Cybersecurity recently made headlines when a tech outage disrupted payment networks, financial institutions, airlines, and other businesses worldwide. This disruption was ironically caused by a cybersecurity firm's software update, highlighting our dependence on technology and the critical importance of robust security measures.
A Real-Time Lesson in Cybersecurity
A cybersecurity expert shared their experience of witnessing a financial institution publicly disclose a cyberattack during a presentation on the connection between payments and cybersecurity. This real-time incident underscored the importance of staying informed about current cyber threat trends and adopting strategies to protect payment data.
Vulnerabilities and Threat Actors
Cybercriminals exploit network vulnerabilities due to cybersecurity gaps, making payment fraud easier to execute. For instance, a 2023 breach of a file transfer service provider affected approximately 60 to 70 million people. In 2024, several major companies suffered a breach of a cloud service provider, potentially exposing the personal and payment data of hundreds of millions of customers, including the cybersecurity expert.
Stolen credentials are often the cause of such breaches. Humans remain the weakest link in cybersecurity, making individuals prime targets for criminals. Phishing is the top attack vector, as highlighted by the Internet Crime Complaint Center (IC3) report. Successful phishing attacks can deliver malware, capture payment details, or redirect payments to fraudsters' accounts.
Rising Financial Losses and Sophisticated Scams
Investment scams lead in internet crime losses, with reported damages of $4.57 billion, $3.96 billion of which stemmed from cryptocurrency fraud. From 2022 to 2023, crypto-related fraud surged by 53%. The sophistication of cyber scams has also increased with artificial intelligence (AI). Crypto fraud and business email compromise (BEC)—including the diversion of high-value payments to fraudsters' accounts—are more frequent. BEC-related financial losses now closely follow investment scams, with losses exceeding $2.95 billion.
Preventative Measures for Financial Institutions and Payments Firms
Financial institutions and payments firms should implement multiple layers of security to combat these threats. Multifactor authentication and multilevel approvals across multiple channels are crucial. According to the Visa Biannual Threats report, threat actors increasingly target authentication bypass. Enhanced upfront security measures, such as modified tokens, AI-created biometrics, backend access prevention, and social engineering defenses, are essential.
AI can also aid in security through anomaly monitoring, detecting fraudulent payment attempts and activities. Regular vulnerability scanning and patching are vital to keeping hackers at bay.
Education and Training
Education is a critical component in strengthening cybersecurity defenses. NEACH offers numerous training programs focused on cybersecurity, risk, and risk management. These programs are designed to equip financial institution employees with the knowledge and skills needed to identify and mitigate cyber threats. Additionally, NEACH U School of Risk Management provides a comprehensive resource for ongoing education in these areas. By leveraging these educational opportunities, employees can stay current with best practices and emerging threats in the cybersecurity landscape.
Guidance and Reporting
The Federal Reserve System provides additional guidance and resources on information technology and cybersecurity. Banking organizations supervised by the Fed must report incidents within 36 hours of discovery. To report an internet crime, visit the FBI's Internet Crime Complaint Center (IC3).
Conclusion
The recent cyberattack during a cybersecurity workshop serves as a stark reminder of the ever-present threat landscape. Financial institution employees must remain vigilant and proactive in implementing robust security measures. By staying informed and prepared, we can better protect our organizations and customers from cyber threats.
Stay Informed: