A number of banks are reporting that their customers’ emails have been hacked. Hacking can trigger a chain of events aimed at defrauding financial institutions. The most effective precaution your bank can take is to completely and consistently follow best practices. The following story illustrates why.
Bank XYZ receives an email that appears to be from its good customer. The email instructs the bank to wire funds to a beneficiary in a foreign country. An employee at Bank XYZ, relying on the email alone for authorization, wires the funds according to the instructions in the email.
What went wrong in this example? The good customer’s email had been hacked. The emailed wire request was sent by a fraudster in a distant country, and the funds are long gone by now.
And because the employee at Bank XYZ failed to call the customer to confirm the originator’s identity, it’s Bank XYZ that suffered the loss.
Unfortunately, U.S. financial institutions have incurred large financial losses as a result of this type of fraud. We urge you stress the importance of always making a call-back to your customer to verify any faxed or emailed wire transfer request before releasing payment. Whether your bank uses passwords or PINs to verify the identity of customers, following this step without exception will help safeguard both your customer and your bank.
CYBERSECURITY: CFO shares information, guidance with community banks
– April 2015
Reprint from the March/April 2015 Bankers’ Bank of the West newsletter for customer banks.
Paper by the Office of the Comptroller of the Currency details ways in which collaborative solutions could prove advantageous for community banks
– January 2015
Reprint from the March/April 2015 Bankers’ Bank of the West newsletter for customer banks
In a paper dated January 13, 2015, the Office of the Comptroller of the Currency explores the potential benefits of collaboration among smaller banks seeking to compete and succeed in a challenging environment.
The paper, “An Opportunity for Community Banks: Working Together Collaboratively,” looks at numerous collaborative models and their potential for alleviating some of the challenges commonly faced by community banks today. It also provides examples of specific approaches, functional areas, and oversight concerns worthy of consideration.