Fraud today is global, sophisticated, and well-organized. To combat it effectively, the financial community and law enforcement must establish upfront relationships, break down internal silos, and develop new ways to rapidly share information when a potential threat occurs.
These recommendations were just part of the message that financial industry experts and law enforcement representatives shared during a recent webinar, hosted by Wells Fargo. Speakers included Bryan Earl, supervisory agent and assistant general counsel from the Federal Bureau of Investigation (FBI); Pat Antonacci, managing director for SWIFT Americas; and leaders from Wells Fargo’s Financial Crimes Intelligence Group. More than 360 attendees from financial institutions around the world attended the online event.
Threat actors more organized and sophisticated.
The business case for change is more urgent than ever, according to presenters. Cyber crime can happen incredibly fast — quickly moving beyond a single bank or national border — but detection and reporting are much slower. Fraud attempts continue to rise. Last year, 73% of businesses experienced attempted or actual payments fraud.1 According to Bryan Earl of the FBI, the FBI’s Internet Crimes Complaint Center received nearly 270,000 complaints in a single year, reporting more than $800 million in losses.
Fraud techniques are also evolving at a rapid pace. The latest cyber threats target local vulnerabilities with teamwork, precision, and speed.
“Attackers are well organized and they’re sophisticated,” noted Pat Antonacci, managing director of SWIFT Americas. “They’re invested in impacting the financial services industry.”
Kelley Chamberlain, from Wells Fargo’s Financial Crimes Intelligence Group, described several trends: “Threat actors are compromising vulnerabilities in bank environments. They’re taking advantage of weaknesses in third-party providers and the supply chain. They’re targeting accounts and rapidly laundering the proceeds in multiple jurisdictions.”
Faster communication and stronger collaboration is needed.
With new threat actors and new techniques emerging daily, presenters urged everyone in the financial services community to improve not just their physical and systems security measures, but also their approach to communication and collaboration.
“Cyber criminals don’t have the same silos,” noted Earl. “We must share among ourselves to have a fighting chance to address the problem.”
Among the recommendations shared:
Break down internal silos. Banks must facilitate stronger communication among their cyber security, anti-money laundering (AML), and fraud teams, both to mitigate new fraud attempts and to investigate suspicious activity.
Collaboration generates better results, as every party approaches the solution from a different perspective.
Report all cyber crime. Unfortunately, many banks are still reluctant to communicate suspicious activity outside their own walls. “The victimized bank may be hesitant to admit to an attack from either a regulatory, legal, reputational, or personal perspective,” Chamberlain explained.
Rapid information sharing, even for small fraud attempts, enables law enforcement to see patterns that may not be visible to a single bank. “Filing suspicious activity reports helps law enforcement understand and investigate, and often, tie cases together,” noted Les Joseph, manager of the Financial Crimes Intelligence Group at Wells Fargo.
Added Earl, “The financial infrastructure of the world is in private hands. If crimes are happening on that infrastructure, and we don’t share information, we simply won’t be able to approach the subject with any effectiveness.”
Establish law enforcement relationships. Earl encouraged all banks to develop a regular liaison with officials in their local area, which creates awareness and trust before an incident occurs. In addition, banks should regularly access agency web portals, such as IC3.gov, where they can view financial crime bulletins and track emerging threats.
“We are eager to sit down with people from industry and exchange information while they’re thinking about securing their systems,” he stated. “We have representatives in the U.S. and all over the world, so we’re structured to oversee national and international threats.”
Secure your infrastructure. A bank’s own systems and processes are the first line of defense against cyber crime. Antonacci shared how SWIFT is working to drive change and support network members with stronger protocols. The new Customer Security Programme (CSP) will help banks reduce potential vulnerabilities and ensure processes are in place to monitor, detect, and respond to anomalous activity. Each member bank must demonstrate adherence to the sixteen mandatory requirements through a self-attestation process.
Track daily activity. SWIFT also offers a daily validation report, launched in December 2016, which provides a summary of network activity. Banks can compare this data to their internal tallies and immediately detect suspicious activity, which can minimize the impact of a fraud incident.
“For example, if you have a very high value transaction that seems to be out of the norm, or your systems show you sent 1,500 wire transactions and the independent Daily Validation Report shows that you sent 1,503, that’s an indication there may have been and the independent Daily Validation Report shows that you sent 1,503,” Antonacci explained.
Manage counterparties. Another source of cyber risk comes from business relationships. Antonacci encouraged each bank to treat a counterparty’s security practices with the same weight given financial liability, know your customer (KYC), or local market risk. In this vein, SWIFT will soon publish self-attestation scores for member banks, providing a measure of transparency. He also urged banks to create a process to maintain counterparty relationships, so inactive accounts no longer have credentials to access systems or services.
- 2016 AFP Payments Fraud and Control Survey
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