Bangladesh Bank, NY Fed discuss suing Manila bank for heist damages

Far Eastern International Bank

08/12/2017 03:11

By Krishna N. Das and Serajul Quadir 
    DHAKA, Dec 8 (Reuters) - Bangladesh's central bank has asked 
the Federal Reserve Bank of New York to join a lawsuit it plans 
to file against a Philippines bank for its role in one of the 
world's biggest cyber-heists, several sources said. 
    The Fed is yet to respond formally, but there is no 
indication it would join the suit. 
    Unidentified hackers stole $81 million from Bangladesh 
Bank's account at the New York Fed in February last year, using 
fraudulent orders on the SWIFT payments system. The money was 
sent to accounts at Manila-based Rizal Commercial Banking Corp 
 RCBS.PS  and then disappeared into the casino industry in the 
Philippines. 
    Nearly two years later, there is no word on who was 
responsible and Bangladesh Bank has been able to retrieve only 
about $15 million, mostly from a Manila junket operator. (http://reut.rs/2jk1W74) 
    Officials from Bangladesh Bank and the New York Fed spoke 
about legal action against RCBC in a conference call last month 
that was also attended by two representatives from SWIFT, 
according to three sources in Dhaka who had direct knowledge of 
the conversations. 
    It was agreed that Bangladesh Bank would send a proposal on 
the suit to the New York Fed, they said. 
    "The aim is to file a case by March-April in New York," said 
one of the sources. "Work is on. Bangladesh Bank is likely to 
send something to the Fed soon." 
    The source said the idea was it would be a civil suit to 
recover the money, and that Bangladesh hoped the Fed and SWIFT 
would be joint petitioners. 
    Subhankar Saha, a spokesman for Bangladesh Bank, said he had 
no knowledge of any plans to sue RCBC but that "efforts are on 
to recover the entire stolen money". 
    The New York Fed and SWIFT declined comment. 
    A source familiar with the New York Fed's thinking confirmed 
that Bangladesh Bank's external counsel raised the idea of 
filing a suit against RCBC in the call. 
    The New York Fed officials agreed to review any proposal 
Bangladesh Bank wrote up but they did not formally agree to a 
joint effort, and have not since worked on it nor heard from 
Bangladesh Bank, the source said. 
    There was no indication that the Fed would join the suit 
once it had received and reviewed the proposal. 
     
    ROGUE EMPLOYEES 
    RCBC has blamed rogue employees and Philippine prosecutors 
have filed money laundering charges against a former RCBC bank 
manager and four people who owned the bank accounts where the 
funds were sent, but are not identifiable since the accounts 
were in fake names. They are the only people to be formally 
cited anywhere in the world in association with the crime.  
    Bangladeshi officials have cited internal RCBC documents, 
also seen by Reuters, to assert that the Filipino bank ignored 
suspicions raised by some RCBC officials when the money was 
first remitted to the accounts on Feb. 5, 2016, and then delayed 
acting on requests from RCBC's head office to freeze the funds 
on Feb. 9. (http://reut.rs/2BM9EOO) 
    RCBC did not respond to requests for comment. But it has 
said in the past that it would not pay any compensation and that 
Bangladesh Bank bore responsibility for the theft since it was 
negligent.  
    RCBC was fined a record one billion Philippine pesos ($20 
million) by the country's central bank last year for its failure 
to prevent the movement of the stolen money through it. 
    Separately, a Bangladesh court has sent "letters rogatory" 
to the United States seeking the findings of the Federal Bureau 
of Investigation (FBI) into the case, said the main police 
investigator in Dhaka. 
    Letters rogatory are documents used to obtain judicial 
assistance from foreign courts. 
    "We have questions for the Federal Reserve Bank, we want to 
collect the FBI report, what their findings are," Molla Nazrul 
Islam, a special superintendent of police in Bangladesh, told 
Reuters this week. 
    An FBI spokeswoman said the agency could not comment on 
ongoing cases. 
    A hacking group called Lazarus that is believed to have 
connections to North Korea has been linked to the Bangladesh 
cyber heist and some U.S. officials said earlier this year that 
prosecutors were building a case against Pyongyang. 
    But no case has yet been filed. 
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
How the New York Fed fumbled over the Bangladesh Bank heist    http://reut.rs/2jk1W74 
How hackers made off with millions    http://reut.rs/2BFiqgN 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Reporting by Krishna N. Das and Serajul Quadir in Dhaka; 
Additional reporting by Karen Lema in Manila, Michelle Price in 
Washington, Jonathan Spicer in New York and Jim Finkle in 
Toronto; Editing by Raju Gopalakrishnan) 
 ((Krishna.Das@tr.com; +91-98711-18314,  +91 11 4954 8026; 
Reuters Messaging: Krishna.Das.thomsonreuters.com@reuters.net, 
Twitter: https://twitter.com/krishnadas56)) 
 
Keywords: CYBER HEIST/BANGLADESH