A banking glitch in Ethiopia reportedly let customers withdraw unlimited funds.
Now, state-owned Commercial Bank of Ethiopia (CBE) is trying to recover the $40-plus million that was withdrawn or transferred to other banks over the weekend, CNBC reported Tuesday (March 19).
The glitch let customers pull more than their total balance, with a large portion of the money being withdrawn by students before transactions were halted. Several universities have urged students to return the money, and CBE President Abie Sano has said that anybody who returns it will not be prosecuted, the report said.
The CBE said the service interruption was not the result of a cyberattack, while the country’s central bank said the glitch followed a series of system security checks and was “not an incident that endangers the bank, its customers and the entire financial system,” according to the report.
PYMNTS reached out to the central bank for comment but did not receive a reply.
Whatever the cause of the glitch, it comes as banks are dealing with a host of different security issues, such as the rise of authorized push payment (APP) fraud.
This fraud involves a consumer instructing their bank to transfer funds to another account, often for what they think is a legitimate purpose such as paying bills or making purchases. However, the payment is a scam and the recipient is a criminal.
“But that doesn’t matter — once the funds have been authorized, the transfer is irrevocable and the bad actors walk away with the money, leaving the victim empty-handed,” PYMNTS wrote last week. “Historically, the victims of APP fraud — the banking customers — have been liable for any losses incurred by the scams, unless their accounts have been hacked or account information has otherwise been compromised.”
But now, the United Kingdom is preparing to require banks and other financial institutions to reimburse victims of APP fraud up to 415,000 pounds (about $527,000) per incident, as well as create a policy delaying payments for up to four days in cases of suspected fraud.
That’s why, PYMNTS wrote, “there is an urgent need for banks to modernize the effectiveness of the fraud-fighting tools they employ or risk seeing their payment systems and networks sent back to the 20th century.”
