Fed ready for talks with foreign counterparts over cyberfraud

This article is more than 12 months old

NEW YORK The US Federal Reserve, which was at the centre of an unsolved cyber heist of US$81 million (S$108 million) nearly two years ago, is ready for further talks with foreign counterparts to address the lingering risks of cyberfraud in global messaging systems, a top Fed official said on Wednesday.

Mr Simon Potter, head of market operations at the New York Fed, said the Swift bank messaging system is only as strong as the weakest of the central banks.

In February last year, hackers broke into Bangladesh Bank's systems and tricked the New York Fed into sending US$81 million to entities mostly in the Philippines.

Bangladesh's central bank has only recovered some US$15 million of the stolen funds despite an international probe.

Fixing the "deficiencies in prevention and detection may require a substantial re-orientation of priorities and resources for some institutions," said Mr Potter, whose unit within the US central bank maintains the international accounts and oversees some US$3.6 trillion in foreign dollar-denominated assets.

Mr Potter said "response regimes" need improvement.

Last year's heist exposed weaknesses not only in Bangladesh Bank and in Swift, but also in the way the Fed detects fraud and communicates with clients in an emergency.

Earlier this month, Reuters reported that Bangladesh Bank had asked the New York Fed to join a lawsuit it was considering filing against the Philippines bank through which the money was stolen. That in turn set off finger-pointing between the bank, Rizal Commercial Banking Corporation, and Dhaka. - REUTERS