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November 18, 2013
Forum Focuses on Best Practices and Other Tools to Fight Payments Fraud
The Retail Payments Risk Forum and the southeastern Regional Payments Associations (RPAs) cohosted an Executive Fraud Forum at the Atlanta Fed on October 30. Forum attendees engaged with speakers and panelists on such issues as the latest payments fraud trends, legislation and regulation, and best practices for financial institutions to mitigate risk in today's dynamic payments environment.
In one session, Federal Reserve Bank of Atlanta senior examiner Tony DaSilva discussed best practices to combat cybercrime. Cybercrime remains top of mind for financial institutions because denial-of-service attacks, which overload an institution's computers so customers cannot access their account information, can affect an institution's reputation and divert attention away from account takeover attempts. Account takeover is when a fraudster uses malware to attempt to steal a customer's valid online credentials and direct payments—often via wire and ACH—out of the customer's account. DaSilva suggests that financial institutions should assume that their systems are infected, and thus constantly, proactively monitor for cybercrime.
DaSilva also highlighted the importance for an institution's board and management to understand the nature of current cyber threats, assigning adequate IT resources and using industry tools to contend with cybercrime. DaSilva also emphasized the importance of following regulatory guidance.
A critical piece of regulatory guidance in this area is the Federal Financial Institutions Examination Council's (FFIEC) 2011 supplement to its 2005 guidance, Authentication in an Internet Banking Environment. The updated guidance recognizes the changing nature of cyber threats, including account takeovers, and emphasizes three area of responsibility for institutions.
- Periodic risk assessments, at a minimum every 12 months, are important. In these assessments, institutions should consider the current threat landscape, changes in customers, and actual incidents, and then make adjustments to customers' authentication controls
- Layered security for high-risk Internet-based systems should at a minimum detect and respond to anomalies and have robust controls for system administrators of business clients
- Education should focus on making consumer and business customers aware of security steps, and should explain federal consumer protection provisions, risk controls offered by the institution and relevant institution contacts
For more on this topic, view Tony DaSliva's video interview and presentation on the conference web page.
By Deborah Shaw, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed
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- account takeovers
- ATM fraud
- bank supervision
- banks and banking
- card networks
- check fraud
- consumer fraud
- consumer protection
- cross-border wires
- data security
- debit cards
- emerging payments
- financial services
- identity theft
- law enforcement
- mobile banking
- mobile money transfer
- mobile network operator (MNO)
- mobile payments
- money laundering
- money services business (MSB)
- online banking fraud
- payments risk
- payments study
- payments systems
- phone fraud
- remotely created checks
- risk management
- Section 1073
- social networks
- third-party service provider
- trusted service manager
- Unfair and Deceptive Acts and Practices (UDAP)
- wire transfer fraud
- workplace fraud