It was the largest bank robbery in history…
It started just hours after the U.S. invaded Iraq in 2003. Saddam Hussein and his sons looted over $1 billion in cash from the Central Bank of Iraq.
In 2005, Brazil’s central bank was also robbed, this time in an Oceans 11-style heist. A gang of 35 bank robbers dug an 80-meter tunnel underneath a branch of the Central Bank of Brazil. They disguised themselves as landscapers to avoid detection while they constructed the tunnel. The gang made off with around $70 million in cash.
It’s rare that any country’s central bank is robbed. When it does happen, it’s a huge story. It’s not like knocking off the local liquor store or retail bank. Central banks are big game.
And it just happened again…
Last month, an international group of hackers robbed Bangladesh’s account at the Federal Reserve, the central bank of the U.S.
First, the hackers used a computer virus to break into the security system of Bangladesh’s central bank. Then they stole the usernames and passwords the bank uses for payment transfers. The hackers used this information to wire over $100 million from Bangladesh’s Federal Reserve account to the Philippines and Sri Lanka. From there, they funneled it to casinos and withdrew it as cash.
The hackers cleverly executed the heist on a Friday. You see, Friday and Saturday are weekend days in Bangladesh. But Friday is a work day in the U.S. So, they were able to execute the bogus transfers without Bangladeshi government employees noticing for days.
Once Bangladesh realized what had happened, they couldn’t stop it. By then, it was Sunday, and no one at the Fed was available to help. When they finally got in contact with the Fed, the $100 million had vanished. Bangladesh was left holding an empty bag.
Not surprisingly, the Bangladeshi government was furious. It lost confidence in the U.S.’s ability to safeguard the world’s financial system.
Other countries likely have as well.
Nearly every country in the world holds some of its reserves in an account with the U.S. Federal Reserve because the U.S. dollar is the world’s premier reserve and trading currency. What if something similar happens to their accounts?
I think of this as a positive development.
The U.S. government has grossly abused the dollar’s position as the world’s premier reserve currency. It’s printed trillions of dollars and, in effect, forced the rest of the world to finance its wasteful spending. It arbitrarily sanctions disobedient countries. It forces the rest of the world to comply with extra-territorial laws, like the odious Foreign Account Tax Compliance Act (FATCA). I could go on…
The U.S. dollar’s premier status enables all of this malfeasance. If other countries lose faith in the U.S., it will help limit this bad behavior.
A Huge Threat to Your Money
The robbery of Bangladesh’s Federal Reserve account is instructive for another reason: It shows the enormous danger of keeping your life savings as electronic entries in a bank or brokerage account, where hackers can easily steal it.
All the money you’ve earned could vanish in an instant.
There’s a distinct possibility you could wake up one weekend and find—just like Bangladesh—that hackers have wiped out your digital bank and brokerage accounts… and there’s nothing you can do about it.
All it takes is a skilled and determined cybercriminal. There’s no shortage of those. Or another nation state, like Russia or China, attacking the U.S.’s digital financial system. The bottom line is: There are huge threats to the money you store as electronic entries.
Don’t expect the government to protect you. After all, the Bangladeshi heist successfully targeted accounts at the Federal Reserve, an arm of the U.S. government.
There are many examples of hackers breaking into some of the world’s most secure digital systems. Last year, hackers stole over 300,000 tax returns from the IRS. They used the information to claim tens of millions of dollars in fraudulent tax refunds.
Sony was also hacked recently. So were Target, JPMorgan Chase, E*Trade, and Scottrade.
If you keep most of your money in digital form, you should take proactive steps to protect yourself and your family.
This is a big reason why I think everyone should own some hard assets, like physical gold bullion coins. But if you want to thoroughly protect yourself from hackers wiping out your digital money, there’s much more to do.
Because we think most Americans are overlooking this huge threat, we’ve put together a comprehensive guide with top cybersecurity experts. It explains seven specific steps you can take now to protect yourself. Click here to download the PDF.