Financial Fraud: The New Epidemic

Cyber attacks today pose a major threat to global financial stability. Yet the world’s governments and companies continue to hide these major breaches because it remains unclear who is responsible for protecting the system. 

COVID-19 forced millions of people in the US and Europe to work from home, transforming our lives to rely increasingly on digital devices. Suddenly, socializing, working and shopping have been digitized. Financial fraudsters have taken advantage of this change and discovered a fertile playground for their crimes.

As the global financial system undergoes an unprecedented digital transformation, we see two main trends: 

• Central banks around the globe are considering throwing their weight behind digital currencies and modernizing payment systems.

• Malicious actors are providing a growing threat to the financial system and its financial stability.

According to experts, the financial sector experienced the second-largest share of cyber attacks (right behind the health sector) during COVID-19. The Federal Reserve Bank of New York reported that financial firms during this period experienced as many as 300 times more cyber-attacks than companies in other industries. 

Here are a few proposed solutions for taking back control of the situation: 

• A coordinated international approach – Individual governments, financial firms and tech companies must work together to protect against cyber threats. Due to the scale of the threat and the system’s globally interdependent nature of digital transformation, these organizations cannot defend themselves against cyber threats if they work alone.

• Expansion of the cybersecurity capacity of the financial sector – The financial sector must work to build and expand its cybersecurity capability to safeguard against cybersecurity threats resulting from accelerated digital transformation. 

In the long term, a holistic view of both potential and already reported and shared attacks from the deep and dark web can give a realistic picture of any future attacks. This combined approach can isolate current threats and prevent specific types of attacks. A collaborative effort that shares this knowledge between all financial institutions can be extraordinarily valuable in combating cyberattacks on a global scale.