Deutsche Bank Inadvertently Made a $35B Payment in a Single Transaction | Hacker News Reader

Deutsche Bank Inadvertently Made a $35B Payment in a Single Transaction

bloomberg.com

69 pointsel_duderino52 comments

Rank sort all of your transactions by size. With 100% probability require double signoff from two senior bankers on all top 5-percentile transactions.

From the article:

> “A bank mistakenly making such a large transfer shows its controls aren’t working adequately, and it’s embarrassing,” said Dieter Hein, an analyst at Fairesearch

Also:

> The error should have been caught by an internal fail-safe system known as a "bear-trap,"

The issue is not that someone said "let's not have any controls", but that the controls failed.

Additionally, yes, ranking all transaction and double-checking the big ones should probably be part of a fail-safe, but I assume that even more harm could be done by a larger amount of minor issues that go unnoticed over a longer period of time.

I think such a system would just get humans used to seeing many large transactions and deal with them repetitively. If you can't make special events pop out more you're not really fighting against the freak accidents.

that's in the 1000s if not 10s of 1000s of transactions a day.

Top 5 percentile is way to many, but I think the principle is sound.

Computers are very fast at sorting even 10s of 1000s of numbers these days!

They meant that, at a bank's scale, "the top 5-percentile" requiring human sign-off would mean 1000s of transactions per day requiring human sign-off.

Hmm, the interesting bit was why the bear trap didn't catch this one, and sadly they don't say anything about that ...

I once saw a $1b payment error for postage... Each day the supplier's software mistakenly billed the month-to-date total instead of the new day's work. That MTD amount therefore doubled each day. And since they were a trusted supplier, it was automatically paid... The error was only discovered a week later, when the business's main bank account went $1b overdrawn.

Of course, the software bug was found pretty quickly and the release rolled back.

The funniest part of this story is the next monthly software release accidentally reinstalled the old buggy code, not the new release. So the incorrect payments happened again!

Bitcoin doesn't handle rollbacks for this kind of thing unless both parties agree.

Both parties seemed to agree on this one, so it doesn't really matter if they were bitcoins, euros, unmarked dollars, or cows.

In most transactions there is no need for a third party to get involved, and if there is, you can always get an escrow. The fact that drug markets, where you are dealing with criminals, are able to work over crypto should make people see that there are indeed alternative ways to VISA/Mastercard/Bank Transfers/PayPal.

>Both parties seemed to agree on this one, so it doesn't really matter if they were bitcoins, euros, unmarked dollars, or cows.

Not entirely true. Having been drunk at a livestock auction, I can attest that unilateral refunds of cows are possible, if you have a big enough truck and it's late enough at night.

Bitcoin does not preclude the use of the legal system or other channels of recourse.

Legal system can’t force a bitcoin transfer. (Not relevant to TFA though.)

But it can lock your ass in a cage for contempt.

The law doesn't work like code. You don't get to go "Ha! I found a loophole if you read this in the strictest, most literal sense!" You get a human who will read right past your bullshit and nail you to the cross.

This is frequently repeated. But it doesn't really describe how law works, but how courts work.

There are plenty of powerful people who get off via such "loopholes", and plenty of powerless who get nailed up even though they are standing on straightforward legal reasoning.

That's a pretty fair clarification. So long as you have a good enough lawyer, and a jury trial you could possibly get off on anything.

If the keys are gone, the keys are gone. “I’m afraid I just don’t recall my recovery phrase, senator.”

"I'm afraid I don't recall where I buried the money from the robbery, your honor."

Somehow I think courts have dealt with this type of thing in the past.

yes, they have:

https://en.wikipedia.org/wiki/Fifth_Amendment_to_the_United_...

That just means you get jailed for contempt until you can persuade them that you actually can't remember the keys, and that you're not just trying to ignore the court order.

That could be some years. http://abcnews.go.com/2020/story?id=8101209&page=1

> A 73-year-old Philadelphia lawyer walked out of prison July 10 after serving 14 years for contempt of court -- the longest term ever served for contempt.

> In a divorce proceeding in 1995 H. Beatty Chadwick said that he had lost his fortune of about $2.75 million and so could not make a significant financial settlement with soon-to-be ex-wife Bobbie.

Judge: “No problem, we take cash.”

I guess you'll be paying in cash then!

If I understand correctly, the legal system can’t force any kind of transfer.

It can, however, apply penalties for not doing what it says.

The court has a remedy called "specific performance" at its disposal. If my problem is that you took my dog, the court absolutely can say "give back tialaramex's dog".

Now, there's a philosophical sense in which this doesn't force you to actually give back my dog. But you could say that about all court remedies. I recommend just giving back the dog.

Why not?

You can have a multi signature wallet with bitcoin. Get at least 3 parties out of 5 to sign any outgoing transaction.

