- Mar 23 2016
The theft of $101 million from the reserves of the Bangladesh Bank has proved the vulnerability of financial institutions to cyber crime syndicates. This incident challenges the ability of existing mechanisms in preventing such incidents. Besides, the theft highlights the need for strengthening the international cooperation in tackling cyber crime.
In February 2016, the hackers accessed Bangladesh central bank’s transfer codes and sent payment transfer requests worth $1 billon to the Federal Reserve Bank of New York. They requested the funds of Bangladesh be transferred to a bank in the Philippines. The attempt could not be fulfilled in totality following a typo that alerted one of the routing banks and transaction was stopped. The hackers misspelled the name of the non-profit organisation in Sri Lanka against which the transfer was requested. But the hackers were successful in siphoning $81 million in the initial four transactions.
The theft of such a large amount from national reserves astonished many in Bangladesh and abroad. Doubts are being expressed about the country’s preparedness to protect its financial infrastructure, which is undergoing digitisation. The theft has become a major embarrassment for the ruling Awami League government which is running a “Digital Bangladesh Programme” to digitise various arms of the government.
The country’s financial sector was shaken. Top management of the Bangladesh Bank was changed completely. Bank’s governor Atiur Rahman resigned on moral grounds. Ironically, it was Rahman who introduced digitisation of the banking sector. It was under his leadership the bank went ahead with the government’s digital Bangladesh programme in the banking sector. Bangladesh Bank was the first institution to introduce e-tendering, e-commerce and made all payment systems online in Bangladesh.
Cause for worry
The rising incidents of cyber frauds in the financial sector have become a cause of worry in Bangladesh. Last month, Taka 1 crore was withdrawn from ATMs of several banks by fraudsters. The government claims that the present fraud took place due to management failure of the payment system and the IT department.
Repetition of such incidents will affect the economy. Protecting financial sectors from future cyber crimes is need of the hour. Bangladesh has made significant economic growth in past few years; the country had maintained more than 6 per cent growth in the past 10 years.
Given the rising incidents of cyber crimes in Bangladesh, there is urgent need for upgrading the country’s financial infrastructure offering services over cyber space. The government has also formulated a cyber security law. To investigate the case, the government has formed an enquiry commission. Still, there are fears that nailing the perpetrators of such crimes might be difficult unless it gets help from the international community. In the absence of a legally-binding international treaty on cyber crime, there are doubts how much cooperation will the country get from others.
The global cooperation should focus on areas such as setting up of international safety standard, training and information sharing. An international Cyberpol could also to established more in the line of the Interpol.
This commentary originally appeared in The Hindu Business Line.