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‘Online banking in SA was a time-bomb waiting to go off’

Absa case spotlights e-banking security concerns

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South African bank Absa has been criticised for its handling of a series of raids its Internet banking service that have seen hundreds of thousands of rand disappearing from its customers' accounts.

Absa says its own systems are secure and blames the problem on security mistakes by its clients. Police are working on the theory used used "spy ware" to gain access of victims' PCs to swipe Internet banking information and transfer money out of their accounts (of which more anon).

Cyber security experts and industry commentators lined up by South African news service ITWeb say Absa should take more responsibility in helping to prevent fraudulent attacks. These comments come even though Absa has managed to stop most of the fraudulent transactions and has reimbursed its clients for monies lost.

Rogan Dawes, a security specialist with Deloitte & Touche, told ITWeb that Absa needed to create greater security awareness amongst its clients. However, like other commentators quizzed by the site, he noted ease of use and effective security were uneasy bedfellows.

Olaf du Randt, IT forensics expert and technical manager at security services provider AVeS Cyber Security, told IT Web that strong two factor authentication should be used for ebanking. Smart card-based authentication systems that improve the security of banking sites beyond what password-based systems alone can provide are in common use in Scandinavia but are very much the exception elsewhere in the world, including the UK and South Africa.

The lack of such technology makes online banking insecure, du Randt argued.

"Online banking in SA was a time-bomb waiting to go off. It just happened to be Absa first," he told ITWeb.

eBlaster misuse fingered in attacks

Meanwhile fresh details are emerging as to the modus operandi of the crims who attempted to steal money from Absa bank accounts. Sources within Absa suspect that the software used to fraudulently transfer money from a number of Absa bank accounts last week was eBlaster, a program designed to help parents and employers to monitor their charges online activities, IT Web reports.

This suspicion remains unconfirmed and the police investigation into unauthorised transfers from up to 10 Absa accounts continues.

[A review of the eBlaster package by my colleague Thomas C Greene - who notes concerns over the possible misuse of the product when used on remote machines - can be found here.]

The bigger picture: regulators getting tougher over security

Regulators are introducing measures to make financial services firms more answerable for a wider range of security issues, beyond the basic financial health of banks and physical security.

The influential Basel Committee on Banking Supervision this week issued a report making privacy and security in e-banking a board-level issue for financial institutions.

"The Board of Directors and senior management should oversee the development and continued maintenance of a security control infrastructure that properly safeguards e-banking systems and data from both internal and external threats," the report states.

Security vendors have not been slow to use the report to reinforce one of their key messages - that security needs to become a board level responsibility, not the preserve of lower-ranking techies.

Application firewall firm MagniFire Websystems said the report has "huge repercussions for bank executives, as they, rather than IT managers, will now be held accountable for any security breaches to their systems through online banking websites."

The tougher controls advocated by the Basel Committee are not prescriptive - it does not attempt to set specific technical solutions or standards relating to e-banking - it does insist that banks put a comprehensive risk management regime in place.

"Although customer protection and privacy regulations vary from jurisdiction to jurisdiction, banks generally have a clear responsibility to provide their customers with a level of comfort regarding information disclosures, protection of customer data and business availability that approaches the level they can expect when using traditional banking distribution channels," the report states. ®

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