Bank system security flaw enables theft of more than $1m from Citibank

The Federal Bureau of Investigation (FBI) said that 14 people have been charged with offences linked to the theft of the money from Citibank. The individuals allegedly coordinated to exploit a "gap" in the bank's "electronic transaction security protocols".

The security flaw meant that the alleged conspirators could collectively withdraw "several times the amount of money" they had deposited into Citibank accounts providing that they made "multiple withdrawals" from the accounts within the space of a minute. The alleged conspirators withdrew the money from a number of "cash advance kiosks" at casinos in Southern California and Nevada, according to the FBI.

The deposit and withdrawal transactions never exceeded $10,000 "in order to avoid federal transaction reporting requirements and conceal their fraud" it is alleged, according to the FBI.

FBI special agent Daphne Hearn said: “While advancements in technology have created a world of accessibility to users and a convenience for consumers, they have also left room for criminals to exploit even the smallest of loopholes. For over 100 years the FBI has kept pace with technological and communication changes in the business world where these types of electronic transactions are the standard and we will continue to do so in order to help protect commercial enterprise and our nation’s economy."

The 14 alleged offenders have all been charged with conspiracy to commit bank fraud and conspiracy to illegally structure financial transactions to avoid reporting requirements, the FBI said. They could each face up to five years in jail and have to pay a $250,000 fine.

One of those accused has also been charged with 14 counts of bank fraud. Each count carries a potential punishment of 30 years in jail and a $1m fine.