Security professionals working for or with financial services organizations are sure to have heard the term "FFIEC guidance" with regard to authentication in online banking. But what does it really mean? What is the FFIEC? And how can financial institutions leverage their compliance work for FFIEC into their broader security programs?
The Federal Financial Institutions Examination Council is an interagency body that sets and oversees standards and forms for federal examination of financial institutions by agencies including the Federal Reserve System, the Federal Deposit Insurance Corp., the Office of the Comptroller and the National Credit Union Administration. The first set of FFIEC guidance, FIL-103-2005, was issued on Oct. 12, 2005. The second set — FIL-50-2011, published on June 29, 2011 — supplements but does not replace the first.
The 2005 guidance was intended to help financial institutions understand the risks associated with online banking using singlefactor authentication. The guidance stated that single-factor authentication, when used as the only control mechanism, was not sufficient for "high-risk transactions involving access to customer information or the movement of funds to other parties." At the time, online banking was taking hold but was not yet commonplace. And mobile banking from smartphones and tablets was almost nonexistent.
By 2011, the landscape had changed dramatically. Online banking was on the rise from the smallest credit unions to the largest commercial banks, and new technologies, such as remote deposit capture for check deposits via mobile phone, were being rolled out by major financial institutions.
With the new landscape came new guidance from the FFIEC to address the change. The agency supplemented the 2005 letter with additional parameters for controlling and managing risk in Internet banking. All financial institutions are impacted by the new guidance, including those with total assets of less than $1 billion. However, the FIL does make note that the guidance is for "high-risk" online transactions specifically, and it also notes the differences between consumer and business accounts.
To find out more about the additional guidance offered under the 2011 guidelines -- and to learn how your organization can prepare for FFIEC examination and extend its FFIEC work to the rest of its enterprise security plan -- download the free FFIEC compliance report.
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