Authorities arrest suspects in relation to cyber heist carried out in Russian Central bank

  09 Dec 2016 , 17:07

Russian authorities arrested a large number of suspects in May in connection with the recently revealed electronic theft of $19 million from accounts held at the Russian central bank, an official said on Wednesday. The bank said last week that hackers had this year used fake client credentials to steal money from correspondent accounts — used to handle transactions on behalf of another bank — at the Bank of Russia.

Banks around the world are tightening the security of their messaging and money transfer networks following a number of cyberattacks – most notably the use of stolen Bangladesh Bank credentials to send SWIFT messages requesting the transfer of nearly $1 billion from its correspondent account at the New York Federal Reserve. The hackers succeeded in transferring $81 million to four accounts in Manila.

Artyom Sychyov, deputy head of the Bank of Russia’s security directorate, said the Federal Security Service, or FSB, and the Interior Ministry, which oversees the police, had run a joint operation after the Russian heist, and that “a large number of people were arrested”. He declined to give further details – but on June 1, the FSB said it had, together with the police, detained some 50 people suspected of the electronic theft of 1.7 billion rubles ($27 million) from unnamed Russian financial institutions.

The FSB and Interior Ministry did not immediately respond to questions about whether this was the operation mentioned by Sychyov. Sychyov said the attack on the central bank had been confined to third-party correspondent accounts. “The payment system of the Bank of Russia cannot in any way be implicated,” he said.

The Bank revealed the attack in a sparse passage on page 37 of a 69-page financial stability report published last Friday. It said the hackers had broken into an electronic system that gives clients access to correspondent accounts held within the Bank. It said they had attempted to steal 2.87 billion rubles ($45 million), of which 1.67 billion was later frozen or recovered.

Since the report was published, central bank officials have declined to answer detailed questions. This week, the Bank of Russia moved Sergei Moiseyev, head of the department for financial stability, which was responsible for the report, to a new job as adviser to the bank’s governor on reform of the leasing industry. The bank did not respond directly when asked if Moiseyev’s removal was linked to the publication of the information about the cyberattack.

Reuters

Banks uses blockchain to the make first cross-border international trade transaction

Image Credit: Commonwealth Bank of Australia

  24 Oct 2016 , 15:48

The first cross-border transaction between banks using multiple blockchain applications has taken place, Commonwealth Bank of Australia and Wells Fargo & Co said on Monday, resulting in a shipment of cotton to China from the United States. Australian cotton trader Brighann Cotton Marketing bought the shipment bound for the port city Qingdao from U.S. division Brighann Cotton in Texas, the companies and their banks said in a joint statement. The blockchain trade, for 88 bales, totalled $35,000, Commonwealth Bank told Reuters.

Blockchain is a web-based transaction processing and settlement system whose efficiency banks say could slash costs. It creates a “golden record” of any given set of data that is automatically replicated for all parties in a secure network, eliminating any need for third-party verification. “Existing trade finance processes are ripe for disruption, and this proof of concept demonstrates how companies around the world could benefit from these emerging technologies,” Michael Eidel, Commonwealth Bank’s executive general manager for cash flow and transaction services, said in the statement.

The transaction is not the first involving the decentralised database, used since 2009 for the digital currency bitcoin. But it is a milestone for the traditional banking industry which at first shied away from the technology, partly because it makes money flows harder for law enforcement agencies to track.

Led by a consortium of over 70 of the world’s biggest financial institutions – called R3 – the banking industry has been researching ways to harness the speed, accuracy and efficiency afforded by blockchain. One of its benefits is removing people from transaction processing. That has been seen as especially appealing for cross-border trades, which are typically held up by duplication of payment processing and time zone differences.

R3 has been researching ways to expand the use of blockchain to include “smart contracts”, or payments triggered when certain conditions are met. The cotton transaction, for instance, involved automatically making payments when the shipment reached certain geographic locations, the statement showed. The shipment is currently between Singapore and Hong Kong, and is due to arrive in early November, Commonwealth Bank said. The bank also said that R3 – of which it and Wells Fargo are members – did not play a part in the trade.

Brighann Cotton was not available for comment when contacted by Reuters. Wells Fargo’s head of international trade services, Chris Lewis, said in the statement that his bank was committed to new technology. He also said, “significant regulatory, legal and other concerns remain to  be addressed.”

Reuters