Let's call it what it is: Cyberterrorism!

Howard Hagen Iowa Banking Law Iowa Cybersecurity Law Dickinson Law Des Moines Iowa

Posted on 02/19/2015 at 02:49 PM by Howard Hagen

The latest massive cyber hacking occurred close to the home of bankers. Last weekend, it was reported that a group of hackers infiltrated more than 100 banks and e-payment systems worldwide. The hackers were able to steal $1 billion since 2013. For two years, unbeknownst to the banks, the attackers used malicious software to compromise banks' cyber and surveillance systems. (See Security Week Article on Hackers.) Here is the detailed Kaspersky report about the entire incident. Several distinctive patterns have emerged from these events. First, the incident involved a number of banks, not just one, and these mass attacks may continue as they are a more profitable technique. Second, the hackers were parked in the banks for over two years without apparent detection. Third, the intruders hijacked the banks’ surveillance systems to monitor activity. Fourth, they used ATMs as cash disruptors or switches. The only conclusion one can make is that this was a very sophisticated and unfortunately eloquently designed endeavor. To be blunt, this is now more than just an old fashioned high tech robbery; it is terrorism. The impact is economically the same and now with the employment of what I call “virtual sleeper cells,” a whole new level of threat has been raised. These events involve foreign interests, intrigue, shock, and lots of collateral damage to the trust in the financial system as they migrate to U.S. financial institutions. The American government needs to treat them as such and focus resources on detecting, alerting, and stopping these events quickly. Also, with federal terrorism insurance currently being considered by Congress, the financial industry needs to promote federal cyberterrorism reinsurance coverage to protect banks; such safe harbor coverage would provide an ultimate institutional backstop for the insurance industry to provide base, but not doomsday, coverage for an insured bank. It is time for action and this needs to happen soon because we know not what is already buried within the bowels of our banks' computers.

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