of a SIM card swap fraud. According to an English language news report, the bank failed to adopt security protocols rigorous enough to prevent its employees from revealing confidential customer information to external parties. The losses at issue amount to approximately USD 1.3 million.
The SIM card swap fraud involved impostors, already in possession of sufficient individual personal information to report a phone as lost, defrauding a telecoms provider into issuing a replacement SIM card. The imposter then can access any online service that requires security codes to be sent to a user’s mobile phone, such as banking services. In that sense, SIM card swap frauds are considered a form of identity theft.
In this case, the imposters immediately zeroed the victim’s account. As the identity of the imposters was unknown, the victim instead pursued a civil case against the bank. The bank’s defence, that the victim should have objected to the fraudulent transaction within 30 days of the date of the relevant bank statement, was rejected by the Court. Instead, the Court held that a bank employee illegally revealed confidential data pertaining to the victim, including official documents and contact numbers, to third parties.
The Dubai Court judgment against the bank, related to the SIM card swap fraud, is significant in that it makes a number of recommendations, to banks and telecoms providers, in order to avoid future liability. The recommendations include developing and deploying stricter security measures, conducting continuous transaction monitoring, upgrading PIN numbers, and running more rigorous background checks on employees.
The fight against fraud in the UAE remains very much a work in progress and the scope of the issue cannot be understated. Indeed, a recent report estimated that upwards of 800 bank fraud cases had been reported in Dubai alone between 2016 and 2019. Dubai Police and one local bank are collaborating on an important #SecureYourAccount campaign that aims to educate the public as to how to avoid falling victim to fraudsters.
In future, a significant commercial application of blockchain technology will be fortifying the risk and security management processes of financial institutions. Indeed, one Dubai bank has reported that its innovative blockchain-powered check clearing system has disrupted check fraud by 99%.