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Washington Archive

Washington

CUNA, partners urge Congress to act on cyber protections

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WASHINGTON (8/4/14)--More than a dozen financial services organizations have praised new cybersecurity legislation passed by the Senate Select Committee on Intelligence. The Credit Union National Association, along with other organizations dedicated to credit unions, banks, investments and financial markets, signed a letter supporting the bill.

The Cybersecurity Information Sharing Act (CISA) of 2014 (S. 2588) is intended to strengthen defenses against cyberattakcs by encouraging the business community and the government to share information about threats more quickly, while ensuring privacy.

The letter points out the need for Congress to act on the bill, citing cyber threats that are more "sophisticated and dangerous than ever," and pointing out the need for public/private cooperation to share information.

"As it stands today, our laws do not do enough to foster information sharing and establish clear lines of communication with the various government agencies responsible for Cybersecurity," the letter reads. "Simply put, there is a limit to our ability to protect our customers and there is a clear need for Congress to act."

The bill would strengthen the ability of private sector and federal government to share information, by narrowing liability protections and strengthening privacy protections.

"For the undersigned financial services trade associations, more effective information sharing provides some of the strongest protections of privacy, as it is information about our members' customers that we are seeking to protect from those who would seek to steal or destroy that information," the letter reads.

The letter, addressed to Sen. Harry Reid (D-Nev.), Senate Majority Leader and Sen. Mitch McConnell (R-Ky.), Senate Minority Leader, urges the legislators to move CISA to the Senate floor as soon as possible.

New fraud scheme involves hacking of executives' e-mail

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WASHINGTON (8/4/14)--An employee might not hesitate to respond if their superior asks for secure information, and that's the response fraudsters are hoping for, according to a report by the Information Security Media Group. The report cites numerous warnings issued by federal authorities and researchers in recent weeks.

According to the report, hackers infiltrate e-mail networks and take over an executive's account. The account is then used to send e-mails to lower-level employees instructing them to perform a task with a sense of urgency. This usually involves confidential information, and sometimes involves instructing the employee to schedule fraudulent funds transfers.

The Internet Crime Complaint Center (IC3), a partnership between the FBI and the National White Collar Crime Center, has issued a notice about this scam. The IC3 reports that the average dollar loss per successful fraudulent transfer is approximately $55,000, but there have been reports of losses exceeding $800,000.

The IC3 also reported that victims are generally from the U.S., England and Canada, and are focused on institutions that generally conduct high-dollar wire transfers, so the requested amount is not uncommon.

Use the resource link below for more information. Also, see related story: DDoS threat landscape continues to evolve .

Big banks' funding advantage less, 'too big to fail' persists says GAO

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WASHINGTON (8/4/14)--While the Dodd-Frank Act prohibits rescues of individual failing financial institution, there is a debate among market observers about whether some of the largest banks are still benefitting from belief in the notion of "too big to fail." This is according to a report from the Government Accountability Office (GAO) that examined whether these large banks are benefitting from the belief that the government will intervene to prevent failure.

The GAO reviewed the economic benefits that banks with more than $500 billion in consolidated assets may have received as a result of actual or perceived support from the government.

The report notes that, in response to recent regulatory reforms, two of three major rating agencies reduced or removed assumed government support from overall credit ratings of some large bank holding companies.

Analysis by the GAO suggests that large bank holding companies had lower funding costs than smaller ones during the financial crisis, but that there is mixed evidence of these advantages in recent years.

The GAO created its own series of 42 statistical models that take into account bond funding costs and credit risk levels to paint a picture of bond funding cost differences between bank holding companies with between $1 trillion and $10 billion.

"All 42 models found that larger bank holding companies had lower bond funding costs than smaller ones in 2008 and 2009, while more than half of the models found that larger bank holding companies had higher bond funding costs than smaller ones in 2011 through 2013," the report reads. "However, the models' comparisons of bond funding costs for bank holding companies of different sizes varied depending on the level of credit risk."

The report warns that the GAO estimates of differences in funding costs reflect a combination of factors, including investors' beliefs about the likelihood a bank will fail and if it will be rescued by the government. Because of this, the report cannot precisely identify the influence of each specific factor.

Use the resource link below to access the report.

BSA clarifications could strengthen member/customer due diligence

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WASHINGTON (8/4/14)--A rule has been proposed to clarify and strengthen member/customer due diligence obligations of financial institutions in an effort to prevent anonymous companies from conducting illegal activity in the American financial sector. Proposed by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), the rule would amend  Bank Secrecy Act regulations.

The proposal was preceded by a related advance notice of proposed rulemaking from 2012. It woudl create a new, standardized format for covered financial institutions to collect information on beneficial owners, defined as individuals who own, control and profit from the companies they service. Financial institutions would be required to identify and verify any individual who owns 25% or more of a legal entity, and an individual who controls the legal entity.

The amendments clarify that customer (member) due diligence consists of:
  • Identifying and verifying the identity of members;

  • Identifying and verifying the beneficial owners of legal entity members;

  • Understanding the nature and purpose of member relationships; and

  • Conducting ongoing monitoring to maintain and update member information and identify and report suspicious transactions. 
David Cohen, Undersecretary for Terrorism and Financial Intelligence said the proposed rule would provide a new tool to track down people behind companies that "secretly move and launder their illicit gains."

CUNA continues to urge FinCEN and other regulators to minimize BSA regulatory burdens on credit unions.

Use the resource link below to access to the complete proposed rule.

204 grants equaling more than $1M got to 174 LICUs

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ALEXANDRIA, Va. (8/4/14)--On Friday, the National Credit Union Administration announced it  awarded $1,051,850 through 204 grants given to 174 low-income credit unions (LICUs).

The funding was given under the second 2014 round of Community Development Revolving Loan Fund grants. The agency's Office of Small Credit Union Initiatives administers the fund, which the U.S. Congress established to provide grants and loans to credit unions serving low-income communities.

The grants can be used for such things as to expanding services to members, training staff and collaborating for greater operational efficiencies.

 
Click to view larger image Source: NCUA

Also, new product or service grants can fund activities like a credit union building its first website or expanding into mobile banking, online applications, card services or home banking. Staff and volunteer training grants support training on lending and collections, governance, compliance and financial counseling for front-line staff to provide to members.

Certification grants help credit unions to apply to the U.S. Department of the Treasury to become a Community Development Financial Institution. Treasury's CDFI Fund provides resources to financial institutions serving low-income households and communities that lack adequate access to affordable financial products and services.

Use the resource links to access the grantees for this round of CDRLF awards and to read about the NCUA's year-round Urgent Needs grant program for emergency assistance.