Cybercrime on the Rise in Kazakhstan’s Finance Industry

Kazakhstan’s finance sector is facing a growing threat from cybercrime, with a recent surge in attacks posing significant risks to the country’s financial stability.

The Growing Threat of Cybercrime

According to a report by the International Monetary Fund (IMF), cyberattacks on financial institutions have more than doubled since the pandemic, resulting in substantial losses for companies and potentially jeopardizing their solvency. The financial sector is particularly vulnerable to cybercrime due to its handling of sensitive data and transactions.

Vulnerability of Banks

Banks are the most exposed to cybercrime, accounting for nearly one-fifth of all attacks. Incidents in this sector could lead to widespread disruption of critical services, erosion of confidence in the financial system, and spillovers to other institutions.

Notable Example: Ransomware Attack on US Credit Unions

A 2023 ransomware attack on a cloud IT service provider caused simultaneous outages at 60 US credit unions. This highlights the potential for system-wide shocks as financial firms increasingly rely on third-party IT service providers, including those using emerging technologies like artificial intelligence.

Insufficient Cybersecurity Policy Frameworks

The IMF’s survey of central banks and supervisory authorities found that cybersecurity policy frameworks in many countries remain insufficient, particularly in emerging market economies like Kazakhstan. Only about half of surveyed countries had a national, finance sector-focused cybersecurity strategy or dedicated cybersecurity regulations.

Key Findings:

• Periodically assessing the cybersecurity landscape and identifying potential systemic risks
• Encouraging cyber “maturity” among financial sector firms through board-level access to cybersecurity expertise
• Improving cyber hygiene of firms through online security, system health, training, and awareness
• Prioritizing data reporting and collection of cyber incidents

International Cooperation and Response

International cooperation is also imperative in addressing cybercrime successfully, as attacks often emanate from outside a country’s borders. To this end, Kazakhstan’s financial sector needs to develop response and recovery procedures, while national authorities should have effective response protocols and crisis management frameworks in place.

Recommendations:

• Develop an adequate national cybersecurity strategy accompanied by effective regulation and supervisory capacity
• Enhance international cooperation to address cybercrime effectively

IMF Support for Strengthening Cybersecurity Frameworks

The IMF actively helps member countries strengthen their cybersecurity frameworks through policy advice and capacity-building activities. Kazakhstan can benefit from these efforts to enhance its resilience against cybercrime and ensure the stability of its finance industry.