PNB adopts strict control over SWIFT use after mega fraud
Mumbai, Feb. 22: Staterun Punjab National Bank ( PNB) has stepped up its controls on the use of global payments network SWIFT following an alleged $ 1.77 billion fraud, according to memos issued this month.
India’s second biggest state lender this month revealed the country’s biggest loan fraud, which it alleges was committed by two junior officials at a Mumbai branch, who issued unauthorised “letters of undertaking” ( LoU) via SWIFT, for firms linked to a billionaire jeweller Nirav Modi and his uncle Mehul Choksi.
The new measures mean only PNB officers will be able to initiate messages on SWIFT, taking away the authority of clerks to do so. Several new limits have been placed on the amount that officers can generate depending on their seniority in the bank hierarchy.
The note sent by the bank’s head office in New Delhi to all regional offices on February 17 also stated any SWIFT message will have to be created, verified and authorised by three different officers, starting Thursday. Previously only two individuals were needed for the process.
“In continuation of efforts to strengthen SWIFT operation and deploy additional measures to ensure more effective control, it has been decided to set up SWIFT user base limits,”
the note went on to say.
A SWIFT spokeswoman in Brussels said it was aware of the reports around PNB but that it could not comment on individual customers.
PNB has also created a unit called “Treasury Division Mumbai” for reauthorisation of most messages sent over SWIFT by branches. The messages include those meant for LoUs, according to a separate circular the bank sent to all its offices on February 12.
“The designated officer at SWIFT Centre, treasury division, will cross- check the credentials of ( the) message in Finacle,” said the note, referencing the lender’s core banking software that was allegedly bypassed to pull off the PNB scam. Any rejection due to any mismatch will be “kept on record for audit by auditors”, the note added.