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Bangladesh Bank Mulls For Lawsuit Against New York Fed

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March 24
8:13 AM 2016

Bangladesh Bank (BB), the country's central bank, has been mulling for potential law suit against the Federal Reserve Bank of New York and has hired a US lawyer in this regard. The lawsuit is going to be filed following denial of responsibility by NY Fed since the cyber heist took place from the opposite terminal of SWIFT interface.   

Hackers have successfully instructed the NY Fed on February 4 to transfer $81 million (£57 million) from BB's current account to several accounts in the Philippines. However, the payments have been made following standard authentication protocols introduced by SWIFT society and acknowledged by all members connected to its network, reports BBC.

, US representative Carolyn Maloney has urged for probing last month's cyber attack on Bangladesh Bank following publication of an internal report in Dhaka. The brazen heist from Bangladesh central bank's account in the NY Fed appears as threat to undermine the confidence of global central banks over Federal Reserve. The heist has also posed threat to safety and soundness of international monetary transactions, reports Reuters quoting Maloney from a statement of the NY Democrat.

Meanwhile, the Philippines anti-money laundering agency has sued two persons with criminal charges- Weikand Xu and Kim Wong. Weikang Xu is a casino jackpot operator who has allegedly taken delivery of $31 million in cash at the Bloomberry and $29 million to his account. Rest $21 million has been transferred to a local online gambling company, Eastern Hawaii Leisure Co., owned by Wong, according to a report published in Zero Hedge.

BB's internal report over the incident, surfaced on Tuesday but dated March 13 has criticized the NY Fed. According to the report, the NY Fed has allowed five of the 35 fraudulent payment instructions to go through leaving many questions.

The US Federal Bureau of Investigation (FBI) has been helping in investigation of the heist that showed the immediate past Bangladesh's central bank governor the door. Democrat Maloney has also reportedly sent a letter to NY Fed President William Dudley, requesting a private meeting with bank staff to discuss the cyber fraud.

Her comments have been analyzed as the first sign that the attack may gain political traction in the US. The NY Fed has also been facing separate political criticism centering the missteps in handling the financial crisis while perceiving conflicts of interest in its role as a regulator. Democrat Maloney has also questioned the Fed actions on treating thirty of the instructions as different.

Cyber attack has been committed at the Bangladesh Bank terminal of the SWIFT system. NY Fed assumes no responsibility since the payment instructions under lens have been implemented following advanced authentication procedures of SWIFT. However, Bangladesh Bank observes the incident differently and preparing to file lawsuit against NY Fed.

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