Russian hacker gang who 'stole millions from Citibank' under investigation

Reports of sums taken are exaggerated, bank says
Crime network re-emerges as US cyber chief is named

The FBI is investigating the activities of a notorious Russian internet gang amid accusations that it stole tens of millions of dollars from US banks.

The hackers, known as the Russian Business Network, had been quiet for two years after masterminding a string of hi-tech crimes including identity theft, fraud, spam and child pornography.

But the gang could be back in action, according to a report in the Wall Street Journal which suggested that Citigroup was the focus of a federal investigation linked to the Russian group. It claimed that an attack believed to have been orchestrated by the network netted large sums of money after targeting Citigroup's computer systems.

Reports of the cyber attack came as the White House today named its head of cyber security as Howard Schmidt, who had a similar role for several years under George W Bush. He will co-ordinate US government, military and intelligence efforts to repel hackers.

There has been a string of reports about hacking attacks on the US government in recent months, as well as the theft of more than £5m from systems belonging to the Royal Bank of Scotland. The threats led President Obama to declare that defence against internet attacks was a "national security priority" – a shift which culminated in Schmidt's appointment.

Citigroup, the world's largest financial services company, has rejected suggestions that the FBI is investigating an incident at the bank, and denied that a raid of such proportions had taken place.

"We had no breach of the system and there were no losses, no customer losses, no bank losses," said Joe Petro, managing director of Citigroup's security and investigative services. "Any allegation that the FBI is working a case at Citigroup involving tens of millions of losses is just not true."

Instead, a spokesman said, the company is aware of one customer whose account was drained of more than $1m after being hacked.

While the nature of the attack remains contested, the reports mark a significant comeback for one of the internet's most high-profile crime groups. The organisation disappeared from view in 2007 after moving its operations from St Petersburg to China.

The extended absence had left some wondering whether it had disbanded, but experts familiar with the network's activities suggested that its influence on organised crime was still strong.

"All signs point to a dramatic rise in cyber crime," said Anton Chuvakin, a computer security expert based in San Jose. "The strategy is pretty much the 'blue ocean' one, with a lot of unexplored opportunity and a low barrier to entry."

It would not be the first time that Citigroup, which is based in New York, or its customers had been targeted by computer criminals. Earlier this year Albert Gonzalez, a 28-year-old hacker from Florida, was charged by US prosecutors with being the mastermind behind a series of computer attacks that netted millions over the course of several years. Citibank was among the groups targeted by the strikes, which also hit computers belonging to payment processing company Heartland and resulted in more than 45m credit card numbers being stolen from the retailer TJX.

Gonzalez, who faces 15 to 25 years in prison, was once linked to another well-known group of internet gangsters known as Shadowcrew.

In the US, the announcement of Schmidt's appointment came as the final step in a much-criticised seven-month search for a candidate. The continuing lack of an appointment had caused some concern in Washington – while officials said that delays in making an appointment were merely part of the process, reports suggested a number of candidates had turned the job down.

Last weekend, it emerged that the Russian military had been meeting Washington officials to discuss potential collaboration over internet security and cyber defence. Such a move would mark a breakthrough in the often frosty relations between the two countries over their activities online.

Rod Beckstrom, the former director of the US Cyber Security Centre, told the Guardian that he had met with Russian officials too – and had encouraged such collaborations while working for the government. "We do see international collaboration improving," he said. "We are pleased to hear superpowers such as Russia and the US addressing these topics."