Days after the Rs 11,400 crore fraud at PNB shook the country, private sector City Union Bank today said it suffered three fraudulent remittances of nearly $2 million (about Rs 12.8 crore). Just like the fraud at Punjab National Bank (PNB), no entries of remittances were made in the ledgers of City Union Bank and transfers were pushed through the SWIFT financial platform. "During our reconciliation process on February 7, it was found out that 3 fraudulent remittances had gone through our SWIFT system to our corespondent banks which were not initiated from our bank's end. We immediately alerted the correspondent banks to recall the funds," City Union Bank said in a regulatory filing on stock exchanges. Of the 3 fraudulent remittance, one remittance was made through Standard Chartered Bank, New York, to a Dubai based bank for $5,00,000 which was blocked immediately and was returned to City Union Bank, it said. Chennai-based City Union Bank said the transfers had been made through correspondent banks even though it had not requested the transfers.
A second transfer of 300,000 euros ($372,150) was routed through a Standard Chartered Bank account in Frankfurt to a Turkish account, while a third totalling $1 million was sent through a Bank of America account in New York to a China-based bank. The bank said it was working with the Ministry of External Affairs and officials in Turkey and China to repatriate the funds. "With the help of Ministry of External Affairs through Consulate General of Shanghai and Istanbul and office of the National Cyber Security Council (PMO) all possible efforts through diplomatic and legal channels are being taken to repatriate the money," it said.
The recent episode raises question mark on the efficiency of the SWIFT network as how secure it is. The PNB fraud pertains to issuance of fake Letters of Understanding (LoUs) to companies associated with billionaire jeweller Nirav Modi by errant PNB employees which enabled these companies to raise buyers credit from international branches of other Indian lenders.
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