Sri Lanka investigating money allegedly laundered from NY Fed

Mar 10, 2016 (LBO) - Sri Lanka is investigating Bangladesh government's claims that hackers stole nearly 100 million dollars from an account with the Federal Reserve Bank of New York and laundered money in Philippines and Sri Lanka. Bangladeshi officials said they had recovered part of the money from Sri Lanka and was in contact with the Philippines’ authorities to track down the rest that may have been routed to three casinos, according to media reports.

"We have been notified. We are investigating it," a senior Sri Lankan government official told Lanka Business Online.

Twenty million dollars of 101 million dollars had been recovered from an account held in Sri Lanka, according to a Bangladeshi central bank official, leaving 81 million dollars unaccounted for. "The money has not actually reached Sri Lanka, so we are trying to trace what happened to it. I can't reveal any details at this stage," the Sri Lankan official said.

The US reserve bank, which manages the Bangladesh Bank reserve account, denies its systems were breached. Media reports said a separate transfer of 870 million dollars had been blocked by the Fed, and the transfer of 100 million dollars appeared to have proper bank verification codes. Some 250 central banks, governments and other institutions have foreign accounts at the New York Fed. They hold mostly US Treasuries and agency debt, according to the New York Post. The New York Fed has been hacked before.

A British citizen was accused in 2014 of breaching its servers and posting private data. The Central Bank of Bangladesh, which has 28 billion dollars in currency reserves, said hackers looted its account Feb. 5 and moved money to the Philippines and Sri Lanka. The funds were “brought into the Philippines’ banking system, sold to a black-market foreign-exchange broker, transferred to at least three large local casinos, sold back to the money broker and moved out to overseas accounts — all in a matter of days,” the Philippines’ Daily Inquirer said.