Mar 09

“Where’s Our $100 Million?” – Furious Bangladesh Holds Fed Responsible For Historic Theft:

Someone at the New York Fed messed up.

On February 5, Bill Dudley was “penetrated” when “hackers” (of supposed Chinese origin) stole $100 million from accounts belonging to the Bangladesh central bank.

As we reported on Tuesday, the money was apparently channeled to the Philippines where it was sold on the black market and funneled to “local casinos” (to quote AFP). After the casino laundering, it was sent back to the same black market FX broker who promptly moved it to “overseas accounts within days.”

Obviously, that’s hilarious, not to mention extremely embarrassing for the NY Fed. Here’s what the Fed had to say yesterday about the “mishap”:

  • NEW YORK FED SAYS HAS BEEN WORKING WITH BANGLADESH C.BANK ON ISSUE OF LOST FUNDS
  • NEW YORK FED SAYS PROBLEMATIC BANGLADESH CENTRAL BANK PAYMENT INSTRUCTIONS ‘FULLY AUTHENTICATED’ BY SWIFT MESSAGING SYSTEM

Right. Someone in the Philippines requested $100 million through SWIFT from Bangladesh’s FX reserves. Nothing suspicious about that.

“Some 250 central banks, governments, and other institutions have foreign accounts at the New York Fed, which is near the centre of the global financial system,” Reuters notes. “The accounts hold mostly U.S. Treasuries and agency debt, and requests for funds arrive and are authenticated by a so-called SWIFT network that connects banks.”

Well, as it turns out, Bangladesh doesn’t agree that the Fed isn’t ultimately culpable.

“We kept money with the Federal Reserve Bank and irregularities must be with the people who handle the funds there,” Finance Minister Abul Maal Abdul Muhith said on Wednesday.

It can’t be that they don’t have any responsibility,” he said, incredulous.

Oh yes it can, Mr. Muhith. Because you are Bangladesh and you are dealing with the NY Fed, a thoroughly corrupt institution which can do and say whatever it wants. If you think anyone at 33 Liberty cares about a lousy $100 million that went missing from the account of a country that most Americans only know exists because they checked the care label on their laundry, you are sorely mistaken. To wit, from Bloomberg:

A Federal Reserve Bank of New York spokeswoman said on Monday there was no sign its systems had been hacked after Bangladesh Bank reported the missing funds.

There is no evidence that any Fed systems were compromised, the spokeswoman said.

Well, yes, there is “evidence that Fed systems were compromised” because $100 million was stolen from Bangladesh and the money ended up in Philippine casinos.

Muhith plans to seek legal recourse to recover the funds, although it wasn’t immediately clear who he’ll target, the “Chinese” hackers, the Philippine black market FX brokers, or Bill Dudley.

In any event, the Fed is sticking with its story. There was no “penetration.” 

“To date, there is no evidence of any attempt to penetrate Federal Reserve systems.” 

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From Bangladesh Bank’s statement

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

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.

In the meantime, the Philippines’ anti-money-laundering authority filed case in that country and obtained court order to freeze the concerned bank accounts.

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