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

Internet Banking News

July 16, 2000

FYI - On June 19, 2000, the Department of the Treasury's Office of Foreign Assets Control (OFAC) amended the Foreign Assets Control Regulations to permit new financial, trade and other transactions with North Korea and its nationals. An import notification and approval procedure is in place for all imports from North Korea. Assets blocked prior to June 19, 2000, must remain blocked. http://www.fdic.gov/news/news/financial/2000/fil0047.html 

FYI - During the past week, USA Today reported the length of time adults are willing to wait for a web page to load before moving to another web page:
Less than 10 seconds - 14%
10 to 59 seconds - 32%
1 to 2 minutes - 23%
Over two minutes - 21%

INTERNET SECURITY - In the FDIC paper "Security Risks Associated with the Internet," we continue FDIC's discussion about the primary technical and procedural security measures necessary to properly govern access control and system security. 

3) Product Certification and Security Scanning Products

Several organizations exist which independently assess and certify the adequacy of firewalls and other computer system related products. Typically, certified products have been tested for their ability to permit and sustain business functions while protecting against both common and evolving attacks. 
Security scanning tools should be run frequently by system administrators to identify any new vulnerabilities or changes in the system. Ideally, the scan should be run both with and without the firewall in place so the firewall's protective capabilities can be fully evaluated. Identifying the susceptibility of the system without the firewall is useful for determining contingency procedures should the firewall ever go down. Some scanning tools have different versions with varying degrees of intrusion/attack attempts. 

4) Logical Access Controls 

If passwords are used for access control or authentication measures, users should be properly educated in password selection. Strong passwords consist of at least six to eight alpha numeric characters, with no resemblance to any personal data. PINs should also be unique, with no resemblance to personal data. Neither passwords nor PINs should ever be reduced to writing or shared with others. 

Other security measures should include the adoption of one-time passwords, or password aging measures that require periodic changes. Encryption technology can also be employed in the entry and transmission of passwords, PINs, user IDs, etc. Any password Directories or databases should be properly protected, as well. 

Password guessing programs can be run against a system. Some can run through tens of thousands of password variations based on personal information, such as a user's name or address. It is preferable to test for such vulnerabilities by running this type of program as a preventive measure, before an unauthorized party has the opportunity to do so. Incorporating a brief delay requirement after each incorrect login attempt can be very effective against these types of programs. In cases where a potential attacker is monitoring a network to collect passwords, a system utilizing one-time passwords would render any data collected useless. 

When additional measures are necessary to confirm that passwords or PINs are entered by the user, technologies such as tokens, smart cards, and biometrics can be useful. Utilizing these technologies adds another dimension to the security structure by requiring the user to possess something physical. 

a) Tokens 
Token technology relies on a separate physical device, which is retained by an individual, to verify the user's identity. The token resembles a small hand-held card or calculator and is used to generate passwords. The device is usually synchronized with security software in the host computer such as an internal clock or an identical time based mathematical algorithm. Tokens are well suited for one-time password generation and access control. A separate PIN is typically required to activate the token. 

b) Smart Cards 
Smart cards resemble credit cards or other traditional magnetic stripe cards, but contain an embedded computer chip. The chip includes a processor, operating system, and both read only memory (ROM) and random access memory (RAM). They can be used to generate one-time passwords when prompted by a host computer, or to carry cryptographic keys. A smart card reader is required for their use. 

c) Biometrics 
Biometrics involves identification and verification of an individual based on some physical characteristic, such as fingerprint analysis, hand geometry, or retina scanning. This technology is advancing rapidly, and offers an alternative means to authenticate a user. 

INTERNET COMPLIANCE - Expedited Funds Availability Act (Regulation CC)

Generally, the rules pertaining to the duty of an institution to make deposited funds available for withdrawal apply in the electronic financial services environment. This includes rules on fund availability schedules, disclosure of policy, and payment of interest. Recently, the FRB published a commentary that clarifies requirements for providing certain written notices or disclosures to customers via electronic means. Specifically, the commentary states that a financial institution satisfies the written exception hold notice requirement, and that a financial institution satisfies the general disclosure requirement by sending an electronic version that displays the text and is in a form that the customer may keep. However, the customer must agree to such means of delivery of notices and disclosures. Information is considered to be in a form that the customer may keep if, for example, it can be downloaded or printed by the customer. To reduce compliance risk, financial institutions should test their programs' ability to provide disclosures in a form that can be downloaded or printed.

IN CLOSING - If you are aware of any state laws that will affect a bank doing business on the Internet, please send us an e-mail. We appreciate your assistance.

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Yennik, Inc.

4409 101st Street
Lubbock, Texas 79424
Office 806-798-7119
Examiner@yennik.com

 

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