NY Fed, Bangladesh central bank to resume normal money transfers: sources

Thu Aug 18, 2016 2:39pm EDT
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By Krishna N. Das and Serajul Quadir

(Reuters) - The Federal Reserve Bank of New York and Bangladesh's central bank have agreed to withdraw additional payment security measures put in place after one of the world's biggest cyber heists, the theft of $81 million from Bangladesh Bank's account at the Fed, two sources said.

The decision comes after SWIFT, the global financial messaging platform, promised in May to strengthen security on software tools used by its clients and to develop new tools that would spot a compromised account and raise a red flag when a payment instruction deviates from normal patterns.

The decision was taken at a meeting in New York this week between officials from Bangladesh Bank, the New York Fed and SWIFT, said a source close to Bangladesh Bank who has direct knowledge of the matter. They have agreed on a tentative timeline to withdraw the additional security measures but the source declined to give details.

"(The New York Fed and Bangladesh Bank) want to use (only) SWIFT for secure communication," said the source, declining to be named as he was not authorized to brief the media. "We are talking about normalizing our communication channels as soon as possible."

The New York Fed declined to comment. SWIFT could not be immediately reached.

In early February, hackers used stolen Bangladesh Bank credentials to send three dozen SWIFT messages to transfer nearly $1 billion from its Fed account, eventually managing to route $81 million to a bank in the Philippines. Most of the money was laundered through casinos in Manila and remains missing.

Following the heist Bangladesh Bank initiated a new protocol under which the Fed could only clear any SWIFT request from Dhaka after a voice authentication. Fed officials had to call one of two or three Bangladesh Bank officials whose voice samples were shared with the Fed.

A senior Bangladesh Bank official in Dhaka, who declined to be named, said more time was needed "to improve the system" before moving back to a SWIFT-only transfer mechanism.   Continued...

Commuters pass by the front of the Bangladesh central bank building in Dhaka March 8, 2016.   REUTERS/Ashikur Rahman/File Photo