Banks called to boost defense against cyber threats

CEBU, Philippines - Banks and other financial institutions need to step up their safety nets on cybersecurity amid the recent cases of bank fraud in the Philippines, a top official of a domestic investment banking firm said.

"(Cybersecurity) has been a serious concern recently," said Eduardo Francisco, president of the BDO Capital and Investment Corp., during a press briefing on the sidelines of the ASEAN Finance Ministers and Central Bank Governors meetings in Lapu-Lapu City yesterday.

Francisco said local players have been receptive to the call to beef up their security measures in the cyberspace, with information technology departments of banks always updating their systems to ward off threats from fraudulent activities such as skimming and money laundering.

"(There's) a lot of continued threats in the banking industry. That's why the IT department of BDO and all other banks in general are always updating their system —security software," the investment bank executive said.

In February 2016, hackers attempted to steal $951 million from the Bank of Bangladesh's account through the Federal Reserve, $81 million of which was transferred into the Philippines.

The money made its way into phony accounts at the Rizal Commercial Banking Corp. and was laundered through the country's casinos.

Experts said the incident highlighted the weakness of the country's money laundering law after lawmakers decided in 2012 to exclude casinos from the list of entities required to report to Anti-Money Laundering Council (AMLC) regarding suspicious transactions.

While online banking has made financial transactions easier, its emergence has also paved the way for the evolution of online fraudulent activities.

A 2014 Intel Security Group study said that the likely annual cost of cybercrime to the global economy stands at more than $400 billion.  A conservative estimate would be $375 billion in losses, while the maximum could be as much as $575 billion.

But the study pointed out that even the smallest of these figures is more than the national income of most countries and governments and companies underestimate how much risk they face from cybercrime and how quickly this risk can grow.

Here in Cebu, at least 2,000 accounts of the Land Bank of the Philippines were feared to have been compromised last month in an apparent case of ATM skimming. Dozens of cardholders, mostly government employees, reported losing money in their accounts ranging from P10,000 to P100,000.

Francisco stressed that the banking sector has to keep upgrading its security system as "crooks are also getting smarter."

"The costs of banking are also increasing because of these things we have to comply with. But we have to guard them (the public)," he said.

The Bangko Sentral ng Pilipinas already warned the public against the growing number of cybersecurity attacks on banks, calling on the industry to come up with precautionary steps.

The BSP said the occurrence of fraudulent acts, especially with the increased prominence of online banking as an alternative to personal banking, should push the banking sector to fight against it.

In response, some banks have been actively implementing security controls such as one time passwords, transaction alerts, and other fraud-monitoring systems to prevent phishing attacks. (FREEMAN)