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Money for nothing

A money changer holds up US dollars and Vietnamese dong at Central Market in Phnom Penh yesterday. Photo by: Wesley Monts
Several weeks ago, staff at ANZ Royal Bank noticed a peculiar customer at one of their ATMs in Phnom Penh.
With
a male companion looking on behind her, the woman inserted a card
issued by Vietnam’s Techcombank and withdrew the maximum allowable
amount of cash, US$2,000.
Then, taking out a new Techcombank card for each transaction, she repeated the task 11 times in succession.
The
woman is one of a growing number of Vietnamese nationals who bankers
say have been cleaning out the Kingdom’s ATMs, taking advantage of the
unusually large gap between Vietnam’s official and unofficial exchange
rates to earn thousands of dollars in profits.
ANZ CEO Stephen
Higgins said yesterday that Techcombank cardholders had withdrawn
roughly $12 million in cash from his bank’s ATMs since mid-December,
with the bulk coming in the past two weeks.
They took roughly $5
million from ACLEDA Bank machines from the beginning of the month until
yesterday, ACLEDA Executive Vice President So Phonnary said.
All
told, Techcombank users have withdrawn “at least $20 million” in cash
from Cambodian ATMs in the past few weeks in a scheme that has also
stretched to Singapore and China, Higgins said.
“It’s very smart what they’re doing,” he said.
“It’s
one of those things where one person figures out this is an easy way to
make money, tells a few people who tell a few more people, and suddenly
you get busloads of people coming across the border to try and do it.”
The
Vietnamese government has pegged the country’s official exchange rate
at roughly 19,500 dong to the dollar, though the black market rate –
also used legally by money changers in Cambodia – is closer to 21,000
dong to the dollar, a difference of about 8 percent.
The Vietnamese who have been travelling to the Kingdom have taken advantage of this.
At
Cambodian ATMs, they receive US dollars that have been converted from
the dong in their home accounts at the official exchange rate.
They
can then trade these dollars for dong from Cambodian money changers or
money changers in Vietnam who use the black market rate, earning the
difference with the official rate.
ATM transaction fees eat into
these profits, but even accounting for such costs, Higgins said the
Techcombank users were likely earning about $20,000 for every $1
million in cash withdrawn.
Techcombank, he added, is uniquely exposed to the scheme.
While
most Vietnamese banks charge international transaction fees to make up
for the difference between the dong’s official and unofficial rates,
Techombank’s fees are unusually low.
As a consequence, it has likely lost “about $1.5 million” from transactions in Cambodia in recent weeks, Higgins said.

An
executive at another large bank who asked to remain anonymous said his
institution too had seen a marked increase in ATM transactions
recently, particularly near the Vietnamese border.
Charles Vann,
deputy general manager of Canadia Bank, said he, also, had noticed “a
throng of Vietnamese” making withdrawals in recent weeks.

“I don’t think there is any problem for us, as long as they’re genuine and they’re not frauds,” he said.

Although
Cambodian banks are not losing any money from the process, the
Vietnamese cardholders are creating a nuisance for regular customers
who are increasingly likely to find their ATMs out of cash, So Phonnary
said. To combat the problem, ACLEDA appealed this week for intervention
from international credit card firm Visa.

“We sent the information to Visa in order to get assistance,” So Phonnary said.
“They
replied to us, they said there is not any fraud. [Those making the
withdrawals] are really cardholders and the cards are actual cards, not
counterfeit.”

Despite the lack of response from Visa, ACLEDA
moved on Wednesday to block Techcombank cardholders from using its
machines, she said.

Higgins said ANZ had conferred with Visa
and had concluded that blocking the users unilaterally would violate
the companies’ agreement. The bank decided simply to lower its maximum
daily withdrawal from $2,000 to $500, and to instruct security guards
at its ATMs to be on the lookout for users wielding multiple cards.

“We
have taken steps to prevent Techcombank users from accessing our ATMs,
and where any of them are found in possession of multiple cards not in
their own name, we will be seeking police intervention,” he said. 

Two
men were arrested yesterday at an ANZ ATM in Dangkor district for
holding the cards of other people, he added. “I think any time that
someone is there with 12 different ATM cards, it’s not a legitimate
transaction,” he said. 

Officials at the Vietnamese Embassy could not be reached for comment, nor could those at the National Bank of Cambodia.
Khuoy
Kry, head of the Bavet International Border Checkpoint in Svay Rieng
province, said travellers were permitted to carry up to $10,000 cash
across the border, and that ATM use was “out of our control”.

ANZ
has counted more than 500 Techcombank users whose cards have been used
in the practice, though the actual number of people performing the
transactions is likely lower, Higgins said.
So Phonnary said she was unsure how many had performed the transactions with ACLEDA.

Jayant
Menon, a currency specialist with the Asian Development Bank, said in
an email that Vietnam had long grappled with the gap between the
official and black market exchange rates.

“When exchange rate
policy is used to substitute for monetary policy in trying to achieve
objectives such as inflation control, the gap between official and
unofficial rates can grow over time,” he said.
For those taking
advantage at Cambodian ATMs in the meantime, however, it appears the
music is about to stop; Higgins said Techcombank was working with Visa
to institute new fees for international transactions by next month that
would close off the arbitrage opportunity. 

“While there’s
that big gap between the official rate and the unofficial rate, it’s
natural that people are going to try and exploit it,” he said. “I just
think more and more people have cottoned on.”
Phnom Penh Post
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