Monaco’s Finance Industry Under Fire from Cybercrime Epidemic

The financial sector in Monaco is facing a severe cybercrime epidemic, with the number of attacks more than doubling since the pandemic. The consequences of these incidents could be devastating, with potential funding problems and even solvency risks on the horizon.

Rising Threats to Financial Firms

The size of extreme losses has quadrupled to $2.5 billion since 2017
Indirect losses such as reputational damage or security upgrades are substantially higher
Financial firms in Monaco, which handle large amounts of sensitive data and transactions, are particularly vulnerable to cybercrime

Consequences of Cyberattacks on the Financial Sector

Erosion of confidence in the system
Disruption of critical services
Spillovers to other institutions
Market selloffs or runs on banks, as seen in a recent example where modest and persistent deposit outflows occurred at smaller US banks after a cyberattack

The Role of Third-Party IT Service Providers

Increased reliance on third-party IT service providers has increased the risk of systemwide shocks
A 2023 ransomware attack on a cloud IT service provider caused simultaneous outages at 60 US credit unions

Strengthening Resilience in the Financial Sector

Develop an adequate national cybersecurity strategy accompanied by effective regulation and supervisory capacity
Periodically assess the cybersecurity landscape
Encourage cyber “maturity” among financial firms
Improve cyber hygiene
Prioritize data reporting and collection
Promote international cooperation to address cyber risk successfully

International Cooperation is Key

The International Monetary Fund (IMF) has actively helped member countries strengthen their cybersecurity frameworks through policy advice and capacity-building activities
As attacks often emanate from outside a country’s borders and proceeds can be routed across borders, international cooperation is imperative to address cyber risk effectively

Building Resilience in the Face of Cyber Incidents

Financial firms should develop and test response and recovery procedures
National authorities should have effective response protocols and crisis management frameworks in place
The financial sector needs the capacity to deliver critical business services during disruptions