Saturday 24 September 2016

Bangladesh threatens to sue Fed over £71m account loss

Published 10/03/2016 | 04:31

New York's Federal Reserve Bank says there was no sign of a hacking attack
New York's Federal Reserve Bank says there was no sign of a hacking attack

Bangladesh says it may sue America's Federal Reserve Bank after losing 100 million dollars (£71m) from an account in New York.

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Few details were revealed about how the money disappeared, but finance minister AMA Muhith said authorities were considering suing the Fed over the money's apparent transfer to accounts in the Philippines.

Mr Muhith said the US bank had "no way to avoid their responsibility", but i n a statement, the New York Fed said it had not detected any hacking attempts and there was "no evidence that any Fed systems were compromised".

"The payment instructions in question were fully authenticated ... in accordance with standard authentication protocols," the statement said.

The New York Fed said it had been working with the central bank of Bangladesh since the incident occurred "and will continue to provide assistance as appropriate".

The Bangladesh Bank said it managed to recover some of the funds, but gave no details. It has also tracked down those still missing and is working with the anti-money laundering agency in the Philippines, which has been ordered by a court in the country to freeze the accounts while the issue is being investigated.

Bangladesh was also working with World Bank cyber and forensic experts, the bank said.

The Philippine Anti-Money Laundering Council said it was investigating and was committed to "combating money laundering and helping preserve the integrity of the financial system".

The country's leading Bengali-language Prothom Alo newspaper said at least 30 transfer requests were made on February 5 using the Bangladesh Bank's SWIFT code, out of which five succeeded in effecting transfers.

Economist Mamun Rashid, who previously headed Citibank NA in Bangladesh, said he was sure the country would be able to recover the full amount.

"Bangladesh is a client of the Federal Reserve Bank. They must take the responsibility for this incident," he said. "But we have to see whether we have lodged our complaint properly."

Since hacking had been a threat for years, he said clients should not suffer if they were depositing with large banks.

"A client's right must be protected," he added.

Press Association

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