Bangladesh Central Bank To Sue New York Fed

Bangladesh Bank (BB), the central bank of Bangladesh, has been mulling for potential law suit against the Federal Reserve Bank of New York and has been consulting a US lawyer in this connection. NY Fed has denied responsibility since the heist has taken place from the opposite terminal of the SWIFT interface. The denial has prompted BB to mull for legal action with specific allegations citing proofs against their claims.

Hackers have successfully instructed the NY Fed on February 4 to transfer $81 million (£57 million) from BB’s current account to several accounts in the Philippines, allegedly linked with casinos. However, the payments have been made following standard authentication protocols introduced by SWIFT society and acknowledged by all members connected to its network.

US representative Carolyn Maloney has urged for probing February’s cyber attack on Bangladesh Bank following publication of an internal report in Dhaka. The brazen heist from Bangladesh central bank’s account in the NY Fed appears as threat to undermine the confidence of global central banks. The heist has also posed threat to safety and soundness of international monetary transactions, informs a statement of the NY Democrat.

Meanwhile, the Philippines anti-money laundering agency has sued two persons with criminal charges- Weikang Xu and Kim Wong. Weikang Xu is a casino jackpot operator who has allegedly taken delivery of $31 million in cash at the Bloomberry and $29 million to his account. Rest $21 million has been transferred to a local online gambling company, Eastern Hawaii Leisure Co., owned by Wong.

BB’s internal report over the incident, surfaced on March 15 but dated March 13 has criticized the NY Fed. According to the report, the NY Fed has allowed five of the 35 fraudulent payment instructions to go through while leaving many questions. But the Fed has failed to explain reasons for allowing 5 transaction instructions while denying 30 others.  

The US Federal Bureau of Investigation (FBI) has been helping in investigation of the heist that showed the immediate past Bangladesh’s central bank governor the door. Democrat Maloney has also reportedly sent a letter to NY Fed President William Dudley, requesting a private meeting with bank staff to discuss the cyber fraud.

Her comments have been analyzed as the first sign that the attack may gain political traction in the US. The NY Fed has also been facing separate political criticism centering the missteps in handling the financial crisis while perceiving conflicts of interest in its role as a regulator. Democrat Maloney has also questioned the Fed actions on treating thirty of the instructions as different.