Industry Insights with Anis Ahmed

Finance & Banking , Fraud Management & Cybercrime , Fraud Risk Management

A Strategic Approach to Stopping SIM Swap Fraud

The UAE No Longer Has Cases of SIM Swap Fraud - Here's Why
A Strategic Approach to Stopping SIM Swap Fraud
(Photo: Oleg Magni/Unsplash)

SIM swap fraud continues to cause substantial financial losses for both consumers and financial institutions, undermining the integrity of the financial ecosystem. According to the FBI’s IC3 Report, the U.S. saw 1,075 reported incidents, resulting in losses totaling $48.7 million.

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In the United Arab Emirates, the banking industry has incurred considerable losses from this fraud scheme. The syndicate behind this fraud was well-organized, diligent and sophisticated.

As one of the leading banks in the UAE, we worked closely with law enforcement agencies, conducted sting operations and helped apprehend nearly two dozen syndicate members, but we failed to reach the top layer of the syndicate. This incident remains one of the few cases in my career where we could not apprehend the key leaders behind the SIM swap fraud.

To tackle this challenge, we formed a cross-functional working group with representatives from antifraud, information security, technology, business and operations teams. We evaluated solutions such as voice biometrics and physical tokens but realized that implementing new technology would take months - a time frame we could not afford due to the high frequency of fraud incidents. This was in early 2015, and the process of integrating new technologies was not as sophisticated as it is today.

Recognizing our limited options, we employed the best-known anti-fraud weapon: making it harder for the criminals to commit fraud.

We began by deconstructing the modus operandi of SIM swap fraud, dissecting its intricate layers to identify vulnerabilities and potential countermeasures.

Understanding SIM Swap Fraud

SIM Swap Fraud Workflow (Image: Anis Ahmed)
  • Step 1: The fraudster obtains the bank account number and mobile number of the victim. This information can be acquired through phishing, social engineering, the dark web or online research. In some instances, information is obtained from the victim’s bank itself.
  • Step 2: The fraudster manipulates the victim's mobile operator by either impersonating the customer or bribing the mobile operator staff to issue a duplicate SIM on the customer’s number.
  • Step 3: The fraudster gains access to the victim's phone number, enabling them to reset login credentials for email and online banking accounts, including MFA codes - OTP. Some banks may also require callers to answer security questions, such as their mother’s maiden name, birthdate, address, last transaction or branch name, which the fraudster may already know, for resetting online banking credentials.
  • Step 4: The fraudster now has complete access to the victim's bank accounts, enabling them to transfer funds, make purchases, or avail other financial facilities.
  • After documenting the modus operandi layer by layer, we explored the available controls. As a bank, preventing the theft of customer data was our top priority. But we had no influence over the telco operators' processes when issuing replacement SIM cards. In summary, we did not have control over Steps 1 or 2.

    The exploration process required us to look for controls in Steps 3 and 4. We reviewed the information required from customers for enrolling or resetting the online banking process. It typically involved either requesting basic dynamic security questions or sending MFA codes via phone or email. At this point, it was evident that these controls lacked effectiveness, as fraudsters occasionally managed to trick or bribe bank staff into divulging certain information.

    It was essential to identify information exclusive to the customer, which would not be available in bank systems, social media, emails or even the dark web. We identified two datasets - the CVV number on the back of the card and the debit card PIN. These two datasets were available in the bank's system in encrypted form. We used the PIN as a unique piece of data known only to the customer, considering CVV numbers could be exposed during regular offline transactions.

    We made process enhancements to the online process of banking enrollment and resetting. Now, whenever a customer was required to enroll or reset their online banking credentials, we mandated entering the PIN on both the call center IVR and online banking platforms. Within a few weeks and at minimal expense, we reengineered the process flow in our systems.

    That was it - the fraud ceased! To this day, no SIM swap incidents have been reported since implementing this change.

    Factors to Consider

    One might counterargue: What if the fraudsters socially engineered the PIN from the customers? That is possible, but there are several factors to take into consideration.

    Fraudsters are cautious about their return on investment. SIM swap fraud is a high-risk endeavor, and they typically expect higher rewards. It involves the risk of physically visiting telco operator premises, obtaining genuine looking customer identification documents, using employees' mules, or bribing bank or telco staff. Their targets are mostly high-balance accounts, including both bank accounts and wallets. Over the years, we have learned that customers with substantial account balances might often share bank details and OTPs during social engineering schemes, but they typically refrain from sharing their PIN due to the perceived risk involved.

    Even if a small percentage of customers were to share their PIN, the risk would still be minimized, as the majority of potential victims would refrain from sharing their PIN. The fraudsters would need to compromise at three levels instead of two: data gathering, compromising the telco operator and persuading the customer. If customers detect something suspicious, they may become alert, resulting in fraudsters wasting their investments.

    The aim was to effectively deter fraudsters and protect customers. What could have taken months or even years was addressed within a few weeks by simplifying our focus on the fundamentals of this fraud scheme.

    We shared our success strategy with the banking fraternity; some swiftly implemented similar controls, while others adopted them after trial and error and incurring further losses.

    As an industry, we worked together to implement additional mitigating controls, which spanned several months but ultimately yielded the desired results. Through the UAE's banking association, we reached out to telecom regulators to mandate the use of the UAE's National ID cards for SIM registration and reissuance. The Emirates ID is part of the UAE's Digital Public Infrastructure, equipped with security features such as chips and biometrics. The telco regulators agreed and mandated that telco operators must verify the Emirates ID card using the chip and fingerprint reader features. This mandate was the final nail in the coffin.

    We no longer have SIM swap incidents in the UAE.

About the Author

Anis Ahmed

Anis Ahmed

Founder and CEO of a Digital Identity and Fraud Management Company

Ahmed is the founder and CEO of a digital identity and fraud management company. He is also a subject matter expert on anti-financial crimes and advises financial institutions on anti-fraud, corporate investigations, ABC and whistleblowing programs. He is the founder and host of "The Fraud Fellas" on LinkedIn, a forum dedicated to discussing fraud and its societal impact.

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