JPMorgan will face a lawsuit over whether it ignored warning signs of a cyberattack on manufacturer Essilor, which saw $272 million taken by criminals.
Essilor, which makes Ray-Ban sunglasses, sued JPMorgan in April, alleging the bank failed to notify it of suspicious activity in its New York bank account.
The French manufacturer can now try to prove that a New York law relating to commercial contracts has been violated.
In documents filed in Manhattan federal court in Aprilthe manufacturer said there was a huge increase in the volume of money being processed, as well as money being sent to front companies in countries considered high risk.
“The fraudulent transfers were all made in round dollars (i.e. without pennies), which was a dramatic departure from previous periods when round dollar transfers were relatively infrequent,” Essilor told the time.
The judge dismissed a claim by JPMorgan that Essilor authorized the transfers because the bank had received two approvals for each, therefore following required security procedures. A breach of contract claim was dismissed, but the judge said Essilor could try to revive it.
Banks are also under the spotlight due to their inability to spot suspicious activity on their networks. For example, banks have received huge fines from regulators for failing to identify and prevent money laundering by criminals.
According to a study published last year by business-to-business information services firm Kyckr, 28 financial institutions around the world were fined for anti-money laundering violations in 2020, which equates to around £2.6 billion.
The UK has the second largest amount of money laundered in the worldwith around £88billion cleaned up by criminals each year.
JP Morgan is one of the biggest banks in the world, with a huge IT budget. Speaking at a recent event, Ziv Gafni, Head of Digital Strategy, Fintech and Markets Innovation at JP Morgan, said the bank invests about $12 billion a year in technology.
Much of a bank’s IT spend is spent on security, but criminals still manage to bypass the defenses.