What Security?

Who’s guarding the bank now that it’s on your mobile? Protect your identity at all cost.

When we entrust our money and our business to the global financial infrastructure as developed by the world’s largest banks and service groups such as SWIFTS we assume our transactions will be secure. Unfortunately  by having computerized most of our banking activity, from chip payment cards to online internet banking where the internet has become the staple of financial flows we see increasingly and alarmingly how naive our assumption has been.

I’ve recently been wiring funds overseas and it amazes me how intrusive the identity requirements are. Even purchasing bitcoins causes unwarranted risk and exposure of my identity.  Seventy-five percent of of companies in the world  now experience serious fraud incidences and listen carefully; more than 80% of these incidents are perpetrated by insiders. Remember this the next time you are providing personal information to wire funds overseas or when the telephone banking clerk asks you all of those personal questions to identify yourself. The current model and mode of operation relying on positively identifying the customer (KYC or Know Your Customer) is seriously flawed and no longer warranted. Identity theft is itself now a large part of the problem with with more than 45% increases in lost of identity year over year. Equally alarming is that 49 % of identity thefts were the result of theft from our governments, the very people we entrust with Social Insurance Numbers, Medical records and personal tax and benefits accounts. ID theft2 .

It is difficult to instill a fresh perspective and to affect change when the threat models evolve more quickly than the regulatory framework and/or the deterrence so why can’t we get our banks, card companies, department stores and our governments to stop asking us to identify ourselves with such easily stolen credentials?  In a world of cyber warfare when data breaches are occurring in everything from our income tax records to our voters lists it isn’t just our Credit Cards we need to protect. We are being forced to surrender our identity to so many agencies and services who repeatedly and blatantly allow this information to be stolen? Over dependence upon proof of personal identity is robbing us of privacy and personal liberty which are suppose to be the hallmarks of a democratic and free society?  If your identity hasn’t yet been compromised read this sample case to prepare yourself as it is only a matter of time before you will suffer the same fate.  Personal ID theft.

More than one million incidents of card scams, online and telephone banking and check frauds occurred in the U.K. in the first six months of the year, according to Financial Fraud Action U.K., an industry body funded by banks. That’s an increase of 53% over the same period of last year, meaning one such crime is now committed every 15 seconds, the FFA said.   Hackers and Fraud rings are resulting in major financial losses. Early in 2016, an international criminal syndicate was able to successfully impersonate bank officers at over 100 banks around the world to net as much as $900 million in stolen funds. Last year the Boleto Fraud Ring siphoned $3.75 billion from Brazilian banks. Throughout 2016, SWIFT officials have grappled with a series of cyber attacks. In February, attackers used SWIFT codes to break into the account of the Bangladesh central bank and send fake payment orders to the Federal Reserve Bank of New York, leading to the theft of $100 million. Some of the money has been tracked down and retrieved, but $81 million is still missing. Not disclosing your identity and using cash, as much as governments don’t like it, appears to be the safest bet.  AML and fraud deterrent costs are more than $8 billion and growing at double digit annual rates while the situation only continues to worsen.  Identity theft is growing at double digits rates and identity thieves will open new accounts and take over more existing banking and credit card accounts in 2017. Hackers will also be target other types of accounts especially those linked to credit cards, including iTunes, Amazon, PayPal and eBay. It is estimated that Cybercrime represents $575 billion in losses and fraud losses in general are 5% 0f global corporate income or 3.5 trillion. Regulations current and pending will be counterweighted by operational costs and customers’ rising expectations on the “speed” of commerce so a new model and fresh vision is required. It is very doubtful that the large banks or the regulators who both suffer from overly bureaucratic operational modes will be able to deliver.

This is especially damaging to our collective well being in that the theft or siphoning off of  such huge amounts of wealth goes unannounced and is simply absorbed into the costs of doing business – precisely because Banks are so profitable. In other words we all pay for these losses in higher fees and the Banks can continue to operate within the law and with impunity by protecting the status quo rather than becoming truly innovative more quickly because they are too big to fail.  We should have learned this lesson when we bailed out the banks in 2008 as the whole system teetered on the brink of collapse.  Rather than creating new regulations to attempt to get ahead of the fraudsters, (it’s not going to happen) our Governments should be taking a proactive stance and  force the Banks to act like,  or partner with Fintech startups, to  focus on increasing security via innovation rather than continuing present day practices of charging  excessive user fees to absorb these losses. We all rely upon a solvent and efficient banking system so before being forced to “bail” out the exceeding profitable bankers again let’s provide targeted tax credits for increased innovation to protect our communal asset.  Internet Fraud

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