New Problems for SWIFT and Banks

Swift probably wishes its problems would go away, but it doesn't look like that will be happening anytime soon.  A Reuters exclusive story (http://www.reuters.com/article/us-cyber-heist-swift-idUSKCN11600C) today, indicates there have been other banks hacked since June by people using the same techniques used in Bangledesh.  That is not good news because it shows that banks are not being responsive to new rules put in place to try to correct these problems.

The excuse was partially made that Swift does not have regulatory authority over banks, but that is really underestimating the authority they do have.  Banks are insured and agree to follow Swift's policies as a condition (at least some policies by a body authorized to establish the intermediary banking systems). They also have influence with regulators whose policies they are also not following.  Bangledesh was egregious if the reporting was accurate;  nobody wants a repeat of that mess.  Swift was not very swift in its response to that incident and will be trying not to make that mistake again.  Regulators were also not very responsive.  Banks cannot afford these kinds of losses, nor the attack on basic infrastructure of the financial system.  This should have been a wake up call for any regulator or any government.

This reminds me of MasterCard and Visa.   We see similar infrastructure attacks on these retail
Communities.  This is not like stealing my credit card number from some retailer.  This is like breaking into a card processing center and stealing all the cards processed there.  Governments need to show more interest beyond establishing new regulations.  That is the easy way out.  There needs to be better transaction validation, better audits, and tighter business processes.  All of these involve new technologies to support them.

Swift, and others like them, ar the basis of trust in the banking system.  When that goes away, there will be big problems with international transactions.  If the regulators can't be responsive, a black list of noncompliant financial institutions will not be far behind.  I have seen insurers close banks for less than what was done in Bangledesh.