You don't need Bitcoin to have a process like that.

Or to say it another way... considering that they didn't have any extra checks on this transaction, what reason is there to think that they would actually use that multi signature thing, if they were on Bitcoin?

In fairness, neither does cash-in-a-briefcase :-p

$35 bn in a suitcase would be impressive.

You'd need a fleet of planes.

https://www.theguardian.com/world/2007/feb/08/usa.iraq1

"US flew nearly $12bn in shrink-wrapped $100 bills into Iraq ... nearly 281 million notes, weighing 363 tonnes".

"retired Admiral David Oliver, is even more direct. The memorandum quotes an interview with the BBC World Service. Asked what had happened to the $8.8bn he replied: "I have no idea. I can't tell you whether or not the money went to the right things or didn't - nor do I actually think it's important."

In €500 notes, $35bn would be a little over 61 tonnes.

"A million euros worth of 500-euro notes weigh just 2.2 kilograms (4.85 pounds) and pack easily into a laptop bag, while the same sum transported in 50-euro denomination comes up to 22 kilos and requires the usage of a large sports bag." [1]

[1] https://luxtimes.lu/archives/6700-goodbye-to-the-500-euro-no...

> I have no idea. I can't tell you whether or not the money went to the right things or didn't - nor do I actually think it's important."

Well that was in 2007.

When did ISIS start showing up again? How were they funded?

Maybe the USA should be more conscious of where billions of dollars are disappearing to...

It was easier in the days of bearer bonds (especially fake ones!):

https://www.nytimes.com/2009/06/26/business/global/26fake.ht...

That would be 3.5 metric tons of $100 bills. I’m not sure if that is more or less than I was expecting.

I know its easy to joke about but this happens at all levels. While the outcome here did not end up as a bad story it might have been. While the number here is phenomenal its usually the small numbers that we don't hear about that cause a lot of harm. Any dealings where money is involved over trivial amounts needs a series of checks and balances. You would be surprised at how many professional and hobbyist organizations don't have them. Then again you may already be nodding your head having read a story where money was embezzled from a charity or the like.

I do know of a certain pure breed canine group which is out 10k or more because the treasurer did not verify the received email was from the group President and paid an invoice which obviously was not a real invoice. If you are part of a club or non profit always verify your officers claims to licenses and experience. then still put in the checks and balances, three people minimum to pay non trivial and more for extra ordinary values. if they don't agree its probably not a good place to be

all this sounds a little fishy, Deutsche Bank as at the moment $60 Trillion exposure on derivatives, it's a financial bomb ready to explode any time, wonder if this occurrence is in any way related to the high derivative exposure.

You owe the bank $60,000, it’s your problem. You owe the bank $60,000,000, it's the bank’s problem. You owe the bank $60,000,000,000,000, it’s the government’s problem. Isn’t that how the old saying now goes?

What does "$60 Trillion exposure on derivatives" even mean?

It’s largely there to sound scary. While stocks can have their exposure measured based on their face value, derivatives cannot. For example, you could have a 100 million interest rate swap, where you either pay or receive the difference between a floating interest rate and a fixed interest rate depending on their values. You’ll never get close to ever losing or gaining 100 million dollars, and that 100 million is never exchanged, but you still have that much exposure.

To further complicate things, these banks may have hedged their exposure, meaning they may have an equal but opposite interest rate swap. Now they have 200 million of exposure, but no matter how the interest rates have changed, there’s no risk (all of this assumes no counterparty risk, which may or may not be valid, but for now ignore it).

I accidentally the whole bank

What kind of account do you keep $35B dollars in?

In my company we require a second approval for transfers over $30 billion.

We used to, but at some point my job just consisted of signing off on trivial stuff like moonbases and space stations all day.

About a week after I started university, I received an email along the lines of "the final payment for the new biomedical engineering building is awaiting your approval, £80 million to be transferred please".

It turns out I shared the first initial and surname of the financial director of my university, and the other senior staff hadn't noticed they were emailing a first year undergraduate. My first name was earlier in the alphabet than his. (Not my name, but "Graeme" and "Graham" would be equivalent.)

I replied saying I was the wrong person, but the email didn't seem to be noticed, and I continued receiving emails on the subject. I replied a few more times over the next week, and eventually received a long and sincere apology from the rector's secretary, CCd to pretty much the whole of the university's senior management, saying they needed to take care not to email me ever again. They didn't.

You should have emailed back that you'd negotiated a cash discount.

I wouldn't have paid.. at least not in a single transaction.

With that kind of red tape how are you supposed to get anything done?

</s>

> The errant transfer occurred about a week before Easter

What an odd time standard to use in a financial news report.

Well, Easter occurs up to a week after a full moon.

Imagine if this took place on the blockchain :)

Reply on news.ycombinator.com