Anarchy as BoU payment system is hacked Billions feared lost

Kampala. The Central Bank yesterday suffered a mysterious failure of its real-time gross settlements (RTGS) system, forcing the Governor to suspend processing for large payments for most of the day and institute an investigation into the incident.

There were frantic attempts to fix what BoU managers called “normal system hiccup” as BoU senior managers “fidgeted” with large cash transactions that needed urgent, safe, secure and real-time clearance. They tried to revert to manual processing for large payments but didn’t succeed.

The governor, Mr. Emmanuel Tumusiime-Mutebile, and his team came under pressure to explain what sources called “the collapse” of the Uganda National Interbank Settlement (UNIS) System, also known as, the BoU Real Time Gross Settlement (RTGS) System.

Questions

Sources at BoU and Treasury told Daily Monitor last evening that the collapse of the payment system puzzled BoU officials and the governor has tasked the IT team at BoU and the head of security to investigate what happened. The disruption mainly affected both incoming and outgoing RTGS flows and clearing files. 

This, according to a senior manager at BoU and another source at a major financial institution in the country, “is an industry-wide issue and is still persisting and unfortunately, until BoU sorts out the system, payments/receipts cannot be affected.”

The BoU director for communications, Ms. Charity Mugumya, last evening confirmed the incident in an email and explained that the issue has since been resolved. 

“It is true that the RTGS had some temporal challenges but they have now been resolved and the system is operating normally,” Ms. Mugumya said.

According to authorities at the Uganda Bankers Association (UBA), RTGS are specialist fund transfer systems where the transfer of money or securities takes place from one bank to another on a “real-time” and on a “gross” basis. 

Settlement in “real-time” means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. “Gross settlement” means the transaction is settled on a one-to-one basis without bundling or netting with any other transaction. Once processed, payments are final and irrevocable.

Effect

Although BoU personnel, UBA and senior officials in the Ministry of Finance passed the incident off as a largely technical issue, the RTGS collapse disrupted the financial sector for a whole day as BoU technical team struggled to avert catastrophic consequences for the country’s economy.

But sources told us that the technical hitch prevented commercial banks and government departments from transacting business as commercial banks and other stakeholders put pressure on the governor and his team to explain what happened.

The affected payments included government disbursements and inter-bank financial transactions, many requiring clearance through intermediary financial institutions, with ripple effects on pay settlements among countless corporate clients. 

The executive director, banks supervision, Dr Tumubweine Twinemanzi, yesterday ruled out any possibility of hacking and described the collapse of the RTGS at BoU as “normal system hiccups”.

“RTGS is a digital system for exchange of payments… when your computer misbehaves, do you immediately assume it has been hacked [into] or you ask when was the anti-virus last updated or Operating System Patching done?” Dr Twinemanzi asked.