Internal Fed documents released in June in response to a Freedom of Information Request showed the dozens of cyberbreaches at the central bank included four described as acts of “espionage” and others of unauthorized access, information disclosure, fraud and malicious code. It wasn’t clear if any money was stolen.
Former Fed Staffer Suspected of Abusing Computer Privileges - WSJ
By Katy Burne
Updated Sept. 19, 2016 12:20 p.m. ET
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The U.S. Justice Department is examining the actions of a former Federal Reserve computer systems administrator, who is suspected of abusing access privileges and may have caused an information technology system to fail, according to people familiar with the matter.
The Fed Board of Governors in Washington in recent months referred the matter to the Justice Department, which has considered treating it as a criminal case, the people added.
The employee no longer works at the Fed, they said, and details of how federal officials expect to resolve the case aren’t known. It is also unclear which system was affected. Representatives for the Justice Department and the Fed declined to comment.
The Fed handles troves of sensitive market-moving information and its decisions affect trillions of dollars of currencies, bonds and other assets all around the world. It also manages accounts on behalf of foreign central banks.
The central bank’s independent watchdog, the Fed’s Office of Inspector General, was informed about the issues involving the former Fed systems administrator, a person familiar with the matter said. A spokesman for the OIG had no comment.
The moves follow the detection of more than 50 breaches of Fed computers between 2011 and 2015. At different times during that period, the Fed was buying large quantities of bonds and swelling its balance sheet to unprecedented size in an effort to spur the economy after the financial crisis.
Some of the breaches in that period were hacking attempts, and several were referred to the U.S. Computer Emergency Readiness Team, a branch of a group at the Department of Homeland Security. A DHS spokesman declined to comment.
Internal Fed documents released in June in response to a Freedom of Information Request showed the dozens of cyberbreaches at the central bank included four described as acts of “espionage” and others of unauthorized access, information disclosure, fraud and malicious code. It wasn’t clear if any money was stolen.
The Justice Department probe also comes as lawmakers are exploring the circumstances surrounding an $81 million theft from Bangladesh’s central bank account at the Federal Reserve Bank of New York.
The perpetrators in the Bangladesh case haven’t been identified, but Bangladesh is trying to recover the money with the assistance of Fed officials. The New York Fed has said its own systems weren’t compromised, and has changed certain practices in the account-servicing department since that heist.
Also scrutinizing the former Fed technology staffer is the House Committee on Science, Space and Technology, which has asked for more information about the Fed’s cyberbreaches.
In a June 3 letter to Fed Chairwoman Janet Yellen, the committee’s chairman, Lamar Smith (R., Texas), said the breaches already recorded “raise serious concerns about the Federal Reserve’s cybersecurity posture, including its ability to prevent threats from compromising highly sensitive financial information housed on the agency’s systems.”
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