Fed’s watchdog warns of central bank foreign travel risks, calls for reforms

By Michael S. Derby

WASHINGTON, June 16 (Reuters) – The Federal Reserve’s internal watchdog is calling on the central bank to strengthen how it protects staff and information during periods ​of international travel where foreign intelligence agencies might be ‌at work.

The Inspector General said as it now stands, the Fed lacks a formal program to prepare employees for international travel and does not check on these workers after their trips to see if anything suspicious has ‌taken ​place. The IG also said the ⁠Fed does not have a ⁠program to track employee foreign travel or to share risk assessments, nor does it have the tools to make sure employees comply with foreign travel regulations.

The report also noted that ​the Fed’s current international travel reporting requirements only apply to workers with security clearances, even though many other staff have ⁠access to confidential central bank information.

“International ⁠travel helps facilitate the Board’s collaboration efforts with ​other central banks and other foreign governmental and nongovernmental entities,” the ​IG said in its report. “International travel introduces information security ‌and physical risks” for Fed employees, and “it is common for foreign adversaries to target U.S. government employees to acquire nonpublic information.”

The IG report said the Fed is responsive to its concerns and ⁠recommended slate of reforms and is working on shoring up its approach to staff international travel.

A spokesperson for the IG said the report ⁠was self-initiated and part ‌of a broader review on how the ⁠Fed manages risks around information and operations.

The report ​flagged ‌China and said the nation “has targeted and obtained ​information from ⁠the System, as evidenced by an insider risk incident.” The authors added, “Common foreign collection methods include targeting government personnel during international visits and at international conferences, as well as using academic solicitation to obtain sensitive or national security information.”

(Reporting by Michael S. Derby; Editing ​by Chizu Nomiyama )