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DT
News
WEDNESDAY, MARCH 16, 2016
BB HEIST TIMELINE MARCH 15
FEBRUARY 29
MARCH 1
MARCH 7
MARCH 8
MARCH 9
MARCH 10
The Philippine Daily Inquirer (PDI) reports Philippine financial regulators investigating estimated $100m bank heist
Philippine Court of Appeals orders four Philippine banks – RCBC, East West Bank, Banco de Oro and Philippine National Bank – to freeze suspected accounts for six months
BB says Financial Intelligence Unit working with the AMLC to retrieve the money. New York Fed denies its systems were breached
Finance Minister AMA Muhith says government will file a case against the US Federal Reserve
It is reported that an attempted theft of $870m of BB funds was foiled. BB executive director says $20m retrieved
The AMLC announces probe into six people. Philippine Senate public hearing scheduled for March 14
BB Governor resigns Prob body formed Case filed Sources: dhakatribune.com inquirer.net, rappler.com
$101m fund heist the Federal Reserve Bank of New York having only transaction references and amounts.” The FIR states that they then contacted with the case manager of SWIFT authorities through case number 10522926. “We apprehend that there was a massive problem in the SWIFT system and requested them to look into the matter. “Realising the importance of an ineffective SWIFT system, we sent an email to Federal Reserve Bank of New York at 1:30pm of February 6 requesting them to temporarily suspend payment processing for all unauthorised payments. A copy of the email was also sent to the bank through fax,” the case statement says. The Bangladesh Bank authorities frequently tried to communicate with the Federal Reserve Bank of New York over the phone on the day, but failed as it was weekly holiday.
Atiur served Bangladesh Bank as its governor since 2009 with his tenure extended twice. The tenure was supposed to end on August 2 this year. He was the first governor in Bangladesh Bank’s history who resigned in the face of allegations. Atiur drew flak from the government for not informing it about the issue of the cyber-theft of $101m from the central bank’s reserve account with the Federal Reserve Bank of New York, USA in more than one month. Atiur had last attended office on March 9 before he left the country for attending a three-day conference on March 11-13 in New Delhi, India. He returned home on March 14. Before going to his office yesterday he had gone to the Prime Minister’s Office to tender his resignation. l
“On February 7, we took an initiative to launch the backup server of the SWIFT system with the help of the SWIFT authorities and resumed it at 6:15pm on February 8. The authorities again tried to communicate with Federal Reserve Bank of New York on the day, but failed as it was Sunday, a weekly holiday. On February 8, we tried to initiate the regular server upon approval from the authorities concerned. Although the SWIFT system came into effect at 8am, it was ready for sending messages at 12 noon,” the FIR says. After analysing the log record of the server, “we got some information about four unauthorised messages at 4:30pm and sent “stop payment requests” to six banks – Federal Reserve Bank of New York, USA; Rizal Commercial Banking Corporation (RCBC), the Philippines; Bank of New York
MAJOR FINANCIAL SECTOR SETBACKS DURING ATIUR’S TENURE $100m Cyber Theft from Bangladesh Bank Reserve in 2016 BASIC Bank’s loan scandal of Tk 4,500 crore. Bangladesh Bank inspection found irregularities took place between December 2009 and November 2012. Bismillah Group scam involving around Tk1,200 crore lent by five banks between 2011 and 2012. Hall Mark loan scandal involving over Tk3,600 crore came in the light in 2012. Sonali Bank lent Tk 3,606 crore to Hall-Mark Group and others violating rules. Bangladesh Bank’s stance on banks' investment exposure to the capital market is considered to be one of the major reasons behind the stock market debacle in 2010.
