The COVID-19 pandemic pushed banks and credit unions to fast-track digital transformation plans as consumers nationwide stopped visiting branches and ATMs, and suddenly shifted to digital and mobile banking options. Many banks have navigated this transition successfully.
The pandemic has exposed shortcomings in both security and technical infrastructure across the financial sector. Cybersecurity threats and fraud have surged during the pandemic. Organized crime rings and fraudsters around the world saw the sudden move to digital channels and the trillions of dollars the U.S. government was injecting into the economy as a perfect opportunity for account takeover schemes, fake business loans and other criminal activity.
To enable safer digital commerce, lawmakers and financial regulators have put in place, or are seeking to put in place, a number of new policies and regulations that would significantly impact the financial sector.
New regulations banks should know
One of the most significant developments has been put forth by the Financial Action Task Force (FATF), a global money laundering and terrorist financing watchdog. The FATF’s Guidance on Digital Identity details best practices for financial institutions to apply customer due diligence to digital identity verification and authentication for remote account opening and onboarding. It also describes how third-party reliance between regulated entities can be used by financial institutions to meet the requirements.
By understanding the most significant regulatory changes affecting the financial sector and adopting new processes and technologies, banks and credit unions can comply with regulations while ensuring that their customers’ sensitive data is secure.
They should take a multilayer approach to security that incorporates technologies such as adaptive multifactor authentication, real-time risk analytics for fraud detection and mobile application security to stop the fraud that runs rampant in digital channels. Only then will they be able to become the digital-first businesses they strive to be, while maintaining compliance and securely providing the online and mobile services their customers desire.
For more information contact us at Smith & Bernards Associates.
Smith & Bernards Associates
320 Park Avenue – 31st Floor, New york, NY 10022, USA
Our firm has a team of attorneys, consultants and others with more than 100 years of combined experience in the securities industry and in securities law. Since 1990, we have represented thousands of investors nationwide to recover losses. We have represented clients in Federal and state courts and in arbitration through The Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE), the American Arbitration Association (AAA) and in private arbitration actions. SOURCE