Central bank hires jurist to assess scopes of case against NY Fed

The central bank hired jurist Ajmalul Hossain QC to assess the responsibility before filing a lawsuit against the Federal Reserve Bank of New York over the US$101 million digital theft from its account.
"We're yet to take decision about filing the lawsuit against the US Federal Reserve Bank. But the central bank has already appointed the senior lawyer to assess legal grounds in this connection," SK Sur Chowdhury, deputy governor of the Bangladesh Bank (BB), told the FE Wednesday.
He said the lawyer will also look into alternative option for expediting the process of recovery of the stolen money from the Philippines.
The central bank of Bangladesh has already sought cooperation from different international organisations, including the Federal Reserve Bank of New York, the central bank of the Philippines and the Egmont Group, to recover its stolen money, according to the BB officials.
They are now reviewing multiple processes to prepare ground to lay legitimate claim to lost funds with the Federal Reserve Bank.
"Our investigators are trying to understand whether the New York Fed followed the correct due-diligence procedure or not in the case of such fund transfer," a BB official said, without elaborating.
 The legal expert has also been assigned to assess the responsibility of the Rizal Commercial Banking Corporation (RCBC) of Manila in the light of international best practices of fund transfers, another BB official said.
On Tuesday, the RCBC fired the manager and the deputy manager of the branch through which the illicit transactions took place, citing violations of bank policies and procedures as well as falsification of commercial documents, the Inquirer reported.
Meanwhile, in a latest development, U.S. Representative Carolyn Maloney sent a letter to New York Fed President William Dudley, requesting a private meeting with bank staff to discuss the digital fraud.
"Why did the New York Fed block the last 30 transfer orders, but not the first 5 orders? What was it about the last 30 transfer orders that raised the New York Fed's suspicions?" Maloney, a New York Democrat, raised the questions in her letter that is available on her website.
Cyber criminals had sent 35 orders, via the Swift financial messaging system, to transfer roughly $951 million out of Bangladesh Bank's account with the New York Fed on February 4 night  to a series of private accounts in other countries.·
The New York Fed executed five of these orders, transferring a total of $101 million to four private accounts in the Philippines and one to the account of a non-governmental organisation in Sri Lanka.
The Fed did not carry out the remaining 30 transfer orders, totaling $850 million, and instead sought reconfirmation from the central bank of Bangladesh.
"Fortunately, the $20 million transfer to the Sri Lankan account was halted when a correspondent bank questioned a misspelling in the transfer instructions," she said in her letter.
In order to better understand these important issues, while also protecting the confidentiality of the Bangladesh Bank and other foreign central banks with accounts at the New York Fed, "I respectfully request a confidential briefing from the appropriate staff at the New York Fed."
Nearly $20 million of the stolen money was recovered from Sri Lanka. The lion's share of the booty ended up in the Philippines, where it is reported to have been squandered through gaming in casinos.
"We fully intend to reach out to the congresswoman and will endeavor to address her questions," a New York Fed spokeswoman was quoted by Reuters as saying Tuesday.
The New York Fed, the premier one of 12 such in the US central banking system, which holds the accounts of some 250 foreign central banks and governments, has previously said very little publicly about the heist, beyond a March 9 statement that the payments were made in the usual way and that there was no evidence its systems were compromised.
The office of Fed's Investigator General has said it is aware of the situation but has not commented as to whether it will conduct its own review, according to the international newswire.
Meanwhile, as part of an internal security measure, the new Bangladesh Bank governor, Fazle Kabir, asked country's bank owners to preserve copies of passports of officials who work in treasury and fund- management departments.
The Philippines Anti-Money Laundering Council (AMLC) has filed a criminal complaint against two Chinese businessmen for their alleged involvement in laundering of money stolen from Bangladesh Bank's US account.
The two accused are casino junket operator Xu Weikang and Cagayan-based restaurateur Kam Sin Wong, the Philippine Daily Inquirer reported on Tuesday.
The AMLC traced the stolen money to their personal accounts, the Inquirer said.
An AMLC investigation found that the money was wired to four accounts under fictitious names in the Rizal Commercial Banking Corp (RCBC) branch on Jupiter Street, Makati City.
The Inquirer also reported the RCBC fired the branch manager, Maia Santos-Deguito, and her deputy, Angela Torres, on Tuesday.
Bangladesh lost $81 million in the biggest cyber theft in banking history in early February.
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