Security & Fraud

Fed Watchdog To Review Bank Cybersecurity Practices

The Federal Reserve will use the scrutiny of its internal watchdog to find out how the U.S. central bank is policing the cybersecurity practices that are in place at the nation’s financial institutions. The central initiative was announced on Monday (June 20), Reuters reported.

The internal unit, the Office of Inspector General (OIG), which is tied to the Federal Reserve Board of Governors, will release an audit of its results in the fourth quarter of this year, said the newswire, and OIG disclosed that time frame in a report on projects that are underway and projects that will be upcoming. As has been noted, Fed Chair Janet Yellen will likely face questions about the state of cybersecurity during testimony before a Senate committee this week, and those questions will concern breaches and attempted breaches at the central bank. The most recent and closely followed headlines have centered on how hackers stole $81 million from a New York Fed account that belonged to the Bangladesh central bank. Reuters itself revealed 50 breaches at the Fed between 2011 and 2015.

OIG said in its report this week: “The growing sophistication and volume of cybersecurity threats presents a serious risk to all financial institutions.”

The OIG report that is slated for later this year will mark the first self-assessment on how the Fed is helping banks hew to rules that track and monitor efforts to battle cyberfraud. The Fed’s reports, thus far, have been centered on technology or on how the agency itself is handling fraud efforts and breach defenses. The Fed is hardly alone in being a large target, as JPMorgan Chase has been a victim, among many others.

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