Homeland Security chief Janet Napolitano says the nation's largest financial institutions "are actively under attack" by cybercriminals, and one expert says it is a trend contributing to the rising security costs of banks.
Napolitano told attendees of a cybersecurity event hosted by The Washington Post that the attackers were stealing information and money, but refused during questioning to provide details. "I really don't want to go into that per se," she said, according to a report in The Hill.
"Right now, financial institutions are actively under attack. We know that. I'm not giving you any classified information," Napolitano said. "I will say this has involved some of our nation's largest institutions. We've also had our stock exchanges attacked over the last [few] years, so we know ... there are vulnerabilities. We're working with them on that."
Napolitano's comments followed about a month after a series of distributed denial of service attacks (DDoS) disrupted online operations of a number of major banks, including PNC Bank, Wells Fargo, U.S. Bank, Bank of America, JPMorgan Chase, SunTrust Banks and Capital One Financial.
The attackers claimed to be Islamic hacktivists running a grassroots operation, but experts said the sophistication of the DDoS attacks indicated that they were well organized and had access to significant resources. The attacks used virtual private web servers to flood online banking systems with huge amounts of junk data, while also targeting web applications the hackers deemed vulnerable. No data was stolen, the banks said.
"We know from all reports that the financial services market continues to be a primary target for cyberattacks, specifically, attacks designed to deny financial services," said Michael Versace, an analyst for IDC.
DDoS is just one kind of attack banks must contend with. Hackers are stealing customer credentials through malware installed on mobile phones and PCs in phishing attacks.
Defending against cyberattacks accounts for a significant portion of the $25 billion banks worldwide spend annually on security technology, Versace said. IDC estimates financial institutions on average spend between 7% and 9% more each year on security.
Banks have managed to reduce the amount of data lost to hackers. Last year, the financial and insurance industry accounted for 10% of data stolen from breaches, compared to 22% in 2010, according to Verizon's latest Data Breach Investigation Report. In 2011, 174 million records were compromised across industries in 855 incidents.
Bank's security problem go beyond just cyberattacks. The FBI in San Diego announced on Oct. 26 the arrest of 14 people suspected of stealing $1 million by exploiting a vulnerability in Citibank's electronic transaction security protocol.
The flaw made it possible for Citibank customers to withdraw from cash advance kiosks several times the amount they had in their accounts. To pull off the theft, multiple withdrawals had to be done within 60 seconds. Each withdrawal was kept below $10,000 to avoid federal reporting requirements, which would have tipped off Citibank auditors.
"While advancements in technology have created a world of accessibility to users and a convenience for consumers, they have also left room for criminals to exploit even the smallest of loopholes," FBI Special Agent Daphne Hearn said in a statement.
Ara Keshishyan, 29, of Fillmore, Calif., is the suspected leader of the scheme. He recruited 13 people to open Citibank accounts and withdraw money from casino kiosks in Southern California and Nevada.
The suspects were charged with conspiracy to commit bank fraud and conspiracy to illegally structure financial transactions to avoid reporting requirements. Keshishyan was also charged with 14 counts of bank fraud.
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This story, "Largest Banks Under Constant Cyber-attack, Feds Say" was originally published by CSO.