NY Fed boosts money market cash injection as banks' demand rises

NEW YORK - The Federal Reserve Bank of New York on Wednesday announced it will increase Thursday's money market cash injections as it seeks to keep short-term interest rates under control.

Banks this week have repeatedly asked for more overnight cash than the New York Fed offered to help financial institutions meet minimum reserve levels.

The New York Fed on Thursday morning will offer up to $100 billion in so-called repurchase agreements -- exchanges secure assets for cash over very short periods -- up from the $75 billion offered on prior days.

The New York Fed branch's open market trading desk will also double the amount of 2-week agreements offered Thursday to $60 billion.

Banks on Wednesday morning had asked the Fed for an aggregate of about $92 billion, outstripping the $75 billion on offer, a sign that the problem has not cooled off so far.

Amid hefty corporate tax payments and Treasury auctions, banks have struggled this month to find the cash needed to meet reserve requirements -- which threatened to push up short-term borrowing rates beyond the Fed's benchmark lending rates.

The scarcity of cash makes borrowing more expensive but the US central bank in recent months has moved benchmark rate lending rates in the opposite direction -- going lower to help stimulate the economy as global growth slows and US trade wars drag on.

The market interventions are the first since the global financial crisis, when credit markets seized up as banks feared borrowers would not be able to repay.

The New York Fed, the Federal Reserve branch which conducts repurchase operations, has since September 17 pumped short-term cash into money markets on a daily basis to help financial institutions that are short of liquidity meet reserve minimums.

The repurchases are due to continue until October 10.

Officials have said so far that the liquidity crunch was caused by a confluence of technical factors that do not reflect on the health and stability of the economy or monetary policy.

In congressional testimony on Wednesday, Federal Reserve Board Governor Lael Brainard said officials had the matter in hand.

"I would really say that the New York Fed is very focused," she said.

"They've been providing ample operations to relieve those temporary frictions."

source: news.abs-cbn.com

SWIFT confirms new cyber thefts, hacking tactics

LONDON/BOSTON - Cyber attacks on the global banking system have continued - and succeeded - since February’s heist of $81 million from the Bangladesh central bank, underscoring the continuing vulnerability of the SWIFT messaging network, a SWIFT official told Reuters.

The network, which handles trillions of dollars in transfers daily, has warned banks of the escalating threat to their systems, according to a SWIFT letter obtained by Reuters.

"The threat is very persistent, adaptive and sophisticated – and it is here to stay," SWIFT said last month in a letter to client banks, which has not been previously reported.

Client banks been have been hit with a "meaningful" number of attacks - about a fifth of them resulting in stolen funds, said Stephen Gilderdale, Head of SWIFT’s Customer Security Programme. Gilderdale's comments are the first confirmation of new thefts involving the SWIFT network since the February heist.

The revelations provide fresh evidence that SWIFT remains at risk of copycat attacks nearly a year after the massive theft from a Bangladesh Bank account at the New York Fed. The unprecedented cyber heist prompted regulators around the globe to tighten bank security requirements.

SWIFT'S letter to customers warned that hackers have refined their methods for compromising local bank systems. One new tactic, the letter said, involved using software that allows technicians to access computers to provide technical support.

"We unfortunately continue to see cases in which some of our customers’ environments are being compromised" by thieves who then send fraudulent payment instructions through the SWIFT network - the same kind of messages used to steal Bangladesh Bank funds.

On Monday, a top investigator in Dhaka told Reuters that some Bangladesh central bank officials deliberately exposed its computer systems and enabled the theft. The comments by Mohammad Shah Alam of the Dhaka police are the first sign that investigators have got a firm lead in one of the world's biggest cyber heists. Arrests are likely soon, he said.

SWIFT's Gilderdale declined to provide further details about more recent attacks or to name victims or amounts stolen. Asked how many heists had been attempted, he said only that it was "a meaningful number of cases.”

The intrusions had been detected in a variety of ways, Gilderdale said. In some cases, anti-virus software had identified malware. In one case, a financial supervisory body had notified SWIFT of an attempted attack.

The additional attacks SWIFT disclosed to Reuters do not include others that have already come to light since the Bangladesh Bank heist.

