Bangladesh’s central bank is weighing up a lawsuit against the Federal Reserve Bank of NY, accusing the United States institution of a “major lapse” over a hack which saw $81 million stolen from an account. Finance noted that the U.S. Federal Bureau of Investigation is aiding in the probe of one of the largest cyber heists in history.
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The Federal Reserve Bank of NY, which holds the accounts of around 250 foreign central banks and governments, said the payments were made in the usual way and there was no evidence its systems were compromised. The New York Fed has faced separate political criticism since the financial crisis for missteps and perceived conflicts of interest in its role as the central bank’s top Wall Street regulator.
Still, a whopping $81 million was transferred to four private accounts in the Philippines.
In February, it mentioned, hackers allegedly sent 35 orders from Swift financial messaging system to transfer $951 million out of Bangladesh Bank’s account at the New York Fed to a number of private accounts around the world.
Luckily, the $20 million transfer to the Sri Lankan account was halted when an eagle-eyed bank employee spotted a misspelling in the transfer instructions.
“Is it appropriate to rely exclusively on authentication from SWIFT for outgoing payments from the accounts of foreign central banks?”
“We fully intend to reach out to the congresswoman and will endeavor to address her questions”, the New York Fed said in a statement Wednesday.
Through these accounts, the Fed provides foreign central banks with payments services that allow them to send and receive U.S. dollars through the Fedwire Funds Service.
Notwithstanding the US bank’s robust statement, in an interim report into the incident Bangladesh Bank said it was mulling “preparing the ground to make a legitimate claim for the loss of funds [against the New York Fed] through a legal process”, according to Reuters.
Quoting press reports, the USA politician said the New York Fed requested reconfirmation from the BB of all 35 transfer orders, but executed the first five transfer orders without receiving any reconfirmation.
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Central bank Deputy Governor SK Sur Chowdhury said the lawyer would look into if the three banks carried out their “responsibilities properly”.
