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A Magnet for Cyber Scammers

In the past five years, Indonesia has arrested hundreds of Chinese and Taiwanese nationals for cybercrime. Why are foreign cyber criminals flocking to Indonesia and what is the precise nature of their crimes?

Crime syndicates based in Taiwan and China have in recent years been using Indonesia as a base for a range of telephone and internet scams, generally targeting Hong Kong residents and mainland Chinese.

Why operate from Indonesia? Immigration spokesman Heru Santoso says it could be because China and Taiwan were last year added to the long list of countries whose citizens are exempt from paying the US$35 fee for a 30-day visitor’s visa on arrival.

But that’s not the real reason. Cybercrime gangs can make up to US$10 million a year from a team of operatives in Indonesia, so having to pay for a visa would not deter them from entering. Indonesia is a magnet for cyber scammers because it has more than 200 internet service providers (ISPs) and it’s easy to obtain broadband internet access without having to provide any identification. Compare that to China, which has only three backbone ISPs, all owned and stringently monitored by the state.

Another factor is that Taiwanese gangs want to operate beyond the reach of their country’s law enforcement agencies, preferably in a nation with a low cost of living and a reputation for corrupt law enforcement.

Cybercrime syndicates will send teams of about 10 to 35 people to Indonesia. Usually, each team will have a few Taiwanese leaders, but most of the members are Cantonese-speaking mainland Chinese. They are often assisted by Indonesian nationals, helping them to find a secure base for their operations. This can be a large house or apartment in any city that offers reliable broadband access, from Batam to Bali. Gangs pay up to Rp.30 million a month for the rental of a ‘safe’ house.

Some of the mainland Chinese arrested in Indonesia for cybercrime claimed they were victims of human trafficking, tricked into thinking they had been recruited for jobs at hotels or legitimate call centres.

Once a team has established a base, it uses hacked, leaked or publicly available data to contact affluent and possibly corrupt residents of Hong Kong and mainland China. Popular targets are Chinese politicians and officials with large bank accounts. The gangs use ‘caller ID spoofing’ software, which disguises the incoming Indonesian phone numbers. Victims’ caller ID screens show the incoming call is from a seemingly legitimate Chinese government agency, such as the powerful Liaison Office of the Central People’s Government in Hong Kong.

The ‘fake official’ scam works like this. Callers identify themselves as police or government officials. Targets are informed they have broken Chinese laws and face heavy fines or even jail time. The caller directs them to bogus government websites listing forged arrest warrants or court orders displaying their photo, address and date of birth. Victims are then instructed to transfer funds to a bank account controlled by the syndicate. Obviously, the scam works best on crooked state officials and people involved in illegal business activities, as they are easiest to blackmail.

How much money can be made by this scam?

In 2015, one gang in Indonesia swindled US$15.2 million in 431 cases before being caught in October and deported the following month.

Sometimes the scammers pose as bank officials. Victims are informed their bank account is about to be frozen due to suspected embezzlement or tax evasion. To avoid having their money confiscated or blocked, they are told to transfer funds to an account controlled by the gang. Other times, victims are tricked into revealing the three-digit CVV (card verification value) on their credit cards, so the cards can then be used to withdraw funds or make online purchases.

Another scam involves informing people they have won a contest and need to pay a fee to claim their prize, which is usually a car or cash. One gang called public officials and threatened to expose their extramarital affairs unless bribes were paid.

Low-level members of these groups sent to Indonesia earn about US$350 per month, but bonuses are paid to callers who exceed targets.

Fears of Foreigners

Indonesia last year deported about 6,000 foreigners for various offenses. Police and Immigration officials have encouraged members of the public to report any “suspicious” foreign nationals in their community, such as a large group of mainland Chinese moving into a single house.

Some nationalist groups are fanning the flames of xenophobia, warning that Indonesia is at risk of being inundated with foreigners stealing Indonesian jobs because residents of 169 countries are now entitled to the free 30-day entry visa. Much of the racism is directed against China. “Unconsciously, this country [Indonesia] is beginning to be controlled by another nation,” warned the Patriot Front for Defence of the State. The arrest in April of five Chinese workers on a railway project at Halim Perdanakusuma airbase in East Jakarta furthered this perception. But Vice President Jusuf Kalla ordered their release, saying they were working on a project in the national interest and had innocently been caught up in a “procedural failure”.

The Directorate General of Immigration, in cooperation with police and state prosecutors, has set up special teams for the supervision of foreigners to ensure they are not involved in any crimes. These teams have raided a few Jakarta nightlife areas and some golf courses, nabbing foreigners not carrying original passports or work permits. But such raids are not netting cyber criminals.

Officials have said it is harder to find cybercrime gangs because they often live in luxury apartments or housing estates with tight security. China’s Ministry of Public Security has been quietly working with Indonesian police and Immigration officers to track down the gangs, resulting in more than a dozen raids in recent years. During a raid last year on a house in East Cilandak, South Jakarta, one man jumped to his death from the second floor to avoid arrest.

Cyber Agency Axed
Indonesian government officials have said the country needs an agency to prevent cyber attacks, including those perpetrated by foreigners living here. Plans for the creation of a National Cyber Agency were announced in January 2015, partly in response to reports that Indonesia was among the world’s top three countries where cybercrimes originate.

Former coordinating minister for political, legal and security affairs Tedjo Edhy Purdijatno said streamlined national cyber defence is required so that all banks and state institutions can have stronger security. Cyber security campaigns are a good idea, but streamlined security software could make it easier for hackers to access more information.

In June 2016, the government axed its planned cyber agency because of a moratorium on the creation of new agencies. Administrative and Bureaucratic Reform Minister Yuddy Chrisnandi said cyber issues would instead be handled by the National Encryption Agency, which will be given greater authority.

Law Misused

Pratama Persadha, chairman of the Communication and Information System Security Research Centre, has called for broader application of the controversial 2008 Law on Electronic Information and Transactions, so that it can be used against cyber criminals. The law, which is under revision by the government, is presently being misused to stifle freedom of expression. Most recently, an animal welfare activist was arrested on August 22 for making online comments on alleged corruption involving a notorious zoo in the East Java capital of Surabaya.

While cybercrime involving Chinese and Taiwanese in Indonesia is a problem, it’s no reason for knee-jerk nationalism that leads to tougher regulations for legitimate foreign workers, who are bringing valuable skills. When the Indonesian elite need medical care or certain services, they are often happy to go abroad to obtain foreign expertise, something most of their compatriots cannot afford.

 

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Kenneth Yeung is a Jakarta-based editor.