Here is the article converted to Markdown format:

Cyber Threat Landscape Shifts Focus Towards Social Engineering Tactics

In recent years, the cyber threat landscape for financial institutions has undergone a significant shift. Gone are the days of relying solely on technical defenses against hacking and malware attacks. Today’s criminals have evolved to use social engineering tactics to gain access to systems and steal sensitive information.

Financial Institutions Must Take Action

To stay ahead of these threats, financial institutions must focus on several key areas:

• Staff Training: Educate employees on identifying phishing schemes and other common tactics used by cybercriminals.
• Vulnerability Testing: Regularly test IT systems for vulnerabilities and apply software patches as necessary.
• Third-Party Vendor Monitoring: Monitor the cybersecurity defenses of third-party vendors to ensure they are meeting security standards.

Regulatory Compliance Risks

Data breaches that leak protected consumer information pose significant regulatory compliance risks under the Gramm-Leach-Bliley Act (GLBA). Even if a breach doesn’t result in regulatory issues, it can cause operational disruptions and reputational damage. A recent example is the ransomware attack against a third-party vendor that left 60 credit union customers unable to access their online banking accounts.

Payment Processor/Risk Assessment

When evaluating payment processors, financial institutions must conduct thorough risk assessments to identify potential vulnerabilities. The ACH network, in particular, presents elevated risks, including fraud, settlement errors, insufficient funds, and compliance issues.

• Fraud Detection: Implement internal controls and account monitoring to detect and resolve ACH transfer fraud.
• Regulatory Compliance: Comply with NACHA rules established by the Electronic Payments Association (formerly National Automated Clearing House Association).

Identity Theft and Red Flag Risk Assessment

Financial institutions are responsible for detecting warning signs of identity theft, including policies for collecting documentation and proof of identity, monitoring suspicious activity, and attention to alerts from credit reporting agencies or fraud detection providers.

• Regular Updates: Update the Identity Theft risk assessment regularly based on an institution’s history with identity theft, changes in account offerings, and other factors.

Remote Deposit Capture Risk Assessment

A risk assessment for Remote Deposit Capture (RDC) technology should focus on legal and compliance risks, operational risks, and vendor risks. Criminals are exploiting RDC to commit fraud by stealing checks from mailboxes and “washing” them to remove the legitimate recipient’s information.

• Fraud Prevention: Implement policies and procedures to curb the deposit of stolen checks, whether physically or digitally.

Digital Banking Risk Assessment

As financial institutions expand their digital offerings, they must assess cybersecurity threats, potential compliance issues, and operational risks. The growth of fintech firms and technology service providers (TSPs) has multiplied risks for financial institutions.

• Cybersecurity Monitoring: Implement real-time monitoring of third-party partners to detect potential security breaches.
• Compliance Issues: Ensure TSPs meet BSA/AML compliance requirements to avoid regulatory issues.

Transforming Risk Assessments

Financial institutions must move from quantifying individual risks to creating an integrated approach to risk management. By integrating risk assessments on a single platform, they can transform risk into an opportunity for growth and improved safety and soundness.

To learn more about building a stronger risk management program, check out our upcoming webinar: “Decoding Risk: IRM, GRC and Everything in Between.”