R. Kinney Williams & Associates
R. Kinney Williams
& Associates

Internet Banking News

July 7, 2002

FYI - Regulation and Supervision - Small-Entity Compliance Guide for Regulation P (Privacy of Consumer Financial Information)  http://www.federalreserve.gov/regulations/cg/regpcg.htm 

FYI - Who's Who in Government Cyber Security A list of people involved in the government's cybersecurity efforts includes Bush administration officials, legislators from both houses, and private sector representatives. http://www.washingtonpost.com/wp-dyn/articles/A50625-2002Jun26.html 

INTERNET COMPLIANCE
- - Disclosures/Notices (Part 2 of 2)

In those instances where an electronic form of communication is permissible by regulation, to reduce compliance risk institutions should ensure that the consumer has agreed to receive disclosures and notices through electronic means. Additionally, institutions may want to provide information to consumers about the ability to discontinue receiving disclosures through electronic means, and to implement procedures to carry out consumer requests to change the method of delivery. Furthermore, financial institutions advertising or selling non-deposit investment products through on-line systems, like the Internet, should ensure that consumers are informed of the risks associated with non-deposit investment products as discussed in the "Interagency Statement on Retail Sales of Non Deposit Investment Products." On-line systems should comply with this Interagency Statement, minimizing the possibility of customer confusion and preventing any inaccurate or misleading impression about the nature of the non-deposit investment product or its lack of FDIC insurance.

INTERNET SECURITY
- We continue the series  from the FDIC "Security Risks Associated with the Internet."  While this Financial Institution Letter was published in December 1997, the issues still are relevant.

Data Transmission and Types of Firewalls 

Data traverses the Internet in units referred to as packets. Each packet has headers which contain information for delivery, such as where the packet is from, where it is going, and what application it contains. The varying firewall techniques examine the headers and either permit or deny access to the system based on the firewall's rule configuration. 

There are different types of firewalls that provide various levels of security. For instance, packet filters, sometimes implemented as screening routers, permit or deny access based solely on the stated source and/or destination IP address and the application (e.g., FTP). However, addresses and applications can be easily falsified, allowing attackers to enter systems. Other types of firewalls, such as circuit-level gateways and application gateways, actually have separate interfaces with the internal and external (Internet) networks, meaning no direct connection is established between the two networks. A relay program copies all data from one interface to another, in each direction. An even stronger firewall, a stateful inspection gateway, not only examines data packets for IP addresses, applications, and specific commands, but also provides security logging and alarm capabilities, in addition to historical comparisons with previous transmissions for deviations from normal context.


Implementation 


When evaluating the need for firewall technology, the potential costs of system or data compromise, including system failure due to attack, should be considered. For most financial institution applications, a strong firewall system is a necessity. All information into and out of the institution should pass through the firewall. The firewall should also be able to change IP addresses to the firewall IP address, so no inside addresses are passed to the outside. The possibility always exists that security might be circumvented, so there must be procedures in place to detect attacks or system intrusions. Careful consideration should also be given to any data that is stored or placed on the server, especially sensitive or critically important data.


PRIVACY EXAMINATION QUESTION
- We continue our series listing the regulatory-privacy examination questions.  When you answer the question each week, you will help ensure compliance with the privacy regulations.

20. Does the opt out notice state:

a. that the institution discloses or reserves the right to disclose nonpublic personal information about the consumer to a nonaffiliated third party;
[7(a)(1)(i)]

b. that the consumer has the right to opt out of that disclosure; [7(a)(1)(ii)] and

c. a reasonable means by which the consumer may opt out? [7(a)(1)(iii)]

 

PLEASE NOTE:  Some of the above links may have expired, especially those from news organizations.  We may have a copy of the article, so please e-mail us at examiner@yennik.com if we can be of assistance.  

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