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

Internet Banking News

January 23, 2005

CONTENT Internet Compliance Information Systems Security
IT Security Question Internet Privacy Website for Penetration Testing


FYI - Securing data from the threat within - A company's biggest security threat isn't the sinister hacker trying to break into the corporate network, but employees and partners with easy access to company information.
http://news.com.com/Securing+data+from+the+threat+within/2100-7347_3-5520016.html?tag=nefd.lede

FYI - Some interesting percentages from the SANS Institute about what security tools have been implemented - http://www.sans.org/whatworks/graph.php

FYI -
Proper Disposal of Consumer Information: Final Rule - This bulletin announces that on December 28, 2004, the OCC, Federal Reserve Board, FDIC, and OTS jointly issued a final rule that requires financial institutions to adopt measures for properly disposing of consumer information derived from credit reports.
Press Release: www.occ.treas.gov/ftp/bulletin/2005-1.txt 
Attachment: www.occ.treas.gov/fr/fedregister/69fr77610.pdf 

FYI - Software firms want copyright law rewrite - A group of large software companies has taken the first step toward inciting a tussle with the telecommunications industry by asking Congress to rewrite copyright law so alleged Internet pirates can be more easily targeted by lawsuits. http://news.com.com/2102-1030_3-5516568.html?tag=st.util.print

FYI - Hackers step up search for unpatched servers - Network administrators who have failed to patch their systems against the Microsoft Windows Internet Naming Service vulnerability are now at much greater risk of attack.
http://asia.cnet.com/news/security/printfriendly.htm?AT=39212031-39037064t-39000005c

FYI - NIST raises VoIP concerns - Government administrators may not understand the complexity of installing security systems for Internet telephony, a new government study suggests. http://www.fcw.com/fcw/articles/2005/0103/web-voip-01-06-05.asp

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WEB SITE COMPLIANCE -
We begin this week reviewing the FFIEC interagency statement on "Weblinking: Identifying Risks and Risk Management Techniques."  (Part 1 of 10)

A. RISK DISCUSSION

Introduction


A significant number of financial institutions regulated by the financial institution regulatory agencies (Agencies) maintain sites on the World Wide Web. Many of these websites contain weblinks to other sites not under direct control of the financial institution. The use of weblinks can create certain risks to the financial institution. Management should be aware of these risks and take appropriate steps to address them. The purpose of this guidance is to discuss the most significant risks of weblinking and how financial institutions can mitigate these risks.

When financial institutions use weblinks to connect to third-party websites, the resulting association is called a "weblinking relationship." Financial institutions with weblinking relationships are exposed to several risks associated with the use of this technology. The most significant risks are reputation risk and compliance risk.

Generally, reputation risk arises when a linked third party adversely affects the financial institution's customer and, in turn, the financial institution, because the customer blames the financial institution for problems experienced. The customer may be under a misimpression that the institution is providing the product or service, or that the institution recommends or endorses the third-party provider. More specifically, reputation risk could arise in any of the following ways:

  • customer confusion in distinguishing whether the financial institution or the linked third party is offering products and services;
  • customer dissatisfaction with the quality of products or services obtained from a third party; and
  • customer confusion as to whether certain regulatory protections apply to third-party products or services.

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INFORMATION TECHNOLOGY SECURITY
- We continue our series on the FFIEC interagency Information Security Booklet.

SECURITY TESTING - KEY FACTORS

Management is responsible for considering the following key factors in developing and implementing independent diagnostic tests:

Personnel. Technical testing is frequently only as good as the personnel performing and supervising the test. Management is responsible for reviewing the qualifications of the testing personnel to satisfy themselves that the capabilities of the testing personnel are adequate to support the test objectives.

Scope. The tests and methods utilized should be sufficient to validate the effectiveness of the security process in identifying and appropriately controlling security risks.

Notifications. Management is responsible for considering whom to inform within the institution about the timing and nature of the tests. The need for protection of institution systems and the potential for disruptive false alarms must be balanced against the need to test personnel reactions to unexpected activities.

Controls Over Testing. Certain testing can adversely affect data integrity, confidentiality, and availability. Management is expected to limit those risks by appropriately crafting test protocols. Examples of issues to address include the specific systems to be tested, threats to be simulated, testing times, the extent of security compromise allowed, situations in which testing will be suspended, and the logging of test activity. Management is responsible for exercising oversight commensurate with the risk posed by the testing.

Frequency. The frequency of testing should be determined by the institution's risk assessment. High - risk systems should be subject to an independent diagnostic test at least once a year. Additionally, firewall policies and other policies addressing access control between the financial institution's network and other networks should be audited and verified at least quarterly.  Factors that may increase the frequency of testing include the extent of changes to network configuration, significant changes in potential attacker profiles and techniques, and the results of other testing.
(FYI - This is the type of independent diagnostic testing that the VISTA penetration study covers.  Please refer to http://www.internetbankingaudits.com/ for information.)

Proxy Testing. Independent diagnostic testing of a proxy system is generally not effective in validating the effectiveness of a security process. Proxy testing, by its nature, does not test the operational system's policies and procedures, or its integration with other systems. It also does not test the reaction of personnel to unusual events. Proxy testing may be the best choice, however, when management is unable to test the operational system without creating excessive risk.


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IT SECURITY QUESTION: 
ENCRYPTION

7. Determine if cryptographic keys are destroyed in a secure manner when they are no longer required.

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INTERNET PRIVACY
- 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.


Initial Privacy Notice

4)  Does the institution provide initial notice after establishing a customer relationship only if:

a.  the customer relationship is not established at the customer's election; [4(e)(1)(i)] or

b.  to do otherwise would substantially delay the customer's transaction (e.g. in the case of a telephone application), and the customer agrees to the subsequent delivery? [4 (e)(1)(ii)]

IN CLOSING - The Gramm-Leach-Bliley Act, best practices, and examiners recommend a security test of your Internet  connection.   The Vulnerability Internet Security Test Audit (VISTA) is an independent external penetration study of {custom4}'s network connection to the Internet that meets the regulatory requirements.  We are trained information systems auditors that only work with financial institutions.  As auditors, we provide an independent review of the vulnerability test results and an audit letter to your Board of Directors certifying the test results.  For more information, visit http://www.internetbankingaudits.com/ or email Kinney Williams at examiner@yennik.com.

 

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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