Mellon, NY, USA; Citi Bank NA, NY, USA; Wells Fargo Bank, NY, USA; and Pan Asia Banking Corporation (PABC), Sri Lanka. “We found that $81m was illegally laundered from the Federal Reserve Bank of New York to the RCBC using the four messages while $20m to the PABC using one message. It seemed to be money laundering,” the case says. The “stop payment request” was sent to the banks from 5pm to 6pm on February 8. The Bangladesh Bank authorities also requested the SWIFT authorities to send their on-site-support and on-site investigation teams to Dhaka. Meanwhile, the PABC of Sri Lanka stopped payment of $20m to the ultimate beneficiary in accordance with the “stop payment request” and returned the money to the Federal Reserve Bank of New York later. The “stop payment request”
was also sent by the Federal Reserve Bank of New York to its three intermediary banks – Bank of New York Mellon; City Bank NA NY; and Wells Fargo Bank, NY – asking not to finish the payment of $81m. Even though the three intermediary banks had sent the message to the RCBC, the amount was transferred to the accounts of the ultimate beneficiaries through its Jupiter Street branch of Makati City. Under the circumstances, Bangladesh Bank sought help from the Philippines central bank, Bangko Sentral ng Pilipinas, to get back the money. To speed up the process, a two-member team was also sent to the Philippines on February 14. The Philippines central bank handed over the investigation to the Anti-Money Laundering Council (AMLC) of the country. The ALMC confirmed that to
investigate the crime they needed a court order and advised Bangladesh Bank to prepare necessary documents for submission before the court. After completing all procedures, a Philippines court issued an order to freeze the accounts of the ultimate beneficiaries at three branches of the RCBC and ordered an investigation. When contacted, Mirza Abdullahel Baqui, special superintendent of the Organised Crime Unit of the CID, said that they had learnt about filling of the case “but it will take some time” to reach the desk due to some legal procedures. “However, we are looking into the issues. We already held a meeting with some top experts to conduct the investigation,” Baqui, who is coordinating the investigation process, told the Dhaka Tribune, yesterday. l
New governor RCBC allowed fund withdrawal Who is the new governor?
Fazle Kabir, a veteran bureaucrat of 34 years, passed his BA (Hons) and Master degrees in Economics from the University of Chittagong. He started his professional career in the Bangladesh Civil Service as an assistant traffic superintendent in the Bangladesh Railway back in 1980. After joining the administrative services in 1983, Kabir served as deputy commissioner and district magistrate of Kishoreganj, as a joint secretary in the Education Ministry, the director general of the National Academy for Planning and Development, and the director general of the BCS Administration Academy. He also served as a secretary of Railways Ministry before becoming the Finance Secretary in 2012.l
suspicious funds on Feb 5, the bank received a “stop payment” order from the Federal Bank of New York at 5pm of Feb 8 — a banking holiday in the country. “The stop payment order was received by your bank, Feb 8, 2016,” he told RCBC president and CEO Lorenzo Tan. “On the morning of Feb 9, the first banking day, you should have seen the stop payment request. But apparently it was not honoured because the funds were withdrawn. All the funds were withdrawn.” He pointed to documents filed by the Anti-Money Laundering Council with courts noting that RCBC “responded to the Bangladesh Bank’s stop payment request at 7:45pm of Feb 9.” “That was the end of the day already,” Guingona said. “Would you care to explain why the stop payment request — which should have been honoured at the very start of the banking day — was not
honoured?” Tan declined to reveal specific details invoking the Bank Secrecy Law. “Sorry, you’re honour. I cannot confirm or deny this request specific to this transaction … But as a general rule, when there’s a freeze order on an account, the branch manager involved should comply with such an order.” Asked if RCBC’s head office sent the stop payment order to Maia Santos-Deguito, manager of Jupiter St branch, Tan pointed at Deguito’s responsibility. “Again, your honour, I’m precluded because of bank secrecy. But as a general rule, these orders are sent by the head office to the branch manager,” he said. During yesterday’s hearing, AMLC officials told senators that they received a request for assistance from Bangladesh Bank as early as Feb 11 and two Bangladeshi officials flew to the Philippines on Feb 16.l