Possibility of insider involvement in illegal transfer of funds

Kathmandu, October 24

The KPMG team that arrived from India on Monday for forensic investigation has not confirmed that NIC Asia Bank’s SWIFT server was hacked, pointing towards the possibility of involvement of insiders in the unauthorised transfer of funds through SWIFT system of the bank.

“The investigation team has yet to confirm whether a foreign party was involved in the fund transfer order through SWIFT or it was done with staffs’ collusion,” a high-ranking official at NIC Asia Bank said, seeking anonymity. “We will get a clear picture of what really happened by the end of this week.”

Though the bank had reported the suspicious transactions to Nepal Rastra Bank (NRB) — the central regulatory and monetary authority — it has not sought help from Central Investigation Bureau (CIB) of Nepal Police to identify the hacker ‘because it is yet to be determined whether it really was a cyber heist’.

Pushkar Karki, deputy inspector general of Nepal Police and chief of the CIB, confirmed that the bank has not reported the incident of SWIFT hack to the bureau. “We cannot initiate an investigation into a matter that is not reported to us,” Karki explained.

CIB has a track record of effectively investigating financial and such technological frauds. The notorious gang of east Europeans involved in ATM fraud in Nepal was detained following the investigation carried out by the CIB last year.

The bank official said that the institution would seek help from CIB to identify the hackers if the investigation confirms the SWIFT system was indeed hacked without the involvement of insiders.

Rajendra Pandit, joint spokesperson for NRB, said that the central bank is waiting for the investigation report of KPMG and would take necessary action only after the investigation concludes. In the case of involvement of insiders, those found guilty will be punished as per the provision of Banking Offence and Punishment Act, as per Pandit.

NIC Asia Bank had reported to the NRB that their SWIFT system had been hacked during the Tihar festival. The bank had requested the central bank to correspond with the central banks of the concerned countries where the payment orders were placed to put the payment order on hold citing the SWIFT system had been hacked.

NIC Asia Bank has also already requested the foreign banks, in which it operates its foreign currency accounts, to hold the fund transfer till the investigation concludes and also requested the banks of different countries where payment orders have been placed to hold the payment to all parties. The bank has requested that all cross-border transactions be put on hold until the investigation concludes.

Reportedly three staffers were responsible to handle the bank’s SWIFT server.