With new technology comes prognostication, both by entrepreneurs and regulatory authorities, and reaction to organic industry trends—such is the life cycle of emerging technology. An increased reliance on artificial Intelligence and mobile payments along with looming IPOs are a few of the predictions experts have made heading into 2019. Industry watchdogs, though, have continued to try to keep pace with budding trends by issuing rules, regulations and best practices.
The Financial Industry Regulatory Authority and Financial Crimes Enforcement Network, for example, recently published materials aimed at shoring up regulatory loose ends for the industry’s major players. At the same time, the Financial Technology Protection Act is working its way through Capitol Hill. Last month, the Financial Industry Regulatory Authority (FINRA) released its "Report on Selected Cybersecurity Practices--2018" (PDF) and the Financial Crimes Enforcement Network (FinCEN) issued a statement (PDF) directed at preventing terrorist activity and money laundering. Protecting data was a major theme in both publications.
FINRA Looks at Information security
The best practices report took a long, hard look at cybersecurity with respect to broker-dealers and information security at large and small firms. David M. Kelley, surveillance director, Member Supervision in FINRA’s Kansas City office summarized its five main points.
• Cybersecurity controls in branch offices
• Methods of limiting phishing attacks
• Identifying and mitigating insider threats
• Elements of a strong penetration-testing program
• Establishing and maintaining controls on mobile devices
“Securities firms rate cybersecurity as one of their top operational risks, and our new report addresses areas that firms tend to find most challenging,” Kelly added.
Yolanda Adewumi-Trottman, examination director, Member Supervision in FINRA’s New York City office, expanded on the importance of exchanging information between key players and its benefit to the “Firms welcome the opportunity to see the effective practices used by other broker-dealers, so they can benchmark their controls and make informed decisions about establishing or evolving their own programs,” says States Adewumi-Trottman:
FCEN Working Group Brings Together Stakeholders
FinCEN created a working group that included Federal depository institutions rulemakers, and the U.S. Department of the Treasury’s Office of Terrorism and Financial Intelligence to look at key security issues.
To that end, a joint statement, released by FinCEN, with contributions from the National Credit Union Administration, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, encouraged credit unions and banks to take “innovative approaches to combating money laundering, terrorist financing, and other illicit financial threats.”
Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence said the financial community can be just as adaptive as bad actors. “As money launderers and other illicit actors constantly evolve their tactics, we want the compliance community to likewise adapt their efforts to counter these threats," Mandelker said. "We are highly encouraged by innovative steps that financial institutions have taken recently to identify and report illicit financial activity related to North Korea, Iran, and other key national security and law enforcement priorities.”
He added: “The joint statement issued today with our fellow regulators is a central part of our ongoing commitment to foster innovation that helps protect our financial system and makes our country safer.”
