Hackers are likely to get away with about $70 million of Bangladesh’s foreign reserves after a brazen cyber-attack against the South Asian nation, according to Finance Minister Abul Maal Abdul Muhith.
The Philippines — where most of the funds ended up — will probably recover as much as $10 million of the $81 million stolen in February from Bangladesh’s account at the Federal Reserve Bank of New York, Muhith said. The rest is hard to track, he said.
“The way it has been lost, it’s very difficult to identify the beneficiaries,” Muhith said by phone from Dhaka. “It has gone largely into casinos and casino accounts.”
The attempted theft of almost $1 billion has prompted central banks around the globe to review defenses against hackers looking to loot bountiful foreign reserve accounts. While the Fed blocked most of the transfers, about $81 million ended up in the Philippines. Another $20 million sent to a bank in Sri Lanka was returned.
The Philippines is investigating the heist. Muhith said Bangladesh is also conducting a probe, adding that “definitely some of our people must’ve been involved.” He declined to disclose further details.
Muhith repeated criticism of the NY Fed’s handling of the money transfers, saying it allowed four transactions to go through without confirmation.
“That way they become liable for that part of the fraud,” Muhith said, referring to the NY Fed. “There have been security lapses and the Federal Reserve cannot be excused for some blame in this trouble.”
The Fed said last month that instructions to make the payments from the account of Bangladesh’s central bank followed standard protocols and were authenticated by the SWIFT message system used by financial institutions.
Bangladesh’s security systems are “very vulnerable” and consultants are working on improving defenses, Muhith said. A detailed report on the investigation will be completed in about six weeks, he said.
Bangladesh’s foreign reserves climbed to a record $29 billion this year as a weaker yuan cut the cost of raw materials used in its garment industry. Exports are holding up despite the drop in global demand, Muhith said.
He called the crime “a very unusual event,” adding that the world hasn’t seen anything like it in recent memory. “It’s a large sum of money for Bangladesh,” Muhith said. “This is a very good warning, a signal to the world to take proper security measures in respect to money transfers.”