- SCMP / Xiaomei Chen
Bitcoin and other cyber-related fraud are on the rise in China as the world’s second largest economy develop and adopt new technology and online payment methods, according to global risk management firm Kroll.
Eighty eight per cent of Chinese companies, including those from Hong Kong, faced cyber-related crime or fraud in 2017, above the global average of 86 per cent, according to Kroll’s Global Fraud & Risk Report released on Wednesday.
“China faces an increase in cyber-related fraud as the country is rapidly adopting new technology and new mobile payment methods,” Paul Jackson, head of Asia-Pacific cybersecurity and investigations at Kroll, told the South China Morning Post in an exclusive interview. “These innovations have made it more convenient for the daily lives of the general public, but it has also led to new risks of cyber fraud and scams.”
Bitcoin and other cryptocurrencies have become a target for hackers and cyber-fraudsters who are attracted by the huge sums invested in these platforms, added Jackson, a former head of the Hong Kong police’s cybercrime investigation team.
Exploiting vulnerabilities in the use of emails was also extremely common, with 55 per cent of respondents in China feeling highly or somewhat vulnerable to email based phishing attacks compared to 53 per cent for data breaches, and 52 per cent for wire transfer fraud.
According to the FBI, the amount of money lost to business email compromise frauds reached US$5 billion globally last year.
One commonly seen type of scam is when someone hacks into the email system of a company and pretends to be the chief executive or other senior management and tells the junior staff to transfer money to their personal accounts, said Violet Ho, head of Kroll’s Greater China investigations and dispute practice.
“Many of these monetary transfers were made in Hong Kong as the city is an international financial centre,” Ho said.
Jackson believes that cyber-related crime and risks will continue to affect many companies in 2018 as they increasingly look to technology innovations to provide convenience and efficiency.
“We have been receiving increasing demand from customers who want us to access new technologies to see if there are any gaps that could be exploited by criminals to commit cyber-related crime,” Jackson said.
“This shows Chinese companies have increased their awareness of fraud and they have done a lot of work to prevent fraud and corruption from happening,” Ho said.
She said Chinese companies mainly suffered from fraud related to the involvement of employees and external suppliers.
“Many Chinese companies do not conduct proper background checks on their staff and lack sufficient supervision to ensure their behaviour after the hiring. Hiring the right people is very important for the companies to prevent instances of fraud.”