Cybercrime in the Financial Industry: BOV’s Cyber Attack Raises Concerns about Malta’s Banking System
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Malta was left reeling this week after one of its leading banks, Bank of Valletta (BOV), fell victim to a cyber attack. The incident has raised concerns about the vulnerability of the Maltese banking system and the potential for similar attacks on other local banks.
What is Cybercrime?
Cybercrime refers to illegal acts that involve the use of information and communication technologies, with computers being either tools or targets. Reports worldwide have concluded that organizations like banks and financial institutions are more likely to be targeted due to their nature of business.
The Risks Posed by Cybercrime
In this case, cybercriminals gained remote access to BOV’s systems, allowing them to administer and manipulate data. The result was a series of false and malicious transactions worth €13 million, which were attempted to be transferred to international banks. Fortunately, the bank’s swift detection, action, and recovery ensured that no financial losses were incurred, and its reputation remained intact.
Global Problem
Cyber attacks are a global problem, with major banks worldwide having fallen victim to such incidents. In 2012, US banks including Bank of America, JPMorgan Chase, and Citigroup reported cyber attacks, while European banks like Royal Bank of Scotland suffered from online service disruptions in 2015. Similarly, Russian banks were targeted in 2016, followed by HSBC a year later.
Financial Losses
The risk of internet-based crime on financial services cannot be overstated, with financial losses totalling $16.8 billion reported in the US alone in 2017. The US Treasury views cyber attacks as one of the key threats to financial stability and considers cybersecurity a top sustainability issue for the financial sector.
Challenges in Dealing with Cyber Attacks
A recent White Paper by Oliver Wyman Management Consulting Company and the Depository Trust & Clearing Corporation highlighted three main factors that make it difficult to deal with cyber attacks:
- Detection: Detection is challenging due to the complexity of modern systems.
- Response: Response is hindered by the level of interconnectivity between financial institutions.
- Recovery: Recovery is also hindered by the same factor.
BOV’s Swift Response
BOV’s swift response to the attack included:
- Confirming the incident
- Shutting down operations
- Informing correspondent banks to initiate a process to reverse the transactions
The bank was able to resume most of its operations within 24 hours.
Industry Safeguards
The local banking industry was further safeguarded when APS Bank suspended some services as a precautionary measure due to its interdependence with BOV’s systems. The incident has raised awareness about the importance of cybersecurity in the financial sector, with both internal and external measures being implemented to prevent similar attacks.
Proactive Measures
Reputable financial institutions like BOV invest heavily in:
- Cybersecurity systems
- Personnel training
They also share information on threats encountered with industry peers to maintain trust despite the global nature of cybercrime.
Regulators’ Role
As technology continues to evolve rapidly, it is essential that financial institutions remain proactive in addressing the risks posed by cybercrime. Regulators like the Malta Financial Services Authority (MFSA) play a crucial role in ensuring that systems are in place to mitigate risk factors and maintain a level of trust in the industry.
By implementing robust cybersecurity measures and staying vigilant against emerging threats, the financial sector can minimize the impact of cyber attacks and protect the integrity of its operations.