Canada Hires Asian Police to Counter Credit Card Fraud

IN an effort to counter escalating Asian-based organized crime -

especially credit card fraud - Canadian police have hired three retired Royal Hong Kong police officers to help ``beef up'' provincial investigations.

The three officers - recruited to work as special constables - are currently awaiting Canadian citizenship. The new staff will ``afford us with a better understanding of the Asian culture,'' says Staff Sgt. Mike Krevesky, who is in charge of organized crime investigation.

Mr. Krevesky's comments follow a sudden upsurge in fraud and extortion by gangs affiliated with organized crime in mainland China and Hong Kong.

Asian immigrants

Vancouver and its suburbs are home to the largest population of Asian immigrants in Canada. Up to a third of the area's 1.7 million residents are of Asian origin.

``Like anywhere else, with an increase in population you have to expect an increase in related crime,'' Krevesky says. ``What made it particularly bad here was the recent influx of undocumented refugees.''

One of the investigators' first targets will be counterfeit credit cards originating in Hong Kong and mainland China. Since 1991, the cost of fake plastic has doubled each year.

Major losses

In 1993, counterfeits were blamed for losses estimated at $13.8 million [Canadian; US$10.4 million] across Canada. At least one-fifth of that fraud occurred in western Canada.

Krevesky says investigations show that many counterfeit credit cards originate in Hong Kong, while supporting counterfeit identification is produced in mainland China.

According to Michael Ballard, security division vice president of the Montreal-based Canadian Bankers' Association, counterfeit Visa and Mastercard credit cards were responsible for more than 20 percent of last year's total credit card fraud.

Credit card fraud made up 10 percent of total fraud in 1992 and 5 percent the previous year.

But Canadian banks that issue the card are keeping quiet about their losses. ``It's propriety information,'' says Bill Ingenthron, corporate security manager for Royal Bank. Although he says credit card fraud is ``of sufficient magnitude,'' Mr. Ingenthron, who is responsible for Royal Bank Visa cards in western Canada, will not say what steps Royal Bank is taking to combat the costly fraud.

``We're not in a position as an industry to go public on things we're working on,'' Ingenthron says. ``We don't want to educate the bad guys. They learn fast enough.''

Anticounterfeit measures cannot come too soon. Some local merchants have already begun discouraging payment by Visa - the world's most-used charge card and also the most counterfeited. Even with identification, some merchants familiar with the recent upsurge in Asian-based credit fraud are not accepting the cards.

``You're looking at a doubling and doubling of credit card counterfeiting, and the biggest proportion of that is coming from Asia,'' Ballard says. ``We believe that the counterfeit card problem is largely the specialty of Asian crime gangs.''

The fake cards are manufactured in the Far East and reach Canada via local gangs with ties to Hong Kong, mainland China, and Macau, Ballard says.

While banks and credit unions issuing the cards are liable for the immediate cost of fraud, the consumer is the loser in the end.

Ballard estimates that last year alone, the fake plastic cost Canada's 27 million credit card accounts about $2 each.

Anticounterfeit measures

The credit card fraud has dropped dramatically in the wake of a special police operation known as ``Project Monsune,'' Vancouver-based investigators say. The operation led to the arrest of 34 people in the Vancouver area on fraud and other related charges. Twelve of those have been convicted and other court dates are coming up.

But the whereabouts of those charged is uncertain. Only one of the 34 accused was born in Canada. The majority, including the alleged organizers of the fraud, were undocumented refugees from mainland China.

Police say many of those slated to stand trial may have already left the country or simply changed their identity.