Feature: Bangladesh's financial world rocked by massive reserve heist, ATM scams

Businessman Abdur Rahim is tense after depositing money in a bank even though he used to deal with the bank daily with such transactions in Dhaka.

Previously Rahim didn't think twice about the money he kept in his bank account, but nowadays, almost everyday, he enters the bank to check on his account.

Similarly, Abdul Huda, a service holder, also wants to have information about his bank account regularly.

"For me, previously, a bank was the safest place to keep my money," Rahim told Xinhua. "But we're now worried about the risk of fraud."

Rahim and Huda like many others in Bangladesh are now worried about keeping their money in bank's branches, in the wake of recent cyber attacks that have been singled out as the biggest risk to personal finance feared by many Bangladeshis.

In addition to the online attacks, four people, including a German national, have allegedly been involved in an ATM skimming scam and were arrested in Dhaka last month.

Deputy Inspector General of the Bangladesh Police, Monirul Islam, said some 36 customers have had money stolen from their bank accounts by the skimming card gang since January.

Footage captured by closed-circuit television cameras in the ATM booths showed a man, who appeared to be a light-skinned foreigner, attaching devices to the ATM machines in the bank.

The instances of ATM card fraud in Bangladesh have forced almost all 56 major banks to take precautionary measures, including temporarily shutting down transactions through the national payment switch (NPS), to safeguard the interests of their clients.

In Bangladesh, currently some 10 million ATM cards are used in around 7,000 booths, which have CCTV cameras installed in them, through which the banks can monitor the transactions closely.

Sources said, however, that the offenders have stolen information from some 1,200 cards and have withdrawn money by creating duplicates.

The Bangladesh Bank has already instructed all banks to install anti-skimming devices, monitor surveillance footage, and disallow third parties from repairing the machines.

Fresh on the heels of the ATM skimming scam, Bangladesh suffered another blow as it came to light that its account at the U.S. Federal Reserve had been hacked and some 101 million U.S. dollars stolen.

With several investigations underway at home and abroad, the reserve heist raised a huge storm in Bangladesh.

Since news of the heist broke, Bangladesh Bank governor Atiur Rahman has stepped down, a number of its senior executives have been suspended and new chief has been appointed, with his work clearly cut out for him to rebuild the heist-hit central bank and return its stolen money.

Fazle Karbi, a former finance secretary, on Sunday started his first day at Bangladesh Bank work, four days after he was appointed governor of the central bank by the government.

"My priority is to get back Bangladesh Bank's money from the Philippines," he told journalists on Sunday, adding that, "Restoring the confidence of my new colleagues in the central bank will be another priority task for me."

The heist came to light in Bangladesh only a couple of days ago following media reports in the Philippines, although it actually occurred early last month.

Former governor Atiur Rahman has been criticized for keeping the Bangladeshi government in the dark for more than a month about the theft, that made headlines across the world.

The malware reportedly not merely hacked into the Bangladesh Bank system, but also destroyed the system on the computers itself, which are used by its officials to make transfer orders.

Finance Minister AMA Muhith has come down hard on the central bank's top officials as they didn't inform the government about the matter in a timely fashion.

The heist, which saw payments processed through the bank's accounts at the U.S. Federal Reserve and money moved to the Philippines and Sri Lanka, was reportedly part of a bigger attempt to steal nearly 1 billion U.S. dollars in total from the central bank.

The massive heist, which exposed serious weaknesses in systems, was partially scuppered by The Federal Reserve Bank of New York, which blocked transactions worth another 850 million U.S. dollars.

The hackers sent 81 million U.S. dollars from Bangladesh Bank's account in New York, to the Philippines, and another 20 million U.S. dollars to Sri Lanka.

Some 20 million U.S. dollars of the total money stolen has so far been recovered, sources close to the central bank of Bangladesh had earlier said.

Bangladesh has already sought support from the U.S. Federal Bureau of Investigation (FBI).

Relevant authorities in the Philippines are also not sitting idly by, as it has apparently become a matter of pride and honor for the Philippines to resolve the matter and counter accusations of "dirty money" and secrecy.

The AMLC of the Philippines and the National Bureau of Investigation (NBI) have already looked into the matter, while the Senate committee held hearings.

"It's not enough they (the Philippines) show their sincerity in investigating the matter. We will only be satisfied when we see they return Bangladesh's money. It's now become clear that they could have foiled the heist even at the very end of the chain." said a Bangladesh ministry official, asking for anonymity.

The heist has not only hit the Bangladesh banking sector, but also tarnished the image of the country.

"Our entire banking sector has suffered a lot," he said, adding that it's too early to predict how much the banking sector has suffered due to the erosion of customer confidence.

"So far we know that the country's financial sector is already feeling the pinch of the reserve heist and ATM skimming scam," he said.

A manager of a private commercial bank, also speaking on condition of anonymity, said that more and more customers are asking whether their internal system is secure enough to prevent any kind of fraud.

"We're really feeling the pinch of the reserve heist and ATM skimming," the bank manager told Xinhua. Endit