Security & Fraud

Bank Regulators Probe Amazon Cloud

The Federal Reserve orchestrated an official investigation of an Amazon facility in Virginia, kicking off what is expected to be ongoing oversight of cloud providers, people familiar with the matter told The Wall Street Journal on Thursday (Aug 1).

The investigation was in April, ahead of the Capital One hack that resulted in the arrest of a former Amazon engineer. Antitrust investigations have also begun to determine if Amazon and other tech companies have used their size and influence to stifle competition, the WSJ said.

Amazon is the biggest player among the many tech firms that have become essential in the U.S. banking system. Capital One is just one of numerous financial institutions using Amazon’s cloud services to store customer data, igniting the question of where banks end and vendors begin.

The Feds focused on Amazon’s resiliency and backup systems, some of the people said, describing the visit as the first of what is expected to be ongoing oversight of the tech giant.

Regulators’ influence over non-banks is limited, and banks are left to vet their own vendors. Bank regulations hadn’t “sufficiently modernized to accommodate cloud and other innovative technologies,” according to a U.S. Treasury report last year, the WSJ said.

Tech giant oversight is progressing despite objections from companies like Amazon, Google and Facebook. The FTC is leading a Facebook investigation, while the DOJ is taking the lead in an investigation of Alphabet, Google’s parent company.

The FTC also recently put together a task force to look at the competition at companies like Facebook and Google and look again at older government decisions that allowed bigger companies to acquire smaller firms. One of the main issues being revisited is Facebook’s purchase of Instagram and WhatsApp.

Efforts from lawmakers in the U.S. to come up with a national privacy law have hit a wall, with Senators unable to agree on how strict the rule should be.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.