Stop the bad actors
EDITOR'S NOTE: John Roszkowski is finance editor for OnCourse Learning. As finance editor, he develops and edits content for OnCourse Learning’s financial services blog, which covers industry news and trends in mortgage, banking, compliance, credit unions, gaming and nonbank financial services. He has more than 25 years of writing and editing experience, having previously worked for weekly and daily newspapers.
Financial institutions need to be concerned about the growing number of insidious cyber threats that can cause significant damage to the U.S. financial system and even national security.
A wide array of bad actors – including terrorist groups, foreign nation states, international criminals and political hacktivists – are trying to exploit the financial system to steal or launder money, cause disruption or otherwise wreak havoc. Frank J. Cilluffo, director of the Center for Cyber and Homeland Security at George Washington University in Washington, D.C., testified in February 2016 before the U.S. House Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies about some of the emerging cyber threats facing the U.S. “Virtually every day, there is a new incident in the headlines and the initiative clearly remains with the attacker,” Cilluffo said in his testimony before the committee. “Critical infrastructure, such as the U.S. financial sector, is in the crosshairs as a primary target.” “Critical infrastructure, such as U.S. banks and the energy sector (oil and gas) are primary targets for cyberattacks and cybercrimes,” Cilluffo added. “A concerted campaign against these crucial infrastructures holds the potential to undermine trust and confidence in the system itself, irrespective of the perpetrator.”
The size, reach, speed and accessibility of the U.S. financial system make financial institutions attractive targets to traditional criminals, cybercriminals, terrorists and state actors.”
— Financial Crimes Enforcement Network
“The most advanced and persistent cyber threats to the United States today remain nationstates and their proxies, and in particular China and Russia,” Cilluffo testified. “In addition, Iran has increased its cyber capabilities exponentially in recent years. And, with the hack of Sony Corporation …North Korea, too, has demonstrated itself to be a significant adversary.” Speaking at the SWIFT Sibos Conference in Geneva last September, Rob Sloan, head of cyber content and data at Dow Jones Risk and Compliance, said cyberattacks on financial firms are evolving and the threat from state actors is real. “State actors will carefully pick their targets, carefully design their attacks and be persistent enough that they will eventually have success,” said Sloan, as quoted in a Sept. 28, 2016 article in Forbes magazine. “Some countries will avoid the risk of being outed as cyber attackers, but Russia, China and North Korea just deny it and say ‘what are you going to do about it?’” In March 2016, the Justice Department announced the indictment of seven Iranian individuals on computer hacking charges related to an extensive campaign of distributed denial of service attacks against 46 U.S. financial institutions, many in New York City, between 2011 and 2013. The hackers, who were believed to have ties to the Iranian government, were accused of attacks that “disabled victim bank websites, prevented customers from accessing their accounts online, and collectively cost the victims tens of millions of dollars as they worked to neutralize and mitigate the attacks on their servers.”
Nation states
Terrorist groups
Just as alarming as nation state attacks are terrorist groups who are attempting to misuse the financial system to plan or finance terrorist attacks. In his testimony before the House subcommittee last February, Cilluffo said “it is likely that ISIS, or their sympathizers, will increasingly turn to disruptive cyberattacks.” “Given ISIS’ savvy use of social media and how it has built and maintained a sophisticated propaganda machine, it is likely that the group and their sympathizers will turn its efforts toward developing a more robust cyberattack capability,” he testified. An Aug. 29, 2014 article by Carter Dougherty on said “bankers and U.S. officials have warned that cyberterrorists will try to wreck the financial system’s computer networks.” “A worst-case scenario that destroyed records, drained accounts and froze networks could hurt the economy on the scale of the terrorist attacks of Sept. 11, 2001,” Dougherty wrote. “The government response, though, might be more akin to that following the 2008 credit meltdown, when the Federal Reserve invoked ‘unusual and exigent circumstances’ to lend billions of dollars. “The government might have little choice but to step in after an attack large enough to threaten the financial system,” the article continued. International organized crime groups also are increasingly turning to cybercrime as a way to build their financial empires or fund criminal activities. “The increasing exploitation of big data and personal data will enable criminal groups to carry out complex and sophisticated identity frauds on previously unprecedented scales,” according to a March 2015 report by Europol, the European Union’s law enforcement agency.
See article on the risks facing banks from terrorism financing.
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Preventing attacks
Many federal agencies offer guidance to financial institutions about how to protect themselves from cyberattacks and cybercrime. In October 2016, the Financial Crimes Enforcement Network issued an advisory to financial institutions about the increasing proliferation of cyber events and cybercrime, which represent “a significant threat to consumers and the U.S. financial system.” “The size, reach, speed and accessibility of the U.S. financial system make financial institutions attractive targets to traditional criminals, cybercriminals, terrorists and state actors,” the advisory stated. The FinCEN advisory highlights how Bank Secrecy Act reporting helps U.S. authorities combat cyber events and cybercrime. Among other things, the advisory provides information to financial institutions on reporting cybercrime and cyber events through Suspicious Activity Reports; collaborating between BSA/Anti-Money Laundering units and in-house security units to identify suspicious activity; and sharing information among financial institutions to guard against and report money laundering, terrorism financing and cyber-enabled crime.
Terrorists and other groups threaten the financial system
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By John Roszkowski
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