New York, NY (BBN)– The Federal Reserve Bank of New York is keeping the hotline in its central bank account-services group open around the clock seven days a week, after the unit was caught up in a cyber attack that spirited tens of millions of dollars from Bangladesh’s account in February.
Previously, the unit’s hotline was only open between 8:30 a.m. and 5:30 p.m. Monday to Friday, according to the New York Fed’s website. The change took place in recent months and wasn’t formally announced, said people familiar with the matter, reports the Wall Street Journal (WSJ).
The move follows assurances by Federal Reserve Chairwoman Janet Yellen that the central bank would tighten its procedures for approving money transfers in the wake of the incident involving Bangladesh’s central bank, in which thieves tried to steal $951 million and walked away with $81 million.
“Let me just say, the New York Fed systems weren’t compromised, but they are looking at their processes—looking at what’s best practices, looking at the possibility of enhanced monitoring for certain kinds of transactions,” Ms. Yellen said during semiannual testimony to Congress in June.
In the Bangladesh heist, the New York Fed flagged a dozen payment orders from the hackers as suspicious hours after they arrived. But, failing in their initial efforts to reach Bangladeshi officials, Fed officials waited over the weekend before stopping certain transfer requests that they had previously authorized.
The culprits took advantage of differences in when weekends fall between the U.S. and Bangladesh. The Friday when the crime occurred was a weekend in Bangladesh and the central bank’s offices were closed, but it was a workday in New York.
Bangladesh Bank officials said they contacted the New York Fed by email, telephone and fax when they returned to work, and those attempts went unanswered. Officials for both central banks didn’t connect until the following Monday.
The Fed group involved is called Central Bank and International Account Services, or CBIAS. The unit is led by 30-year New York Fed veteran, Anne Baum, who took over recently when the former head of the group, Timothy Fogarty, retired, according to the WSJ
A spokeswoman for the New York Fed declined to comment on what changes the CBIAS unit was making, including the 24-hour hotline, which was reported earlier by Reuters. But in a June statement, the bank said, “In conjunction with the [Fed] Board of Governors, the New York Fed has taken a comprehensive look at its processes and has enhanced monitoring for certain jurisdictions and transaction types for customers.”
The CBIAS unit offers payment, custody and investment services to as many as 250 foreign central banks, governments and international institutions on behalf of the Fed, according to the New York Fed’s website. It tends to screen payment instructions automatically, but manual reviews can sometimes happen after a payment has been executed.
The New York Fed has defended the procedures in the CBIAS unit. In a letter released by a lawmaker, Thomas Baxter, then the head lawyer and executive vice president at the bank, said the unit’s procedures are mostly for preventing dollars from being transferred to individuals or firms that have been placed under sanctions and “are not designed to protect our customers from an unauthorized transfer.”
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