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

Internet Banking News

August 12, 2001

FYI - In the age of sophisticated Internet, telephone and wireless banking, most Americans still prefer to bank the old-fashioned way: by walking into a local branch and talking to a teller, a survey found.  http://news.cnet.com/news/0-1007-200-6817306.html?tag=cd_mh 

FYI - Researchers have discovered a way to quickly break through the security system that protects the leading corporate wireless networking system, a trade group said Friday.
http://news.cnet.com/news/0-1004-200-6773189.html?tag=ch_mh 

FYI
- Suspicious Activity Report Database - Board staff and the Reserve Banks have long recognized that, as part of the Federal Reserve's on-going supervision of financial institutions, it is necessary that there be a continuing, thorough and timely review of Suspicious Activity Reports (SARs). 
www.federalreserve.gov/boarddocs/srletters/2001/sr0118.htm

FYI
- Draft Check Truncation Act - The Federal Reserve Board staff is developing a draft law that would facilitate check truncation by removing several existing legal impediments to the use of electronics in check processing.
www.federalreserve.gov/PaymentSystems/truncation/draftinfo.htm

INTERNET COMPLIANCE
Non-Deposit Investment Products

Financial institutions advertising or selling non-deposit investment products on-line 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 covering some of the issues discussed in the "Risk Management Principles for Electronic Banking" published by the Basel Committee on Bank Supervision in May 2001.

Board and Management Oversight 

Because the Board of Directors and senior management are responsible for developing the institutionís business strategy and establishing an effective management oversight over risks, they are expected to take an explicit, informed and documented strategic decision as to whether and how the bank is to provide e-banking services. The initial decision should include the specific accountabilities, policies and controls to address risks, including those arising in a cross-border context. Effective management oversight is expected to encompass the review and approval of the key aspects of the bankís security control process, such as the development and maintenance of a security control infrastructure that properly safeguards e-banking systems and data from both internal and external threats. It also should include a comprehensive process for managing risks associated with increased complexity of and increasing reliance on outsourcing relationships and third-party dependencies to perform critical e-banking functions.


PRIVACY - We continue covering various issues in the "Privacy of Consumer Financial Information" published by the financial regulatory agencies in May 2001.

Nonpublic Personal Information:

"Nonpublic personal information" generally is any information that is not publicly available and that:

1)  a consumer provides to a financial institution to obtain a financial product or service from the institution;

2)  results from a transaction between the consumer and the institution involving a financial product or service; or

3)  a financial institution otherwise obtains about a consumer in connection with providing a financial product or service.

Information is publicly available if an institution has a reasonable basis to believe that the information is lawfully made available to the general public from government records, widely distributed media, or legally required disclosures to the general public. Examples include information in a telephone book or a publicly recorded document, such as a mortgage or securities filing.

Nonpublic personal information may include individual items of information as well as lists of information. For example, nonpublic personal information may include names, addresses, phone numbers, social security numbers, income, credit score, and information obtained through Internet collection devices (i.e., cookies).

There are special rules regarding lists. Publicly available information would be treated as nonpublic if it were included on a list of consumers derived from nonpublic personal information. For example, a list of the names and addresses of a financial institution's depositors would be nonpublic personal information even though the names and addresses might be published in local telephone directories because the list is derived from the fact that a person has a deposit account with an institution, which is not publicly available information.

However, if the financial institution has a reasonable basis to believe that certain customer relationships are a matter of public record, then any list of these relationships would be considered publicly available information. For instance, a list of mortgage customers where the mortgages are recorded in public records would be considered publicly available information. The institution could provide a list of such customers, and include on that list any other publicly available information it has about the customers on that list without having to provide notice or opt out.

 

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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