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Inside Privacy Updates on Developments in Global Privacy & Data Security from Covington & Burling LLP

FFIEC Authentication Guidance to be a Hot Topic in 2012

Posted in Data Security, Financial Institutions, Financial Privacy, United States

Last year, the Federal Financial Institutions Examination Council (FFIEC) released a much-anticipated supplement to its Authentication in an Internet Banking Environment guidance.  The supplement updates the FFIEC’s supervisory expectations regarding depository institutions’ customer authentication, layered security, and other controls for Internet banking.  Starting this year, FFIEC information technology examinations will include reviews for compliance with the supplement. 

A study released by Guardian Analytics suggests that institutions are moving towards compliance with the supplement but may not be completely prepared for FFIEC IT examinations to be conducted in 2012.  The Guardian Analytics study polled executives at 100 U.S.-based financial institutions in November 2011.  The study found that 43 percent of institutions had not yet completed a risk assessment of online banking, and 41 percent had not developed a plan for addressing online banking security gaps.  Further, 22 percent of institutions had not reviewed the FFIEC supplement.  It is expected that the supplement will be a hot topic throughout 2012 as FFIEC IT examinations reveal the agencies’ stance on the supplement as well as institutions’ compliance with the supplement.