The Bhutanese Leading the way.
The main question in the Bank of Bhutan (BoB) account case is how around Nu 1.5 billion (bn) was credited to the account of the businessman, who then used Nu 191 mn for paying loans, a land transaction and for paying suppliers.
According to a source, it took around two weeks to trace the technical source of the problem, which was the failure to migrate some data from the old system to the new system.
The BoB from 2024 itself was working to upgrade its Core Banking System (CBS) to a new global banking platform with Tata Consultancy Services (TCS) as the main consultant, and the main migration was done on 12th and 13th February this year.
There was one TCS team to download the existing data and another TCS team to upload this data to the new system. The BoB had even hired an independent consultant to look at the process independently.
However, one particular set of data or instructions was not uploaded to the new system, causing the whole issue.
This data had to do with certain accounts where a Standing Instruction (SI) is given whereby the balances in these master accounts are transferred or swept to one linked account identified by the account holder.
In practical terms, this would apply to a large business with multiple points of payment, such as MBoB accounts at various sale counters. During the day, money flows into these accounts and, based on the SI, at the end of the day (EOD), funds from all these master accounts are automatically transferred to one linked account by the banking system.
The instruction in the system should have been ‘4EOD’ on the tab or field which has a whole program behind it, but this information was never transferred to the new system keeping the field or tab blank and as a result the particular system without the proper instruction of ‘4 EOD’ started executing all kinds of sweeps or transfers leading to the problem.
There are different sweep or transfer types with separate programs for each, but without an assigned sweep type of ‘4EOD’, the system started executing all types of sweeps, resulting in chaos.
The investigation showed that a total of 243 SI accounts were impacted, but it was only in the case of the above businessman where things went wrong and huge volumes of money got transferred from his master account with the last two digits of 82, which started going into minus balance, and transferring huge amounts to the linked account with the last two digits of 13.
In the case of this particular master account of 82, the SI or instruction had been to keep Nu 1,000 balance and transfer the rest by the end of day to linked account 13, however, instead of doing that the master account 82 went erratic and transferred huge amounts to linked account 13.
This happened because account 82 treated the debited or deducted amount as added or credited amount and sent this to account 13 making the debited amount balloon in size rapidly within a few days as account 82 made multiple and expanding sweeps.
Bank records show that it started on 28th February 2026 when account 82 only had Nu 1,000 balance but an amount of Nu 28,800 was sent via MBoB, and instead of rejecting the transfer it allowed it and showed a minus balance of -27,800.
A family member of the businessman disputes the bank statement saying this Nu 28,800 payment was not done by them but by the bank system, and they have the sms message to prove it.
On 1st and 2nd march the businessman transferred Nu 4 to 5 mn from account 83 to other accounts as it went negative and subsequently the account started making large and repeated automatic sweeps or transfers to account 13 reaching Nu -1.593 billion (bn).
The businessman then used Nu 191 mn from account 13 between 1st and 14th March.
A source said that something unique about the particular account 82 is that despite having standing instructions to transfer money to account 13 the businessman also manually used MBoB to make transfers late at night.
The source said the EOD sweep happens at around 12 midnight and goes on for around 45 minutes and they suspect the combination of a blank ‘4 EOD’ and the man executing payments in this late window period led to the problem.
Both the RMA and the police are asking why did the businessman have to do late night transfers when there were already standing instructions to transfer the money at the end of the day.
Here, the daughter of the businessman said that her father had not only given the SI of keeping 1,000 balance in account 82 and transferring the rest to account 13, but he had also given a SI for account 13 that it transfer Nu 50,000 everyday to his personal account for his personal use.
The daughter and mother did not want the father to use so much money and wanted to retain the money within the business, and so the daughter said she waited till late at night when all sales are completed and she would manually transfer money from account 82 to another business account 45 before the sweep to account 13 happens.
She said they have been doing this for the last one year, and it is nothing suspicious, but the truth is little bit embarrassing which now has to come out given what she says are the unwarranted suspicions.
In the old BoB system, if one had several linked accounts and even if one account had less money one could make a bigger payment if other linked accounts had the money, and it would get adjusted as the system would pull money from other linked accounts.
The BoB wanted to get rid of this in the new system but since the data migration had not happened properly, the system started allowing negative balance in account 82.
It took a while for the problem to be detected, and the TCS local representative could not detect the problem and neither could the independent consultant. The TCS local team had to contact its main team back home after which the problem was detected.
The problem has been fixed for now.
Businessman in detention
Meanwhile, the businessman at the center of the storm is still in detention as the RBP investigates with his detention period now coming to around one month.
The daughter of the businessman said the RBP were trying to look at the angle of if her father had collaborators in the bank or even some tech collaborators in India.
The police were looking at his foreign trips and seeing if he had made certain foreign transactions and transfers.
The daughter said their lawyer could meet her father in prison a few days ago, and he told them that he has maintained the same stance that he waited to be informed by the bank, but with no one contacting him he thought a scammer had deposited money in his account and so he decided to use the money.
The daughter said she does not understand why her father has to be detained for so long as the police have questioned him only four times.
She said with all their business and even personal accounts on hold (cannot make payments) it is impacting their business and they have to end up using the accounts of their staff, and there is now a flight risk if one of the staffs decide to flee with the money in their account.
“Our suppliers who used to give us credit for a month are now asking for upfront payment and everybody wants to deal in cash with us only, and we even cannot do RTGS payments to suppliers outside. Our business is hampered and not being allowed to recover,” she said.
She said the RMA investigation makes it clear that the fault lies with the bank. She said even their phones have been seized making it difficult to do business.
She also said that they were not even allowed to get an authorization letter from her father in detention to open a bank account in T-Bank to do their business.
RMA takes action
The RMA, however, is not interested in looking at it purely as a technical glitch, as the blame would then be assigned only to the consultants, but the RMA is taking a much broader view of the issue and wants to ensure accountability from the management to the board to the shareholder owner, which is DHI.
RMA has imposed Nu 228 mn in fines and regulatory sanctions on BoB (see separate story on pg 4).
