SWIFT CEO Gottfried Leibbrandt asks Indian banks to stress-test internal controls to avoid PNB-like fraud

Gottfried Leibbrandt, the CEO of SWIFT, the global financial messaging platform, isn’t loosing any sleep over the fact that the widely-used communications platform was at the centre of the over Rs 13,000 core Punjab National Bank (PNB) fraud, allegedly perpetrated by a few PNB staffers, billionaire diamantaire Nirav Modi, jeweller Mehul Choksi and their firms. In an interview to  The Economic Times, Leibbrandt, referring to the scam at India’s second-largest state-run lender, said banks must ensure that they put in place systems that check insider fraud and that they should never rely on just a single control. “There has to be a system of controls. If one of them fails, there is another one that captures a discrepancy.” [caption id=“attachment_4462663” align=“alignleft” width=“380”] A file photo of Gottfried Leibbrandt. Image courtesy: SWIFT[/caption] Talking about payments’ security and the local banking ecosystem’s moves to digitise payments, Leibbrandt said that after the Bangladesh central bank cyber-heist, SWIFT rolled out a massive customer security programme (CSP), and Indian lenders are warming up to the idea of better controls. However, he told the newspaper that he doesn’t expect “every lender to complaint on day one… Globally, we had 93 percent banks self-attest against these controls. India was at 85 percent and the same goes for linking SWIFT system to their back offices…” In March, SWIFT expanded its GPI Tracker system to help banks track global transactions at all times, helping them maintain full vigil on payment activity, the PTI reported. The introduction of the unique end-to-end transaction reference in all payment instructions will be effected through the mandatory annual standards update in November 2018. The SWIFT GPI reportedly improves the customer experience by increasing speed, transparency and automatically provides status updates to all GPI banks involved in any GPI payment chain. The GPI will target all 11,000 SWIFT customers, who operate in over 200 countries. The PNB fraud saw the accused take advantage of the fact that the bank’s core-banking system (CBS) software platform was not linked to the SWIFT messaging system, helping the wrongdoers bypass the CBS to issue fraudulent letters of undertaking (LoUs). With inputs from PTI