SINGAPORE – In October, a customer called a bank to freeze all of their cards and savings, only to find out later that not all fund transfers were disabled.

It may well be that the customer expects the bank’s “kill switch” to be a master switch that turns off the financing tap for everything further downstream – and reasonably so.

But a day later, the customer’s compromised Wise multi-currency e-wallet could still be topped up. with its linked POSB account. An unauthorized transfer totaling $3,000 was ultimately transferred to an unknown account overseas via Wise.

The customer had no idea the transactions had taken place until it was too late.

He was the victim of a complex hack involving a criminal misusing stolen items. log in credentials to control one’s e-SIM, including one-time passwords, and online financial accounts. It didn’t help that the victim used the same thing log in credentials to multiple online accounts, making it easier for the hacker to gain access to those accounts.

The incident shed light on what the banking kill switch actually does.

How did the victim still lose money when she had frozen her cards and savings?

Since October 2022, all retail banks have deployed their versions of the obligatory kill switch Allow customers to freeze all cards and accounts if they suspect their login credentials have been compromised.

The kill switch – which can be activated by calling a bank hotline or through the bank’s app or website – is intended to limit potential losses for hackers, after some 790 OCBC bank customers were defrauded of $13.7 million in phishing attacks in December 2021 and January 2022.

But there is a big problem.

Depending on which bank you talk to, the kill switch has a different function.

Banks are divided into two camps which the services their kill switches affect, particularly when it comes to Giro, a direct debit mechanism first introduced in 1984 to allow people to pay their bills.

In one camp, OCBC, Citibank and HSBC cut off the Giro (incoming and outgoing) when customers activate the circuit breaker.

This means existing arrangements to receive a monthly salary above Giro and regular payments to organizations such as the Inland Revenue Authority of Singapore, country clubs, schools, municipal councils. And insurance companies, will be disrupted. Customers will need to find other ways to continue to receive their wages or pay their bills.

Meanwhile, the circuit breakers from DBS Bank, POSB, UOB, Standard Chartered Bank and Maybank are not killing Giro – and understandably so.

Who wants to go through the hassle of implementing new payment methods across so many billing organizations?

Not all banks communicate which the services their kill switches affect on their websites, and customers are unaware of it.

Unfortunately for the POSB customer who lost money in October, the unauthorized transfers were made via Giro, which links his POSB savings account to his Wise e-wallet.

A spokesperson for the Monetary Authority of Singapore (MAS) told The Straits Times: “MAS expects retail banks to provide customers with a way to quickly disable access to mobile and online banking services as well as as outgoing payment transfers. Banks should clearly indicate to customers which access and transactions will be disabled and which functions or transactions will still be operational and give customers the option to deactivate them.

For a very long time, Giro has been a safe and convenient mechanism for paying all kinds of bills. In recent times, it has also become a popular way to top up e-wallets such as those from Grab, Wise and YouTrip to facilitate e-commerce payments, including to foreign entities.

For the uninitiated, Giro transfers only need to be authorized once, at the time the link is established. Subsequent transfers – which can be initiated by the billing agency or via e-wallet applications – do not require any user authorization.

This explains why the hacker was able to easily top up the POSB customer’s Wise e-wallet and steal the funds.

In a statement to ST, POSB said the customer’s bank account was not compromised or hacked.

The customer could not be named. ST understands that it has signed a non-disclosure agreement with POSB and its telecommunications company Giga, a sub-brand of StarHub.

Police have confirmed that the victim has filed a complaint and the investigation is ongoing.

The Infocomm Media Development Authority is also investigating StarHub for failing to verify the identity of users requesting to port their Giga e-SIM to another phone.

This is how the POSB customer lost control of his Giga e-SIM.

Many questions remain unanswered.

It is unclear whether POSB had explained to the client that the Giro agreements would be excluded from kill switch coverage, or whether the client had explicitly requested that Giro be excluded, as it would not be practical to find other means of receive his salary. or pay bills.

In its statement, DBS said its security switch does not, by default, block incoming communications. funds transfers or existing Giro arrangements.

“This is about ensuring that we strike a balance between enhanced security and unnecessary disruption to the customer’s recurring payments or salary credit,” said a spokesperson. However, customers can still request that all Giro links be cut, she added.

It could well be that the POSB customer has no idea that their Wise e-wallet can still be topped up even after turning off the upstream funding spigot with the bank.

Now that the incident has cast a shadow over the Giro, perhaps it is time for the MAS to intervene.

Since most bank customers would have no incentive to request Giro to be deactivated, the MAS could standardize its regulations on how banks set their kill switches. For example, this could require Giro to be included in all kill switches. But this approach has its drawbacks.

Imagine the downside.

Alternatively, MAS could prohibit topping up e-wallets via Giro. This approach will protect the Giro program (which has been ingrained in most people’s way of life for 40 years) from abuse and disruption.

Moreover, why do e-wallets need to be recharged via Giro since these e-wallets can also be recharged via other means, such as PayNow, credit or debit cards, which fall under the kill switches of all banks?

Multi-currency e-wallets like Wise and YouTrip – which make it easy to transfer funds abroad – are prime targets for criminals. Additionally, these e-wallets can now process and hold more funds, which may result in greater losses.

In 2023, the Payment Services Act of Singapore was amended to allow the maximum amount of funds held in e-wallets to be increased from $5,000 to $20,000. The maximum annual flow through an e-wallet has also been increased from $30,000 to $100,000.

Giro is the weakest link in the e-wallet payment chain since authorization is only required once: when the link is established between a savings account and an e-wallet. This weak link must be strengthened.

Require Giro to be included in killswitches for consistency, or exclude Giro only for established billing organizations. Giro should not be integrated into the modern mix of e-wallets.

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