Threat posed by Chinese nationals looms over Nepal’s financial sector

Gajendra Basnet

April 1, 2021

9 MIN READ

Threat posed by Chinese nationals looms over Nepal’s financial sector

KATHMANDU: DSP Rameshwor Poudel of Metropolitan Police Circle, Durbar Marg, received a call from Mega Bank, reporting suspicious activities at one of its automated teller machine (ATM) booths, at around 5:30 pm on March 30 (Tuesday).

DSP Poudel forwarded the information to Metropolitan Police Range (MPR), Teku, which immediately dispatched a team to investigate. Poudel, too, swung into action with two teams to look into the matter.

Acting on the bank’s complaint, according to MPR Chief SSP Ashok Singh, police caught a Chinese national Wang Xiaolon, 29, in action from Jyatha-based Mega Bank’s ATM booth. The arrested Chinese national was trying to hack the ATM and withdraw cash from it.

“When we scrutinized the security footage we saw Xiaolon broke open a device in the ATM booth and clicked a photo from his mobile,” SSP Singh told Khabarhub adding, “We also recovered various devices used in hacking from his hotel room in Jyatha.” Police have seized 10 ATM cards, a passport, internet connector, pen drive, hidden camera, drill machine and foreign currencies from the arrestee’s room.

ATM robbery plot hatched in China

Xiaolon arrived in Kathmandu at around 2 pm on March 30 on a tourist visa, which was issued to him on March 10. Upon his arrival, he headed straight to a Jyatha-based hotel and booked a room.

“He reached the ATM booth within a few hours of landing. We were able to foil his plan before he could finish it,” said SSP Singh.

According to SSP Singh, Xiaolon reaching the ATM booth within hours of landing indicates that the crime could have been pre-planned in China.

However, the police are investigating further into Xiaolon and are trying to determine if he acted alone or had accomplices. “We’ll bring out the facts soon,” Singh said.

According to a police official involved in the investigation, the arrested told the police that he had no intention of breaking the ATM machine or stealing cash.

Citing the arrestee’s statement, the police official said, “While on way to Nepal, Xiaolon met another Chinese national in Guangzhou, who requested him to click a picture of the ATM screen and serial number, and sent it to him.

For the work, he was given $65 and provided a key and some tools. Another Chinese national had also assured him that breaking into the ATM booth and sending the details sought would not amount to any illegal offense in Nepal.

Xiaolon, a resident of Hubei province, had been scared and left the ATM booth when he saw a CCTV camera installed at the ATM booth, as per the police official.

Xiaolon told police that he planned to stay in Thamel for two days and go to Pokhara. The police investigation has also found that before breaking into the Mega Bank’s ATM booth, he had also attempted to use the key in another ATM.

Whether he was able to send the picture anywhere is yet to be known, police said. The police are carrying out further investigation on the basis of the arrestee’s statement and existing evidence.

Chinese nationals’ frequent involvement in Cyber Crime

Nepal Police had received similar reports of ATM hack, like that of Tuesday, on September 1, 2019, as well. Police had nabbed five Chinese nationals involved in the act of hacking and stealing cash from ATMs of several banks at the time.

The day after, on September 2, 2019, one more Chinese national was arrested in connection with the case. And later three Nepali nationals were also nabbed for helping those six Chinese citizens. It was later confirmed that one of the six Chinese nationals had masterminded the robbery.

Subsequently, on December 23, 2020, Nepal Police had raided several spots in Kathmandu in search of Chinese nationals who had either overstayed or committed financial crimes and arrested as many as 122 Chinese nationals. Security agencies in Nepal had carried out that raid under the direct supervision of Director Wang Xiaohong of the Ministry of Public Security of China.

The basis for the raid was intelligence collected by Chinese agencies. Chinese agencies had found out that as many as 300 Chinese people, who committed financial crimes in China, were hiding in 70 different houses in Nepal. However, only 122 of the 300 fell in the police net at the time.

Many of the most wanted-Chinese nationals were able to escape due to Chinese agencies’ harried move without trusting Nepali security agencies.

Though Nepal Police confiscated a large number of laptops and mobile phones from the residences of those 122 Chinese people, they were not allowed to investigate further. The cases and seized items were handed over to Chinese police.

The Chinese security agencies questioned Nepal Police’s technical expertise and ability to investigate those cases. Chinese agencies had violated the initial agreement with Nepal Police.

The raids and arrests became more suspenseful after Kathmandu District Administration handed over the 122 Chinese people to Chinese authorities after penalizing them nominal amounts.

These are just representative cases. There are numerous incidents in which Chinese nationals have been arrested on the charge of stealing cash from ATMs and financial frauds.

The data maintained with Nepal Police Headquarters shows that over 100 Chinese nationals have been arrested on different charges in the past five years. The charges include hacking, illegal financial transactions, trafficking animal parts, and medicinal herbs, among others.

Threat from Chinese citizens to Nepalese banking sector

Repeated Chinese intrusions, including hacking and stealing from ATMs, have raised the question over the security of Nepalese banking system. The threat of hacking into the ATM system is ever present in Nepal.

Nepal Police former DIG Hemanta Malla says, “Chinese nationals have been stealing money by repeating bank ATM hacks in the country. This trend has posed additional challenges to the overall security of the Nepali banking sector.”

Following the trend, Nepal Rastra Bank (NRB), the Central Bank of Nepal, had instructed banks to decrease the amount of withdrawal from ATMs.

Banks also followed suit; they reduced the daily ATM withdrawal amount to Rs 60,000 from Rs 100,000. At present, customers can withdraw up to Rs 20,000 from ATMs at one go and are able to withdraw only Rs 60,000 on any given day.

Banks in Nepal have also upgraded cybersecurity measures and the police have also stepped up their vigilance. Still, the threat posed by Chinese nationals to Nepal’s banking sector is on the rise day by day.

Challenges in investigating Chinese nationals

Nepal Police face several difficulties in interrogating Chinese nationals. According to SSP Singh, identifying Chinese nationals by name is a tough task as they do not speak any other language except Chinese and do not understand simple English as well.

Police have to use an interpreter while questioning or recording statements of Chinese arrestees. Police officials involved in the investigation of crimes committed by Chinese nationals acknowledge the challenges faced during the probe. Former DIG Malla agreed that identifying names of Chinese nationals and recording their statements was not an easy task.

The cause behind increased Chinese criminal involvement

The flow of Chinese tourists increased after the previous government, which was also led by incumbent Prime Minister KP Oli, the decision to waive off visa fees to Chinese nationals in order to attract Chinese nationals into the country.

“As the flow of Chinese tourists increased in the country, so did their involvement in crime,” says ex-DIG Malla. “Advanced use of technology by Chinese citizens, language barrier, pressure from higher-ups, including Chinese embassy, whenever a Chinese national is arrested, among others, have further exacerbated the situation,” he added.

The language barrier has also hampered Nepali authorities’ coordination efforts with the Chinese embassy in dealing with arrested Chinese citizens, he said.