Sunday, May 20, 2018

Police wants independently owned ATMs regulated

By on March 16, 2017

SAN JUAN – The Puerto Rico Police endorsed Wednesday a Senate bill that seeks to regulate independently owned automated teller machines (ATMs) after warning about the growing practice of card cloning in these machines due to a lack of security at the places where they are installed.

In a public hearing held by the Consumer Affairs Committee on Senate Bill 190, Carlos Fernández Cruz, an agent with the Police Bank Robbery Division, said independent ATMs are often tampered with and are rarely under electronic surveillance.

“We have seen an excessive proliferation of these independent ATMs, which are placed in remote locations or of dubious reputation, and every month two to three break-ins are reported but when we investigate many times it is not known who owns the ATM. They are cloning cards with these ATMs because they have no security,” Fernández Cruz said.

Do you think these independent tellers lend themselves to money laundering, Consumer Affairs Committee Chairwoman Evelyn Vázquez asked.

Evelyn Vázquez, president of the Senate Committee on Consumer Affairs, looks at a bill to regulate independently owned ATMs. (CB / Limarys Suárez)

Evelyn Vázquez, president of the Senate Committee on Consumer Affairs, looks at a bill to regulate independently owned ATMs. (CB / Limarys Suárez)

“It’s possible. We do not know whose or where the money is coming from there,” the police officer replied.

Fernández Cruz added that these types of ATMs do not have a phone number that can be called when there is a complaint.

“There are some independent companies that are very responsible, that we have not had problems with. But we are seeing a proliferation of ATMs that are not fixed, which are set up anywhere,” he said when recommending approval of the measure.

Senate Bill 190 seeks to match the requirements of independent ATMs to those of bank-managed ones to improve security when conducting financial and commercial transactions.

The measure, which was authored by Sen. Eric Correa, establishes for this type of ATM that for its operation, the owner file a request for permission at the Financial Institutions Commissioner’s Office (OCIF by its Spanish acronym) and obtain authorization, in addition to a Treasury Department seal.

“According to the testimony we have received, they do not pay the $500 bank ATMs pay and what they pay is $15 to $ 20 as if it were a soda machine. [Independently owned ATMs] do not have a regulations that can be overseen by a financial institution,” the Consumer Affairs Committee told Caribbean Business.

Vázquez said another reason for the measure is that, unlike those belonging to banks and cooperatives, those ATMs do not feature cameras.

“It’s not candy that’s being withdrawn from[the unregulated ATMs], it is money and they provide up to $500 like bank ATMs. Who regulates them. Who is overseeing those transactions and what money is being moved around? There are many questions. Another thing that worries me is they do not have cameras and are placed anywhere,” the senator said.

Unfair competition?

Two representatives of independent-ATM operators separately stated that the bill could result in unfair competition because it would not apply to the ATMs of banks and cooperatives.

The president of the local company Infocard Technology Systems Integrators (ITS), Iván Torres Navedo, assured that the independent ATMs are regulated by laws and federal agencies that handle the electronic transfer of funds, and therefore do not represent a security threat.

Torres Navedo suggested the measure apply to all ATM operators, including banks.

“The present bill should apply to every ISO [Independent Sales Organization] in Puerto Rico and therefore to all ATMs that each ISO manages directly or indirectly, whether independent or of financial institutions. This would allow for an open market,” Torres Navedo’s testimony reads.
For his part, Jorge Fernández, vice president of the board of the ATM Industry Association’s Latin America chapter, said there are about 1,200 independently operated ATMs in Puerto Rico, or half the total on the island.

Fernández pointed out that independent tellers are already regulated by federal laws and agencies and stressed that the measure is discriminatory because it does not apply to ATMs inside banks.

He believes that forcing independent operators, which are mostly small and midsize companies, to install security camera systems and hiring companies for the storage and management of those images would represent substantial and additional costs, and opposed the bill.


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