Cybersecurity, foreign interference key risks in banking sector

The National Security Intelligence (NSI) has identified some internal and external risks for the country's central bank and the overall banking sector, sources said.

"Although efforts are on from the central bank to restore discipline in the banking sector, some risks of disrupting such a positive move remain at both local and international levels," it said.

To avert possible problems, the NSI recently submitted a set of recommendations to the Financial Institutions Division (FID) under the finance ministry. On March 5, the FID forwarded the recommendations to the Bangladesh Bank (BB) and asked it to take necessary steps in this connection.

The NSI mentioned various risks, including mismanagement and internal risks related to boards of directors, foreign espionage, cybersecurity threats and the risk of sabotage, foreign interference in sovereignty, and the erosion of strategic financial autonomy.

Mentioning the present situation, it said there are fears that incidents like the 2016 central bank reserve heist may recur.

The agency said in its overall assessment that Bangladesh's financial sector is currently facing various problems due to a number of reasons. Security risks are a new addition to the banking sector's problems.

It said conflicts among the members of bank management bodies are being observed. Besides, various issues have created distance between the senior management and junior employees.

Requesting anonymity, a senior FID official told The Financial Express, "We have asked the Bangladesh Bank to take necessary steps in this regard."

The intelligence agency fears incidents like robbery may occur, which may affect customers while transporting money from one bank to another or withdrawing cash. This has a risk of loss of life and property, it said.

It said there is a risk of foreigners getting access to banking information if appropriate measures are not taken to address cybersecurity threats and sabotage risks.

The agency, which operates under the home ministry, believes foreign interference and cyber attacks may threaten the country's internal security and economic independence, which could create negative impacts on international relations and diplomacy.

Besides, some foreign organisations may secretly conduct surveillance or collect data from Bangladesh due to pressure from their own governments, which could lead to sensitive information leaks. If that happens, it will be tough to avoid foreign influence on Bangladesh's economic and political decision-making.

The NSI said the country's entire banking and economic system could be disrupted if foreign software-providing countries impose any sanction or force their companies to cease services, which could threaten Bangladesh's sovereignty and economic independence.

The recommendations include issuing strict instructions by the Bangladesh Bank to strengthen security measures in all branches of all banks, mandatory deployment of multiple armed security guards in every branch, and seeking the assistance of armed police while transporting large amounts of money by banks and customers.

The NSI opined that the banking regulator may advise to increase surveillance in all banks, which will reduce internal conflicts in the banking sector, and form regional/local coordination committees immediately to resolve any unstable situation in any bank/branch.

It thinks Bangladesh needs to take some important steps to address the issue of cybersecurity risks.

The suggestions also include investing in local technology innovation and software development to increase the country's technological self-reliance, creating a legal framework to reduce dependence on foreign institutions, and raising awareness and arranging training in the areas of information security and cybersecurity so that both the public and the government can protect themselves from foreign influence. When contacted in this regard, Bangladesh Bank Spokesperson (Executive Director) Arif Hossain Khan said he is abroad and suggested talking to Mohammad Shahriar Siddiqui, director of the Banking Regulation and Policy Department. However, Siddiqui could not be reached over the phone despite several attempts.

Meanwhile, in a recent report, global ratings agency Moody's Ratings downgraded the outlook for Bangladesh's banking system to negative from stable, citing adversities like rising asset risks, poor corporate governance, and slower economic growth.

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