Mr. ROYCE. Let me ask you another question. You stated in your testimony that since the Bank of New York has been conducting its own investigations, a vast amount of data has been examined, but, quote, it is simply not possible for this data to identify the source or legality of any individual transfer of funds once a bank grants a customer access to its payment system. It is extremely difficult to track the flow of funds or to stop a transaction before it happens.
Are there any steps that the Bank of New York has taken to remedy this situation, or is it a foregone conclusion that we cannot track the flow of funds under any circumstances?
Mr. RENYI. The issue, Congressman, I believe, is a systemic one. It really lends itself to a discussion of the characteristics of the payment system, not necessarily what the Bank of New York or any other bank can or cannot do. What we are looking at is a system which requires a tremendous amount of volume and speed and automation, which, in order to ensure it takes place and it takes place flawlessly, there is a significant amount of automation, and therefore, the data that is provided in that system tends to be abbreviated. Therefore, what I was recommending in my testimony is that the Bank of New York, as well as all of the members of the payment system as supported by Congress, to ensure that access to the system is really where the point of control exists, access to the system, so that we must be much, much more diligent with regard to ensuring who we do business with.
Mr. ROYCE. Well, thank you very much for your testimony.
Mr. Chairman, thank you.
Chairman LEACH. Well, thank you, Mr. Royce.
To continue for a moment, does the Russian Central Bank have an account at your bank?
Mr. RENYI. They opened an account, Mr. Chairman, in November of last year.
Chairman LEACH. Nothing before then?
Mr. RENYI. Nothing before then.
Chairman LEACH. Do you have any sense that, as you know, we are looking at this IMF issue in a particular timeframe, and you referenced it earlier.
Mr. RENYI. Yes.
Chairman LEACH. The Central Bank might have given deposits to any of your correspondent banks; is that a possibility in your system?
Mr. RENYI. I would suspect that it could very well be a possibility. That is a reason why I intensely looked at the volumes going through those accounts for that timeframe. There was a press article which indicated that several days after the IMF funding, billions of dollars flowed through the Bank of New York. To the absolute best of my knowledge and review, that did not take place. The numbers that I mentioned to you really were in support of that in the context that $640 million, I understand, was the IMF advance at that point in time. The moneys flowing through the account of $3.7 billion may or may not have gone through any of those accounts. It really would be again virtually impossible to tell. There is no identifier with regard to IMF or any other type of governmental moneys.
Chairman LEACH. So all you know is that a number of Russian banks had deposits at your bank, they had flows of funds that were very large, but that they weren't terrifically out of proportion, but they were slightly higher than the previous three months and slightly higher than the three months after.
Mr. RENYI. There was a continuation of that.
Chairman LEACH. Continuation, so approximately the same thing?
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Date: 2007-05-26 09:16 pm (UTC)Are there any steps that the Bank of New York has taken to remedy this situation, or is it a foregone conclusion that we cannot track the flow of funds under any circumstances?
Mr. RENYI. The issue, Congressman, I believe, is a systemic one. It really lends itself to a discussion of the characteristics of the payment system, not necessarily what the Bank of New York or any other bank can or cannot do. What we are looking at is a system which requires a tremendous amount of volume and speed and automation, which, in order to ensure it takes place and it takes place flawlessly, there is a significant amount of automation, and therefore, the data that is provided in that system tends to be abbreviated. Therefore, what I was recommending in my testimony is that the Bank of New York, as well as all of the members of the payment system as supported by Congress, to ensure that access to the system is really where the point of control exists, access to the system, so that we must be much, much more diligent with regard to ensuring who we do business with.
Mr. ROYCE. Well, thank you very much for your testimony.
Mr. Chairman, thank you.
Chairman LEACH. Well, thank you, Mr. Royce.
To continue for a moment, does the Russian Central Bank have an account at your bank?
Mr. RENYI. They opened an account, Mr. Chairman, in November of last year.
Chairman LEACH. Nothing before then?
Mr. RENYI. Nothing before then.
Chairman LEACH. Do you have any sense that, as you know, we are looking at this IMF issue in a particular timeframe, and you referenced it earlier.
Mr. RENYI. Yes.
Chairman LEACH. The Central Bank might have given deposits to any of your correspondent banks; is that a possibility in your system?
Mr. RENYI. I would suspect that it could very well be a possibility. That is a reason why I intensely looked at the volumes going through those accounts for that timeframe. There was a press article which indicated that several days after the IMF funding, billions of dollars flowed through the Bank of New York. To the absolute best of my knowledge and review, that did not take place. The numbers that I mentioned to you really were in support of that in the context that $640 million, I understand, was the IMF advance at that point in time. The moneys flowing through the account of $3.7 billion may or may not have gone through any of those accounts. It really would be again virtually impossible to tell. There is no identifier with regard to IMF or any other type of governmental moneys.
Chairman LEACH. So all you know is that a number of Russian banks had deposits at your bank, they had flows of funds that were very large, but that they weren't terrifically out of proportion, but they were slightly higher than the previous three months and slightly higher than the three months after.
Mr. RENYI. There was a continuation of that.
Chairman LEACH. Continuation, so approximately the same thing?
Mr. RENYI. Yes.