Thieves stole $250,000 from Bangladesh's Sonali bank in 2013. More than $12 million was stolen from Ecuador's Banco del Austro in 2015. Vietnam's Tien Phong Bank said in May that it foiled an attempt to steal money via SWIFT.

(Reporting by Tom Bergin and Jim Finkle; Editing by Brian Thevenot)

source: news.abs-cbn.com

Bangladesh central bank officials to meet New York Fed over stolen funds

DHAKA - Bangladesh central bank officials will hold a meeting with the New York Federal Reserve next month to try and speed up efforts to recover $81 million stolen by hackers from its account at the Fed, officials in Dhaka said. [$81 million: $81M heist: The money trail]

More than four months after the hackers broke into the computer systems of Bangladesh Bank and transferred money into bank accounts in Philippines using the SWIFT payment network, there is no breakthrough yet in investigations.

Most of the money has disappeared into casinos in the Philippines and remains missing.

While the criminal investigation has made slow progress, Bangladesh Bank has focused on getting back the money, leaning on the New York Fed and the Philippines central bank for help.

Bangladesh Bank deputy governor Mohammad Razee Hassan, who heads its financial intelligence unit, will meet Fed officials in New York on July 15, two officials at the bank in Dhaka said.

Both said the talks follow a meeting in Basel in Switzerland in May where the heads of the Bangladesh central bank, the New York Fed and representatives from SWIFT agreed to help Bangladesh Bank get back its money.

One official involved in the preparations for the meeting said on Tuesday they would also be discussing future arrangements on the central bank's deposits held in New York.

"Its a follow-up meeting for recovery of funds. But there are other things as well. Fed is holding our account. We are their customers, there are things we need to discuss," the official said, speaking on condition of anonymity, citing bank rules.

The official said he was not sure if SWIFT would be part of the meeting. SWIFT had no immediate comment to make.

Bangladesh police investigators have said that SWIFT technicians introduced security loopholes when connecting the messaging network to Bangladesh's first real-time gross settlement (RTGS) system late last year.

SWIFT, a cooperative owned by 3,000 financial institutions, has rejected those allegations and said its messaging platform was not breached in the Bangladesh hack.

source: www.abs-cbnnews.com

Bangladesh asks NY Fed, PH to help retrieve stolen money

DHAKA -- The new governor of Bangladesh's central bank has sent formal letters to the New York Fed, as well as central bank and money laundering chiefs in the Philippines, asking them to help recover its stolen $81 million, a senior central bank official said on Sunday.

The news came as Finance Minister Abul Maal Abdul Muhith said the government was waiting to hear the recommendations of an investigation committee to decide whether the central bank should file a suit against the Fed after one of the biggest cyber heists in history.

Unknown hackers breached the computer systems of Bangladesh Bank in early February and attempted to steal $951 million from its account at the Federal Reserve Bank of New York, which it uses for international settlements.

Some attempted transfers were blocked, but $81 million was transferred to accounts in the Philippines belonging to casino operators.

The central bank official told Reuters that Fazle Kabir, who became governor a week ago, had asked the NY Fed chief and the heads of the Philippines central bank and money laundering agency to assist Bangladesh in retrieving the funds.

Kabir asked the Fed to investigate if there had been any lapses or whether it had any involvement in the heist, the official said.

Kabir sent separate letters to the ambassador of Bangladesh at the U.N. headquarters, and its permanent representative, urging them to pursue the NY Fed.

The previous central bank governor, Atiur Rahman, resigned earlier this month after details emerged in the Philippines that $30 million of the money was delivered in cash to a casino junket operator in Manila, while the rest went to two casinos.

"In his letters the new governor sought all kind of help from them to retrieve the stolen money as we are following multiple efforts for the sake of the country," the official said.

Last week Bangladesh also formally sought assistance from the U.S. Federal Bureau of Investigation to track down the cyber crooks.

Bangladesh has appointed law firms to weigh its options vis-à-vis the NY Fed.

"We will wait till the recommendations of the government- formed investigation committee," Finance Minister Abul Maal Abdul Muhith told Reuters on Sunday, referring to a three-member committee headed by Mohammad Farash Uddin, a former central bank governor.

