1. Credit Card Fraud The Scale of the Problem Michael Moore Regional Security & Fraud Investigation Manager 14 – 17 Nov 2005 Security & Safety – Middle East 2005

2. Agenda The Credit Card System Worldwide Trends CEMEA/Gulf Fraud Performance UAE Fraud Figures

3. Payment Associations do not: Issue Cards Acquire merchants

4. Member Institutions Issuing banks Acquiring banks Both

5. Basic Service Provided Authorisation for card transactions Clearing and Settlement for Member Banks

6. Merchant Agreement Merchant Cardholder Agreement Acquirer Issuer The Credit Card System

7. Merchant Agreement Merchant Sales Draft Cardholder Agreement Authorizations Acquirer Issuer Card Transaction Flow

8. Merchant Agreement Merchant Cardholder Agreement Acquirer Issuer Clearing & Settlement

9. Current Worldwide Fraud Trends Losses during 2004 US$ 1.9 bn Visa Record

10. Current World wide Fraud Trends for MasterCard An average of 8 cents for every $100

11. Worldwide Issuer Counterfeit Losses Ending 4Q 2004 2004 losses US$630m (Up 17% over 2003)

12. Financial loses as a result of POS Fraud MasterCard Worldwide AED 3,385,206,786.44 Middle East & North Africa AED 66,755,408.64 UAE AED 4,980,195.14

14. CEMEA Acquired Fraud (RSV) CEMEA VISA WORLDWIDE $6.96m $6.50m $7.23m $6.75m $6.43m $6.49m $8.05m $8.3m $9.1m

15. CEMEA Acquired Fraud by Type 6 Quarters ending 4Q04 Counterfeit now at US$5m

16. CEMEA Acquired Fraud Distribution 2004 Lost/Stolen18% NRI62% Fraud Apps31% Counterfeit21% Miscellaneous23% Fraud Use25% Percentage % in GCC

17. Common Types of Credit Card Fraud - Never Received Issue (NRI) Definition: –Card is stolen from the mail system before the cardholder receives it and is subsequently used fraudulently Use of NRI Cards is normally supported by forged identity documents.

18. Easy to Fake

19. GCC – Impact of Counterfeit, Lost/Stolen and NRI – 2004 USA - GCC 37% - $2.1m EU - GCC 44% $2.5m CANADA - GCC 5% - $304k AP – GCC 6% - $325k LATAM - GCC 1% - $34k Total Acquired in GCC - $6m CEMEA – GCC 7% $400k

20. CEMEA Issuer Fraud to CSV VISA WORLDWIDE CEMEA $5.4m $6.5m $5.1m $4.5m $3.4m $2.8m $2.3m

21. CEMEA Issuer Fraud by Fraud Type Fraudulent Use of Account Counterfei t Miscellan eous Fraudulent Applications Card Not Received Lost / Stolen

22. Skimming Device

23. CEMEA/GCC - Cash vs. ATM Fraud $27k $18k $21k $350k $29k $95k $2k $22k GCC

24. ATM Skimmer

25. Fake ATM front side with Skimmer

26. UAE Acquired Fraud to 4Q 2004 CEMEA UAE

27. UAE Acquired Fraud by MCC - 2004

28. UAE – X Border Acquired Sales 2004

29. X Border Acquired Sales vs. Acquired Fraud 2004

30. UAE Issuer Fraud to 4Q04 CEMEA UAE

31. UAE Issuer Fraud by MCC 2004

32. UAE – X Border Spend 4Q 2004

34. UAE Issuer Fraud by Country of Acquisition during 2004

35. No transaction monitoring from banks

36. Solutions – Long Term Migration to Chip Technology Terminals – point of acceptance changing in UAE Cards – incentive plans introduced Chip Liability Shift – 2006 Verified by Visa & SecureCode looking to secure internet transactions Initiatives to improve data security Mandating banks monitor transactions

37. Thank you Together We Fight Fraud