Germany's KfW Bank explains $5.4 billion funds transfer lash up
27 March 2017 | 5458 views | 1
Germany's KfW Bank says a system error led to the unintentional transfer of $5.4 billion to four counterparty banks in an automated cycle of repeat transactions.
The German government-owned development bank says a mistake in configuration works performed by an experienced IT programmer caused a temporary system bug in payment transaction software. This led to multiple payments being made by KfW to the four unidentified banks.
The Bank says the bug was detected immediately by internal services and corrected the same day, with funds repatriated by the recipient banks.
KfW says it has created a special task force to formulate remedies to prevent a recurrence of the error, which was caused by a disconnect between the bank's Swift interface and inhouse transaction software resulting in an automatic cycle of repeat payments to its banking partners.
"We regret that during works on the systems, this incident could happen due to human error owing to a configuration mistake," states the bank. "KfW 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."
KfW is no stranger to erroneous funds transfers. The bank famously transferred hundreds of millions of euros to Lehman Brothers Holdings by mistake on the day the US firm filed for bankruptcy. That transaction earned the institution the label of "Germany's dumbest bank", in a report by national daily Bild.