Police in London yesterday revealed an attempt at one of the largest bank frauds in the history of the City. The trail has also led to Israel. Israel Police yesterday announced that it had arrested on the suspects in the affair. The Israel Police National Fraud Unit arrested Yaron Blondy, 35, of Holon, on suspicion of fraud and attempted money laundering.
The Police National Fraud Unit says it is cooperating with the British National Hi-Tech Crime Unit, which is coordinating the international investigation in ten countries. The investigation was launched in October 2004.
Police National Fraud Unit representative Chief Inspector Meir Hayoun told the court that €20 million was to be transferred to a bank account registered to Warro Fuel Marketing, registered to the suspect. Zion said many people from around the world, including Israel were involved in the affair.
Under the plan, £220 million (NIS 2 billion) was to be electronically transferred from Sumitomo Mitsui Banking Corporation's (SMBC) London office to ten bank accounts around the world. The fraud was discovered before any money was stolen. A group of hackers are suspected of breaking into Sumitomo's security system. The hackers used software that monitors user names and passwords, enabling the hackers to penetrate the users' accounts.
It is not yet clear whether the suspects physically entered Sumitomo Bank's branch to install the software on the bank's system, or whether they hacked into the system from outside. The plan was to transfer the money to bank accounts in ten countries, including Israel.
Unsubstantiated rumors of the attempted fraud, have been circulating in the City since the investigation was launched, when the National Hi-Tech Crime Unit warned all financial institutions about the danger of theft.
Blondy's attorney claims that his client was a small cog in the affair. He claimed that others apparently tried to transfer money to his client, who in good faith believed that the matter was a prank when he agreed to the money transfer. The attorney claims that his client does not know the people involved in the affair in the UK, and had no connection with any of the other parties involved. He was approached by a man whose name Blondy did not even know. The attorney says that his client believed this was a joke.
Tel Aviv Magistrates Court Judge Michal Barak Nevo ruled that there was reasonable suspicion linking Blondy to the crimes attributed to him. She said the investigation material raised suspicions of obstruction of justice. She agreed to the police's request to extend Blondy's remand for another seven days.
SMBC confirmed that there was an investigation, adding the company had not suffered any financial loss. The bank declined to provide further details, such as whether it discovered the attempted fraud, and what lessons it drew from the attempt.
The spread of the investigation to Israel again showed that financial criminals, especially money launderers, still consider Israel a safe haven.
The British media has played up the arrest of an Israeli suspect in the affair. No mention was made of suspected money laundered discovered at Bank Hapoalim (LSE: BKHD; TASE: POLI).
Published by Globes [online], Israel business news - www.globes.co.il - on March 17, 2005