Security & Fraud

KfW Sends $5.4B In Error Due To Technical Glitch

KfW, a state-owned bank in Germany, has mistakenly transferred more than $5.4 billion to four banks due to a technical glitch.

According to a report in Bloomberg News, KfW previously mistakenly transferred millions of euros to now-bankrupt Lehman Brothers a day before it filed for bankruptcy in the U.S. The mishap this week was the result of a technical glitch that caused a single payment to be repeated several times. That mistake resulted in the total amount transferred erroneously to be around 6 billion euros, people familiar with the matter told Bloomberg.

“KfW has detected the system’s incorrect behavior very early in the process, immediately mitigated the unwanted action and started the necessary process of analyzing the causes,” the bank said in an emailed statement to Bloomberg. “The mistake was rapidly identified and eliminated, and the amounts overpaid were successfully demanded back. We regret that, during works on the systems, this incident could happen due to human error owing to a configuration mistake.”

The bank said it has “immediately started comprehensive internal and external audits in order to clarify the causes of the incident in detail and to draw the corresponding conclusions.” The report noted KfW got wind of the mistake by Germany’s Bundesbank, which informed KfW it had overdrawn on its account.

According to Bloomberg, KfW, which boasts accolades including being awarded the world’s safest bank by Global Finance, isn’t the only bank to have computer glitches that resulted in mistakes. Bloomberg pointed to Deutsche Bank as another example. In June of 201,5 Deutsche Bank’s foreign exchange unit sent $6 billion to a hedge fund client by accident. It was able to recover the money a day later, a person familiar with the matter told the news outlet.

The report said mistakes like this occur because of old technology, which poses a broader security risk and is something Germany’s BaFin, the financial watchdog, has brought to light recently. BaFin hit KfW with a capital surcharge because of outdated IT, the report noted.

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