After PNB, City Union Bank hit by fraud

Days after the Rs 11,400 crore fraud at PNB shook the country, private sector City Union Bank on Saturday said it suffered three fraudulent remittances of nearly USD 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 correspondent 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 remittances, one remittance was made through Standard Chartered Bank, New York, to a Dubai-based bank for USD 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.

The second transfer of 300,000 euros (USD 372,150) was routed through a Standard Chartered Bank account in Frankfurt to a Turkish account, while a third totalling USD 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 the 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 a question mark on the efficiency of the SWIFT network as for how secure it is.