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09th-Mar-2016

Looting of our money easy even outside

By Editorial Desk

The removal of $100 million Bangladesh government fund; which is equivalent to Tk 800 crore from an account of Federal Reserves in New York by hackers has come as a big shock to the nation at a time when the country's' banking system is trying to cope with the breaking of ATM booths in the capital by foreign gangsters. Bangladesh Bank (BB) made the disclosure of the new electronic theft on Monday saying hackers have moved out most money to the Philippines, except a part of it to Sri Lanka and BB has already recovered it. It also shows how the high tech e-Banking system is increasingly becoming vulnerable with threats to safety of reserves from hackers at home and abroad. Bangladesh Bank claims Chinese hackers have mainly removed the money but investigators believe that some local BB officials may be equally involved. Particularly an official has reportedly cleared the electronic transfer request to release the fund without sensing the hands of the fraudster behind it. But how the Federal Reserves can release the fund without further verification is the big question. They have surely neglected their oversight duty.
At home front, acting on suspicion, Detective Branch (DB) police seized the passports of five BB officials yesterday who work at bank's accounting and budgeting departments.
What appears quite surprising is the immediate denial of Federal Reserves at New York that any such theft of Bangladesh government funds has taken place. Such claim has made the matter more complicated. Finance Minister AMA Muhith yesterday said Bangladesh government would sue the Federal Reserves for failing in its responsibility to protect the funds and demand the return of the money.
Meanwhile BB said it has already identified the foreign nationals who have stolen the money and a team of its Financial Intelligence Unit (BFIU) recently visited Manila to talk about the recovery of the fund. The team said anti-graft authorities in that country has also secured court orders to freeze the accounts of those involved in the theft.
But notwithstanding such development, Federal Reserves officials on Tuesday said their payment system was never before compromised and was not also compromised in this case. What we fear is such claim and counter claim may create a highly critical situation when both sides are required to work together to uphold the high level of integrity in addressing the issue.
This is a highly crucial issue for Bangladesh as stands to lose a big amount of money while the hacking shows that the safety of the remaining reserves is also at high stake. The Federal Reserves also face the big integrity question as it holds reserves of many other countries. Such story may send the wrong signal.
But question arises as to how the hackers were able to get access to highly secretive passwords and swift code number, which hold the key to place the order for transfer and make it effective. Hackers are everywhere now throwing big challenge to corporate secrecy and safety to bank vaults.
What we believe, the electronic transfer system can't be erased and it gives the best hope to ascertain the theft at New York Federal Reserves. Bangladesh has around $28 billion in foreign currency reserve and nearly one-third of it is in liquid assets with the Federal Reserve in the USA and the Bank of England. The rest is invested in bonds and gold.
The latest incident not only calls for working together with the Federal Reserves and others to protect our reserves at home and abroad it also underlines the need for developing more secured electronic custody and transfer system at banks that can detect and defeat cheating by electronic thieves.