There’s been a slew of movies and TV shows about criminal activities being carried out in the brave new world of cyberspace by hackers and other evildoers. The villains are shown being thwarted by a new generation of security operatives, some of them, as in “CSI: Cyber,” being former criminal hackers themselves.
“CSI: Cyber” is not a favorite show of mine, unlike its predecessors which set the tone for present-day scientific police procedurals and fascinated me no end. Watching “CSI: Cyber,” my husband and I must concentrate if only to follow the dialog and understand what all that jargon is about. And oftentimes, we end up in a fog of confusion and puzzlement, not entirely sure what happened.
Well, maybe we should have been paying better attention. Or boning up on our computer-ese. Because the hottest story these days (which, I am proud to say our business section staff at the Inquirer broke), not just in the Philippines but even abroad, is the theft of $81 million from the foreign reserves of the government of Bangladesh.
This cyberthieves (believed to be Chinese) accomplished by fielding “malware” or malicious software into the system of the Federal Reserve Bank of New York where the Bank of Bangladesh (equivalent to our Bangko Sentral) kept its foreign accounts.
Over the course of two days, as news accounts put it, a total of 35 transfer orders were sent to the Federal Reserve Bank of New York and remitted the money to a Philippine bank, the Rizal Commercial Banking Corp. The money was then “laundered” by transferring it to local casinos, where the cash was converted into chips, and then cashed in.
If the story sounds straight out of “CSI: Cyber” or a movie like “Blackhat,” that may be because elements of the elaborate scenario had long been possible, if not in fact operational.
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But oh my, what an embarrassment for the country!
Did the perpetrators of the theft choose a Filipino-owned and -managed bank because of our notoriously lax regulations and oversight operations? Or were the recipients of the mind-boggling money transfers as well as those who facilitated them in on the action from the very start?
While a Senate hearing on the laundering scheme is ongoing as this is being written, with a dark cloud gathering above the banking community and financial regulations field, in Bangladesh the controversy has already generated political fallout.
The head of Bangladesh Bank, Atiur Rahman, has already resigned his post, after being asked to do so by Finance Minister A.M.A. Muhith.
Rahman came under fire not just for allowing the theft to happen but also for his “incompetent handling” of the incident, particularly for taking more than a month before informing the finance ministry of the loss of $81 million to hackers.
So far, the fallout in the country has mainly fallen on the four account holders—Michael Francisco Cruz, Jessie Christopher Lagrosas, Alfred Santos Vergara and Enrico Teodoro Vasquez—under whose names the purloined funds were transferred; and on Maia Santos Deguito, manager of the RCBC branch on Jupiter Street in Makati, where the funds were deposited.
Though she has so far staunchly maintained her right to refuse to testify before the public Senate hearing, invoking the right against self-incrimination, Deguito and her lawyer have dropped hints that “higher-ups” in the bank not just knew of but even approved of the transactions.
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So there is about this international scandal not just a whiff of irregularity but the stink of an international criminal syndicate that dares takes on the biggest, most prestigious names in international banking.
At the same time, it exposes the soft underbelly of the banking system of poor countries. I don’t think it’s just coincidence that Bangladesh and the Philippines became victims of the international cybercriminals, perhaps with the connivance of Bangladeshis and Filipinos themselves.
But think of who this heist has hurt. It isn’t just the people of Bangladesh, who lost public funds that had been targeted for use in development projects, mainly infrastructure, which will now face extraordinary difficulty being completed. There’s also us Filipinos, whose reputation in the field of international finance—even if many of us have difficulty understanding just how the theft took place—is now sullied and come under suspicion.
If only to strengthen and bolster the Anti-Money Laundering Act (Amla), as Securities and Exchange Commission Chair Teresita Herbosa has appealed, then I approve wholeheartedly of a full congressional investigation into this scandal. Maybe they could take a closer look at the exemption granted the country’s casinos—and their regulator Pagcor—from coverage of the Amla. The casinos’ involvement in the cybertheft may be reason enough to put them under closer government supervision.
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In the end, we all have a stake in the ongoing Senate hearings and in the probe. It may not be our money involved—or even the government funds—but our international reputation is at stake. An earnest and thorough investigation, with no one spared, is called for if other countries we deal with in this age of cybercommerce would continue to trust in the integrity of our business practices. Time to watch more “CSI: Cyber”!