Congresswoman wants probe of ‘brazen’ $81M theft from New York Fed

Mar 22, 2016
In The News

New York Congresswoman Carolyn Maloney is calling for an investigation into the theft of nearly $81 million from the Bangladesh central bank account at the New York Federal Reserve, The Post has learned.

Maloney (D-NY) sent a letter on Tuesday to the Federal Reserve’s President William C. Dudley, demanding answers on why his agency blocked 30 to 35 bogus transfer orders, but did not stop the first five orders.

She also insisted to know why the New York Fed asked for reconfirmation from the Bangladesh Bank for each of the 35 transfer orders, but decided to execute five orders before waiting for final approval.

“This brazen heist from the Bangladesh central bank’s account at the New York Fed threatens to undermine the confidence that foreign central banks have in the Federal Reserve, and in the safety and soundness of international monetary transactions,” Maloney said.

“We need a thorough investigation to determine how these criminals were able to manipulate the system so that banks and financial institutions can institute standards that will prevent hackers and cyber criminals from siphoning money out of accounts like those held at the New York Fed again,” she added.

In February, 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.

The New York Fed allegedly executed five of the orders, transferring $101 million to four accounts in the Philippines and one in Sri Lanka.

The agency refused to green light the other 30 transfer orders worth $850 million, but, instead, asked for reconfirmation from Bangladesh Bank.

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.

Still, a whopping $81 million was transferred to four private accounts in the Philippines — and the thieves may have laundered the cash through that country’s casinos.

The New York Fed, through a spokeswoman, originally denied that its system was penetrated by hackers, starting a war of words with the Bangladeshi government.

To date, there is no evidence of any attempt to penetrate Federal Reserve systems in connection with the payments in question, and there is no evidence that any Fed systems were compromised,” said spokeswoman Andrea Priest.

The Bangladeshi Embassy countered that investigators were working with Filipino officials to find the funds.

“It has been possible to recover a portion of the amount ‘hacked’ from Bangladesh Bank’s reserve account in the United States,’’ it said in a statement.

“Bangladesh Financial Intelligence Unit is engaged with the Philippines’ anti-money laundering authority to trace the destination of the remaining amount and recover the same.