Punjab National Bank has strengthened its controls over the use of SWIFT, a global payments network after being hit by the Nirav Modi scam. As per the new controls, only the PNB officers will have the authority to initiate messages on SWIFT as opposed to the previous system wherein clerks also had the authority to do so. New limits have also been placed on the amount that officers can generate depending on their standing in the bank hierarchy.
The fraud was committed by two junior officials at the Brady House branch in Mumbai, who issued illegal letters of undertaking via SWIFT, for companies tied to a Nirav Modi and Mehul Choksi.
The official notice was circulated by the bank’s head office to all the regional offices on February 17 and stated that starting Thursday, any SWIFT message will have to be created, verified and authorised by three different officers. Previously only two individuals were required 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 said.
“When a case of potential fraud is reported to us, we offer our assistance to the affected user to help secure its environment,” said Natasha de Terán, SWIFT spokeswoman in Brussels. “SWIFT can reassure customers that there is no indication the SWIFT network has been compromised.”
PNB has also created a separate unit called “Treasury Division Mumbai” for the re-authorisation of messages meant for LoUs and sent over SWIFT by the branches.
“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 scam, whose scale PNB only disclosed last week.
Any rejection due to any mismatch will be “kept on record for audit by auditors”, the note added.