BB defers discussion with New York Fed

Bangladesh Bank has deferred a meeting with the top officials of the Federal Reserve Bank of New York to discuss recovery of the $81 million stolen by hackers from its account at the Fed, a top official said.

The meeting, which was scheduled for July 15, was supposed to be led by a deputy governor and a senior panel lawyer.

"The meeting has been deferred from our side as we could not take necessary approvals from the government, including the prime minister, in time," said a senior BB official involved in the team.

The long Eid vacation has caused this inconvenience. A new date for the meeting has not yet been determined, said the official adding that it may be held next month.

Abu Hena Mohd Razee Hassan, deputy governor of BB, was supposed to lead a delegation of four members at the meeting with Fed officials. A lawyer will also be included in the BB team along with officials of the Bangladesh financial intelligence unit.

"A lawyer has been included in the team at the Fed's request. Otherwise, they will not sit with us," said a BB official.

This will be a follow-up meeting of similar talks held in Switzerland's Basel, where the heads of BB, the New York Fed and representatives from SWIFT in May agreed to help Bangladesh get back its stolen funds.

"The primary objective of the meeting is to discuss recovery of the stolen money. Other issues, such as the Fed's role in disbursing the funds to the hackers' accounts, are also on the agenda," said an official concerned.

The way Federal Reserve Bank of New York acted in handling the fund transfer requests made by hackers from BB's accounts has raised questions on whether the Fed followed due diligence before executing the fund transfers. Questions also surfaced on whether its authentication process for fund transfer requests falls short of standards.

Future arrangements on BB's deposits held in the New York Fed will also be discussed, as the majority of Bangladesh's nearly $30 billion foreign exchange reserves are with the Fed, the official said.

In the first week of February, unknown hackers breached the computer systems of BB and transferred $101 million into the banking system in the Philippines and Sri Lanka by using the SWIFT network. Of the funds, the BB was able to recover $20 million that had gone to Sri Lanka.

The incident rattled the Bangladesh banking system; then Governor Atiur Rahman had to step down and two deputy governors were removed from their jobs.