Financial Crime World

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Gibraltar’s Finance Industry Under Siege as Cybercrime Threats Continue to Rise

The COVID-19 pandemic has brought about a surge in cyberattacks worldwide, with companies facing unprecedented threats to their data and financial stability. Gibraltar’s finance industry, which relies heavily on digital transactions, is particularly vulnerable to these attacks.

Cyber Risk: A Growing Concern

According to a recent report by the International Monetary Fund (IMF), the risk of extreme losses from cyber incidents has increased significantly since 2017, with potential losses now reaching $2.5 billion. The financial sector is uniquely exposed to cyber risk, as financial firms handle large amounts of sensitive data and transactions, making them attractive targets for criminals seeking to steal money or disrupt economic activity.

Banks at Risk

Banks are particularly at risk, accounting for nearly one-fifth of all cyberattacks in the financial sector. Incidents in this sector could have far-reaching consequences, including:

  • Eroding confidence in the financial system
  • Disrupting critical services
  • Causing spillovers to other institutions

Consequences of a Severe Incident

A severe incident at a financial institution could lead to market selloffs or runs on banks. Attacks on payment networks could severely affect economic activity, such as:

  • Disrupting the national payment system, preventing transactions by domestic banks
  • Causing simultaneous outages at multiple institutions

Rise of Artificial Intelligence and Third-Party IT Service Providers

The rise of artificial intelligence and third-party IT service providers has also increased the risk of cyberattacks in the financial sector. For example:

  • A 2023 ransomware attack on a cloud IT service provider caused simultaneous outages at 60 US credit unions

Addressing Growing Threats

To address these growing threats, policies and governance frameworks at firms must keep pace with the increasing digitalization and geopolitical tensions in the global financial system. This includes:

  • Developing an adequate national cybersecurity strategy
  • Encouraging cyber maturity among financial sector firms
  • Improving cyber hygiene
  • Prioritizing data reporting and collection of cyber incidents
  • Sharing information among financial sector participants

International Cooperation

International cooperation is also crucial in addressing cyber risk successfully, as attacks often emanate from outside a country’s borders and proceed across borders. The IMF actively helps member countries strengthen their cybersecurity frameworks through policy advice and capacity-building activities.

Preparing for Disruptions

As the finance industry in Gibraltar continues to face these growing threats, it is essential that firms develop robust response and recovery procedures and national authorities have effective response protocols and crisis management frameworks in place to ensure critical business services can be delivered during disruptions.