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Bangladesh may not have to sue the US Federal Reserve as it may return the $81 million stolen from its Bangladesh Bank account to protect its reputation, says lawyer Ajmalul Hossain QC.
Published : 29 Mar 2016, 08:32 PM
Bangladesh Bank, which has plans to sue the NY Fed and three other banks for negligence, appointed Hossain last week to make a case of it.
Hossain told reporters on Tuesday it was most important to find out whether the NY Fed breached the contract in allowing the hackers to transfer $81 million to bank accounts in the Philippines.
He said he was also checking if there was any leak in the system.
In one of the worst cyber heists in history, the hackers had also directed the US bank to transfer $20 million to accounts in Sri Lanka using global bank messaging system SWIFT (Society for Worldwide Interbank Financial Telecommunication) on Feb 4.
The money sent to Sri Lanka was recovered, but the amount wired to the Philippines is yet to be retrieved since half of it was converted to local currencies and routed to casinos. The rest of the stolen funds was smuggled out.
Bangladesh Bank submitted a report on the cyber heist to the finance ministry on Mar 13, saying the four US banks involved in the wire-transfer were negligent in carrying out their responsibilities.
Then Barrister Ajmalul Hossain QC was hired on Mar 23, with Filipino officials giving a 'very low chance' of recovering the $81 million.
Hossain said the NY Fed is allowed to transfer funds only when explicit requests are made to it by Bangladesh Bank.
Bangladesh ‘can file a case’ because that did not happen during these controversial transactions, he added.
“This is clear that the thieves gave the instruction. So we can easily say - you (NY Fed) followed instructions from the thieves, not ours. So give our money back.
“This is simple. I think we won’t have to start a case. They will return the money because they are embarrassed. I think they should return it on their own. There is no need to file a case.”
When asked what made him think so, lawyer Hossain said, “Their (NY Fed) reputation is at stake. If the clients think the bank is not secure enough, they will close their accounts and take back their funds. Then the NY Fed will be out of business.”
He said many countries have accounts in the Federal Reserve Bank of New York to keep their funds safe. But Bangladesh’s money has been stolen from there even though the bank is considered a secure place.
“The money was transferred though no payment instruction was received from the Bangladesh Bank. How did they (NY Fed) miss it? I’m checking if they breached the contract or if there is any deficiency in the system. And deficiency may be found in some areas.”
Ajmalul Hossain QC said the central bank had given him the charge to recover the stolen funds, and it was his job to ensure the arrest of those responsible and punish them.
“I’m concentrating on the contract and its possible violation. Federal Reserve Bank had suspected that some of the instructions were not genuine. Even after that, they made the payments before getting confirmation from the Bangladesh Bank.
“Another thing is that they (NY Fed) have a system that can recall funds transferred illegally from an account. Bangladesh Bank complained several times... sent e-mails and letters. It also sent messages through SWIFT. But received no reply.”
Bangladesh Bank officials said the $101 million funds were sent to Sri Lanka and the Philippines through banking and financial services company Wells Fargo, the Bank of New York Mellon and Citibank of New York from the central bank’s NY Fed account.
Hossain said his investigation would also look into whether these banks ‘followed protocol’ while executing the funds transfer requests.
“Bangladesh Bank will decide whether it will start a case after it gets all the information,” he added.