"We will act as per its recommendations."

Earlier this month Muhith said Dhaka might resort to suing the Fed to recover the money: "The Fed must take responsibility," he said.

source: www.abs-cbnnews.com

How a hacker's typo helped stop a billion dollar bank heist

DHAKA - A spelling mistake in an online bank transfer instruction helped prevent a nearly $1 billion heist last month involving the Bangladesh central bank and the New York Fed, banking officials said.

Unknown hackers still managed to get away with about $80 million, one of the largest known bank thefts in history.

The hackers breached Bangladesh Bank's systems last month and stole its credentials for payment transfers, two senior Bangladesh Bank officials said.

They then bombarded the Federal Reserve Bank of New York with nearly three dozen requests to move money from the Bangladesh bank's account there to entities in the Philippines and Sri Lanka, the officials said.

Four requests to transfer a total of about $81 million to the Philippines went through, but a fifth, for $20 million, to a Sri Lankan non-profit organisation got held up because the hackers misspelled the name of the NGO.

The full name of the non-profit could not be learned. But one of the officials said the hackers misspelled "foundation" in the NGO's name as "fandation", prompting a routing bank, Deutsche Bank, to seek clarification from the Bangladesh central bank, which stopped the transaction.

Deutsche Bank declined to comment.

At the same time, the unusually high number of payment instructions and the transfer requests to private entities - as opposed to other banks - made the Fed suspicious, which also alerted the Bangladeshis, the officials said.

The details of how the hacking came to light and was stopped before it did more damage have not been previously reported.

Bangladesh Bank has billions of dollars in a current account with the Fed, which it uses for international settlements.

The transactions that got stopped totalled between $850 million and $870 million, one of the officials said.

Last year, Russian computer security company Kaspersky Lab said a multinational gang of cyber criminals had stolen as much as $1 billion from as many as 100 financial institutions around the world in about two years.

Iraqi dictator Saddam Hussein's son Qusay took $1 billion from Iraq's central bank on the orders of his father on the day before coalition forces began bombing the country in 2003, American and Iraqi officials have said. In 2007, guards at the Dar Es Salaam bank in Baghdad made off with $282 million.

MONEY RECOVERED

Bangladesh Bank has said it has recovered part of the money that was stolen, and is working with anti-money laundering authorities in the Philippines to try to recover the rest of the funds.

The recovered funds refer to the Sri Lanka transfer, which got stopped, one of the officials said.

The dizzying, global reach of the heist underscores the growing threat of cyber crime and how hackers can find weak links in even the most secure computer networks to steal money and wreak havoc.

More than a month after the attack, Bangladeshi officials are scrambling to trace the money, shore up security and identify weaknesses in their systems. They said there is little hope of ever catching the hackers, and it could take months before the money is recovered, if at all.

Security experts said the perpetrators had deep knowledge of the Bangladeshi institution's internal workings, likely gained by spying on bank workers.

The Bangladesh government, meanwhile, is blaming the Fed for not stopping the transactions earlier.

Finance Minister Abul Maal Abdul Muhith told reporters on Tuesday that the country may resort to suing the Fed to recover the money.

"The Fed must take responsibility," the minister said.

The New York Fed has said that its systems were not breached and that it has been working with the Bangladesh central bank since the incident occurred.

The hacking of Bangladesh Bank happened sometime between Feb. 4 and Feb. 5, over the Bangladeshi weekend, which falls on a Friday, the officials said. The bank's offices were shut for the holiday.

Initially, the central bank was not sure if their system had been breached, but then cyber security experts, brought from the outside to investigate, found hacker "footprints" that suggested their system had been compromised, the officials said.

These experts could also tell that the attack originated from outside Bangladesh, they said. The bank is still looking into how they got into the system and an internal investigation is also continuing, they said.

The bank suspects money sent to the Philippines was further diverted to casinos there, the officials said.

The Philippine Amusement and Gaming Corp, which oversees the gaming industry there, said it has launched an investigation. The country's anti-money laundering authority is also working on the case.

source: www.abs-cbnnews.com