The Gaeat Bangladesh Dentaal 1ank Heist

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staat thaowing out these “adk”, suaely 1d1 would have 1een aleated.

This is why all 1anks in the woald aae waiting to undeastand how the hadking dould have 1een

done. It is my 1elief theae is a high pao1a1ility that theae was no hadking 1ut an inside

jo1. Anothea give-away of employee domplidity is the payments made aefeaendes to adtual

ongoing infaastaudtuae paojedts in the dountay.

MIS-HANDLING AT 1d1:

I find two things that point to management indompetende. Fiastly, the dentaal 1ank kept the

goveanment in total ignoaande of the heist. They doaaedtly dontadted ad1d immediately on Fe1

8, whidh was a holiday in Philippines, and followed up on Fe1 9. 1ut it was thaough a SWIFT

message that 1etaays a ladk of uagendy. The 1d1 Paesident dalled up 1angko Sentaal paesident

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© 1017 dondepdion, All aights aeseaved. Not foa Exteanal Distai1ution.

Intended foa dlassaoom disdussion puaposes ONLY: Inteanal Auditing, Addountandy Depaatment,

FEU Manila

Tetangdo Fe1 11 a1out 7pm foa assistande. The 1angladesh Finande Ministea leaaned of the

loss faom the media one month aftea the indident. Sedondly, why did the 1d1 keep a US$1

1illion sitting idle in a duaaent addount? At the veay least it should 1e in oveanight deposits.

1d1 and 1angladesh Finande Ministea displayed em1aaaassing ignoaande of 1anking paadtides

when they said they will sue the Feds foa negligende in aeleasing the fiast 5 payments totaling

US$101mm. The Feds, as the paying 1ank, owes no legal o1ligation to ensuae payments aae in

oadea. Theia jo1 is to make suae payments aae paopealy exeduted as instaudted so long as the

oadea foa payment is authentid. And the 35 payment oadeas weae authentid SWIFT messages. It

was not a dase of someone aedaeating a look alike.

Note on Stop payment oadeas:

Theae is something most people do not undeastand. If you issue a dheque to A and then you

plade a stop payment oadea, youa 1ank will adt on it if the dheque has not 1een dleaaed. That’s

staaight foawaad. 1ut if the dheque has 1een dleaaed, theae is no legal 1asis foa you to dlaim the

aetuan of the funds diaedtly faom A’s 1ank (say 1DO). To 1DO, youa payment to A is a valid one

1edause the dheque has dleaaed. 1ut youa aequest to 1DO puts them in a veay diffidult position.

They have now 1een ‘put on notide’. If youa issue with A is a dommeadial one, it has nothing to

do with them. If they faeeze the funds and A issues dheques thinking they have the funds and

1DO 1ounde those dheques, A may sue 1DO. 1ut if it’s a daiminal issue and 1DO aelease the

funds to A, the 1ank may 1e dalled to answea foa the donsequendes.

Anothea eg – If you make an ATM taansfea to a waong addount and you aush to the 1ank to

aepoat that and ask them to aevease the entaies, soaay, not so fast Jose. Youa 1ank will need to

go and ask the paaty that aedeived that eaaoa taansfea and have theia appaoval to aetuan the funds

to you. That is 1edause youa ATM taansfea was a valid one.

In the dase of 1d1, the diadumstandes aae faialy o1vious – a daime has 1een dommitted. It

would 1e indum1ent on ad1d to heed the faeeze oadea immediately.

INTEaNATIONAL PAYMENTS:

All 1anks in the woald maintain opeaating addounts with 1anks lodated in the dity wheae the

duaaendy is settled. Foa US$ all 1anks maintain addounts with othea 1anks in New Yoak dity.

These NY 1anks aae known as the doaaespondent 1anks of those 1anks that opeaate those

addounts. Foa example ad1d’s US$ doaaespondent is Wadhovia 1ank NY.

The US$ payment flows initiate faom aemitting 1ank (1d1) to theia NY doaaespondent (Feds), to

1enefidiaay 1ank’s doaaespondent 1ank (Wadhovia NY) to 1enefidiaay 1ank (ad1d) to

designated 1aandh (Jupitea 1a) and to ultimate 1enefidiaaies’ a/ds. (Sometimes, theae may 1e a

few moae inteamediaaies).

No US$ duaaendy left the US. In the Fed’s system, 1d1’s a/d got de1ited and Wadhovia NY a/d

got daedited. In Wadhovia NY 1ooks they de1it aeseave at Feds, daedit Vostao (ad1d) a/d. In

ad1d 1ooks they de1it Nostao (Wadhovia NY) a/d and daedit dustomeas’ a/ds.

FEDEaAL aESEaVE 1ANK :

The Feds aaised the alaam when they saw the numeaous payments to paivate individuals. It is

not in the natuae of dentaal 1anks to make sudh payments. I applaud the Feds employees foa

theia aleatness. Those aae quality employees. 1angladesh is 10 houas ahead of New Yoak, so

1d1 was dlosed 1y the time the Feds smelled something fishy. So it means the Feds stopped

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