WASHINGTON—Chairman Nik Pula of the Trust Fund for the People of the Republic of the Marshall Islands confirmed last week that funds compromised by cyber-attacks at State Street Financial Services Co. have been fully restored and diligence stepped up after the discovery of fraudulent withdrawals of more than $600,000.
“Trust fund staff first detected irregularities in early July 2017 and alerted State Street, leading to the discovery of fraudulent activity in the trust fund,” said Pula. “All trust fund members and staff have been collaborating closely with State Street in monitoring and resolving the situation with the Republic of the Marshall Islands attorney general, RMI auditor, and other officials from the Marshall Islands, Taiwan, and U.S. governments. Together we will continue to protect and maintain the integrity of the Trust Fund for the People of the Republic of the Marshall Islands.”
In late June and the first half of July 2017, a series of eight fraudulent wire transfers occurred in the trust fund totaling $685,595.08.
The irregular activity violated proper protocol, processes, and procedures established to protect the trust fund.
All illegally withdrawn funds from the trust fund have been returned by State Street; no funds are missing.
State Street is in the process of reimbursing all funds fraudulently transferred out of a separate account, which is managed and administered solely by the RMI government.
In late July 2017, the trust fund initiated transfer of custody from State Street to Vanguard. The transfer was planned prior to the fraudulent activity and based on a previous RFP process. The trust fund will finalize closure of its account with State Street once the accounts are fully reconciled.
Trust fund staff continues to maintain rigorous monitoring and reporting activities on a daily, weekly, monthly, and quarterly basis to protect the integrity of the account.
An investigation by the State Street Cyber-Security team is ongoing and the FBI has also been called upon to investigate.
Pula and trust fund members continue to be fully apprised of the situation and will continue to be diligent in protecting the trust fund.
The value of the fund as of Sept. 30, 2017, preliminary and unaudited for fiscal year 2017, was $354,656,481. (PR)