Fighting cyber criminals

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BY MANNY VILLAR
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January 31, 2018
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MAN’S unending quest for things and ways to improve his life has led, and continues to lead, to numerous inventions and processes that make living a lot more enjoyable, efficient and rewarding.

The invention of motor vehicles, trains, modern ships and airplanes, for instance, has virtually shrunk the distances between cities and countries. Still, research continues on how to make travel faster. The impact of modern transportation on people, countries and the global economy is so huge, that it is difficult to imagine what life would be without these inventions.

Advances in information and communications technology are also creating a similar impact on our lives. For instance, many people would feel helpless without a cell phone in their pockets. Very few will have the patience to write by pounding on a manual typewriter instead of a touch-screen tablet, or at least a laptop.

When it comes to financial transactions, including payment of utility bills, sending money to families from different countries, purchasing goods and withdrawing funds, the Philippines is not so far behind developed countries in shifting to paperless transactions.

Banks discourage their clients from using passbooks, promoting the more efficient ATM (automated teller machine) cards, which allow people to deposit or withdraw money almost anywhere, without going to the banks where they opened their accounts, and lining up before a tired teller.

Inventions, innovations and technological advances are part of what we call progress. They are good and welcome because, as I said earlier, they generally make life easy.

However, we all recognize that new products and processes can also create problems that did not exist before. Money is the one thing that is ever present in our daily routine, so I will focus on the negative impact of advances in information and communications technology on financial transactions.

Paperless or online transactions – between banks, corporations or people – have created a new type of crime, now known as cyber crime. Theft is no longer limited to breaking into private homes or bank vaults; the modern criminals are able to steal millions of dollars just by hacking online accounts, both individual and corporate.

In the Philippines, it is now common to read or watch news about depositors who complain of losing money from their accounts. Of course, the biggest in terms of amount was the loss of $81 million in February 2017 from the account of the government of Bangladesh with the Federal Reserve Bank of New York. Investigation showed that the money was transferred to the Philippines and then moved to another country.

This is, of course, a global problem. In an online report in July 2014, US News cited a study by the Center for Strategic and International Studies (CSIS), which found that hackers were costing consumers and companies between $375 billion and $575 billion a year, and that the figure was expected to rise as online information stealing expands with increased Internet use.

The study, funded by cyber security firm McAfee, also estimated that losses from online crime was equivalent to 0.8 percent of worldwide GDP (Gross Domestic Product), with developed countries like those in North America and Europe losing more than countries in Latin America or Africa.

In the Philippines, it is understandable that many people were worried by the recent attacks on several local banks, considering that most banking transactions are now done online.

On the positive side, the banks that were affected are all very stable, and I’m sure that those banks have taken the necessary precautions to protect them and their clients from hackers.

As the primary banking regulator, the Bangko Sentral ng Pilipinas (BSP) is also moving swiftly to address cyber threats. In November last year, the Monetary Board, the BSP’s policymaking body, approved stricter rules on information security management focusing on cyber security.

The BSP says the new guidelines are needed to address the growing concerns on the fast-evolving cyber-threats that continue to confront global as well as domestic financial communities.

The new guidelines require BSP-supervised financial institutions to set up a 24/7 security operations center equipped with advanced technologies and manned by competent analysts to proactively monitor emerging and highly sophisticated cyber threats and attacks.

Reforms initiated by the BSP have helped the domestic banking industry weather global crisis in the recent past, and developed the industry’s resilience toward future challenges. Overall, I believe the local banks stand on solid ground.

Having said that, the new threats require that the monetary authorities and the banks, as well as the public, be vigilant and always prepared to deter any attacks from cyber criminals.

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This piece first came out in Business Mirror on Jan. 22, 2017 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
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