Federal Reserve watchdog flags potential data breaches by retiring staffer

The Federal Reserve’s Office of Inspector General (OIG) has flagged a series of potential data breaches involving a former staff member in the Division of International Finance. Before retiring in July 2024, the employee triggered 279 data-loss-prevention alerts in a 90-day period, including 111 alerts involving information potentially classified by the Federal Open Market Committee (FOMC).

The alerts involved various methods of data removal, such as printing, copying information into notepad applications, emailing material to personal addresses, and transferring files to unencrypted USB devices. The employee had previously been flagged in 2021 and 2023 for similar activities involving FOMC-classified files.

Despite the potential severity, the OIG determined there was insufficient evidence to pursue a formal misconduct investigation. Investigators noted that available records did not clearly indicate what specific information was removed, and many of the alerts were identified as false positives. The OIG report highlighted systemic concerns regarding how the Federal Reserve manages the exit process for employees with access to sensitive policymaking information, calling for immediate corrective actions to improve data management and policy communication.