UPDATED 08:36 EST / NOVEMBER 28 2011

Phone Hackers Arrested for Terrorist Funding Scams

Last week, four individuals were arrested in the Philippines for allegedly hacking into telecommunications companies in the United States, including AT&T, and using the money acquired to fund a terrorist network in Asia, Jemaah Islamiah (JI), which is linked to the larger terrorist group Al Qaeda.

The local Philippine National Police (PNP) and Criminal Investigation and Detection Group (CIDG) are working closely with the US’ Federal Bureau of Investigation (FBI) since 1999 to track down the connection between phone hackers and terrorist cells.

Though the FBI refused to give official details,  Jenny Shearer stated that the hackers targeted customers of AT&T, not the carrier itself.  A person familiar with the situation said that the phone hackers broke into the phone systems of some AT&T customers and made calls to bogus international premium-rate services in Eastern Europe, Africa and Asia in which the payments would be collected and diverted even before the activity has been identified.

Members of CIDG’s Anti-Transnational and Cyber Crime Division (ATCCD) and FBI agents were able to track down suspected hackers.  ATCCD Chief Senior Superintendent Gilbert Sosa identified the suspects as Paul Michael Kwan, Macnell Gracilla, Francisco Manalac, and his live-in partner Regina Balura.

According to Sosa, Kwan was arrested in 2007 by Philippine authorities following an international crackdown launched by the FBI against “suspected terrorist cells involved in financing terrorist activities.”  The CIDG failed to disclose information as to why Kwan was released after his arrest.

JI member Muhammad Zamir, who was tagged as the financial source for the terrorist attack in Mumbai, India in 2008, is also responsible for financing the phone hackers.

“Revenues derived from the hacking activities of the Filipino-based hackers were diverted to the account of the terrorists, who paid the Filipino hackers on a commission basis via local banks,” Sosa said.

The Philippines is not known for punishing cybercriminals, as the country has very weak laws regarding cybercrimes.  Back in 2000, the ILOVEYOU worm unleashed by two Filipino computer programming students was able to infect and spread worldwide in just one day.  The computer worm caused an estimated $5.5 billion in damages.  Though the mess was massive, the two were not prosecuted since the country didn’t have any laws regarding such malicious acts back then.  A couple of months after the attack the Philippine Congress enacted the Republic Act No. 8792,otherwise known as the E-Commerce Law, but still, cybercrime flourishes in the country.

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