Ransomware attack hobbles FX; Wells accused of passing cost of fines to vendors

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Ransomware attack

Several U.K. banks, including Barclays and Lloyds, and Australia’s Westpac, said Thursday they were unable to take orders from customers for foreign currencies following a New Year’s Eve ransomware attack on Travelex, which provides cash deliveries to major international banks. “The banks’ online retail foreign-currency exchange services, which are outsourced to Travelex, were also shut off,” the Wall Street Journal reports.

“Travelex, a unit of U.K.-listed payments conglomerate Finablr, is best known for its global network of retail foreign-exchange kiosks that target customers passing through international airports. Those operations have been hobbled by the attacks, with agents resorting to manual operations, writing handwritten receipts. A lesser known, but important, part of Travelex’s operations is its business helping other financial institutions manage their supply of foreign bank notes,” the paper says.

“The hackers told the BBC on Wednesday that they had downloaded five gigabytes of sensitive customer data since gaining access to Travelex six months ago and intended to sell it if there was no response by January 14,” the New York Times says. “They have demanded $6 million for the data’s return.”

Financial Times

Change of heart

Santander said it will prepay a €1.5 billion bond issue “that briefly rattled the $200 billion market for riskier bank debt last year. The Spanish lender sparked confusion among investors in ‘additional tier 1’ (AT1) bonds in February 2019 when it opted not to repay one of its equity-like securities at the first available opportunity," the paper says. "AT1 bonds, which can be written off in times of stress, were introduced by regulators after the financial crisis to shore up banks’ balance sheets. While such bonds have a perpetual maturity, meaning that they never have to be repaid, Santander was the first bank not to call the debt when the opportunity first arose, arguing it did not make economic sense to repay the bonds at that time.” The Spanish bank said it will “raise new AT1 debt at a lower cost, and would repay the disputed bonds in March.”

On defense

Dutch bank ABN Amro named Robert Swaak, the former chairman of PwC Netherlands, its CEO, “to guide it through a criminal investigation into potential money laundering and financing of terrorism. The top priority during Mr. Swaak’s four-year term will be to settle a probe by the Dutch Public Prosecution Service into allegations of money laundering. It alleged in September that ABN failed to carry out sufficient due diligence and monitoring of customers, and failed to report suspicious transactions to the government’s financial intelligence unit.”

Last year the bank “pledged to spend an extra €220 million to tighten its anti-money laundering procedures after a series of scandals at local rivals” and said it “tripled staff in areas such as compliance, financial crime and anti-money laundering to more than 1,400,” according to the paper.

Elsewhere

More Wells woes

“In a scathing letter sent to the bank’s new chief executive,” Charles Scharf, Rep. Katie Porter, D-Calif., “accused Wells Fargo of passing on costs associated with its wide-ranging scandals to third parties,” Reuters reports. “Last summer, Wells Fargo asked 14 of its IT vendors to return 2.5% of revenue earned in 2018, claiming that the vendors benefited from increased business as a result of its sales-practices scandals. Reuters reported in November that several of the vendors had paid Wells Fargo, and some felt pressured to do so out of fear of lost future business.”

Michael Nagle/Bloomberg

“Asking for a rebate and linking it to higher costs due to regulatory backlash goes against the intent of regulator actions,” said Porter, who “requested that Wells Fargo refund the rebates by January 30.”

Quotable

“When federal watchdogs ... assess fines against bad actors, a major purpose of those fines is to discourage continued bad behavior. When those bad actors then pass the cost of those fines down to their vendors ... the purpose of the fine is subverted.” — Rep. Katie Porter, D-California, in a letter to Wells Fargo, accusing it of passing along the cost of fines to its vendors