Wire fraud incidents from China prove current security measures, including multifactor authentication, are too easy to bypass. And security pundits say it all points back to why the financial industry needs more guidance about adequate online security.
In the absence of the FFIEC's new guidance, industry experts say banks need to act now to help mitigate online risks associated with commercial accounts. "You can be sure the attacks won't abate until banks fight back," says Gartner's Avivah Litan.
Between March 2010 and April 2011, 20 incidents of wire fraud hit small and mid-sized U.S. businesses. All of the transactions involved payments routed to Chinese economic and trade companies located near the Russian border.
The bad news is that banks and businesses have not made great progress in the fight against account takeover fraud. The good news is: They have the strategies and tools to win this fight in 2011.
It's been over three months since the accidental disclosure. When will the final FFIEC authentication update be released? "I don't think we're any less safe," says Gartner's Avivah Litan. "We just need to step up enforcements."
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EastNets' Paul Buelens says fraud-fighting is an international concern, as old schemes abound and new threats emerge. Fraud risks are some of the most challenging banks have ever faced.
"More and more consumers are using PIN debit at the pumps, so this makes for a rich harvest for the criminals," says John Buzzard of FICO's Card Alert Service.
"Today's risk management professionals really need to take a strategic view of managing risk to be relevant in achieving the organization's expected outcome," says Philip Alexander of Wells Fargo Bank.
Speculation about the pending update to online authentication guidance has been circulating around water coolers for months now. "A [disclosure] like this could make it more challenging for the regulators," says attorney David Navetta.
"We want to know what the FFIEC guidelines actually mean and who is responsible for enforcing audits and compliance," says fraud victim Jim Payne, owner of Choice Escrow.
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