Legacy infrastructure
The underlying technology of the global financial network is difficult to navigate, consisting of a variety of incompatible legacy protocols and standards; many of the current electronic settlement systems have remained relatively unchanged for 40 years.
For instance, Automated Clearing House (ACH) transactions in the United States are still conducted via fixed-width text files (with precisely 94 characters per line), uploaded to various FTP servers and downloaded at specific times of day for settlement. Until 2016, these transactions cleared the following business day, when NACHA announced an update allowing for same day payments. This “upgrade” involved no changes to the underlying specification; rather, banks were required to process transactions twice instead of once daily.
Other clearing systems include the Society for Worldwide Interbank Financial Telecommunication (SWIFT); the New York Clearing House Association’s CHIPS network; and the Federal Reserve’s Fedwire network.
Each involve substantially more robust checks and balances than ACH and benefit from greater speed, increasing the complexity of the global financial system. Together, these systems transmit a staggering 3.6 quadrillion USD in global volume.
Daily processing volume
SWIFT
5 trillion USD
30.7 million transactions
Fedwire
2.1 trillion USD 528,000 transactions
CHIPS
1.4 trillion USD 430,000 transactions
ACH
120 billion USD
70.1 million transactions
Fraud vulnerability
Despite the additional supervision involved in these ledger systems, their protocols and networks are vulnerable to fraud. In a 2016 survey of the largest financial institutions, “cybersecurity concerns” was the most- responded challenge that bank executives said they faced in their day-to- day role, and many such instances of theft have recently become public.
In 2016, thieves made off with 81 million USD by impersonating Central Bank SWIFT operators. Throughout a single weekend, they routed four transactions through the New York Fed’s mostly automated system, moving 101 million USD from Bangladesh to the Philippines. It was only when a New York Fed official caught a thief’s misspelling of the beneficiary name that they were able to alert Bangladesh Bank officials and prevent the transit of an additional 920 million USD.
In 2018, a larger heist was discovered involving the Punjab National Bank and promissory “letters of understanding” issued through SWIFT, where funds were laundered by using a password provided by bank officials for direct access to the SWIFT network. Letters of understanding were issued for the equivalent of nearly 1.77 billion USD, and they were not correlated with the lesser amount that was registered via SWIFT in the bank’s holdings. Despite repeated warnings against fraudulent SWIFT messaging from the deputy governor of the Reserve Bank of India, the scam went undetected for nearly seven years.
Visit for more information:
https://pdxcoin.io/
https://pdxcoin.finance
https://twitter.com/PDX_Coin
https://www.reddit.com/r/PDXCoin/
https://t.me/PDXToken
https://www.facebook.com/pdxcoin/
