Over several months last year, an international group of cyber bank robbers, possibly funded by the North Korean government, stole nearly $100 million, threw the integrity of a decades-old banking industry messaging system into question, and remained at large. Sound like the plot of the latest James Bond blockbuster? Unfortunately, these hacks, utilizing the SWIFT network messaging system, were all too real – and they’re probably far from over.

The SWIFT Network: What is it, and what happened?

SWIFT, the Society for Worldwide Interbank Financial Telecommunications, is a secure messaging network used by financial institutions to transmit information and instructions to each other. In particular, it allows banks in different countries to easily communicate using a standardized system of codes. It was created in the early 1970s as an alternative to Telex messages, which were slower, less secure, and more prone to human error. The SWIFT network does not actually move or store money; it is simply the conduit that banks use to initiate money transfers.

The attacks began in February 2016, when hackers used the Central Bank of Bangladesh’s SWIFT network login credentials to request nearly $1 billion in money transfers from the bank’s account at the New York Fed to accounts in Sri Lanka and the Philippines. The majority of the requests did not go through, having been flagged for review by U.S. officials, but five requests, for a total of $81 million, were sent. Following the Bangladeshi heist, a number of other banks, mostly in Southeast Asia, reported having been victimized by similar attacks that may have involved the SWIFT network. The hackers struck again in June, this time stealing $10 million from a bank in Ukraine.

Ukrainian officials allege that numerous other financial institutions in Ukraine and Russia have been hacked but do not wish to publicly identify themselves. So far, all of the targeted banks have been outside of the U.S., most of them located in developing countries with reporting requirements that are lax compared to U.S. standards. This means that no one has a handle on the true extent of the SWIFT network attacks, which makes banking executives all the more nervous.

As the SWIFT organization has maintained from the beginning, the SWIFT network itself was not actually breached; hackers were not able to break into the system or intercept legitimate messages. Instead, they accessed the network through the targeted banks’ systems, installing malware so they could access the banks’ SWIFT terminals and send the money transfer requests. However, because SWIFT was involved, it finds itself under fire. SWIFT’s CEO went on the defensive, insisting that the SWIFT network was secure, blaming the hacks on lax security procedures at member banks, and threatening to pull their access to the SWIFT network if they did not implement stronger cyber security practices.

However, at the same time, SWIFT has announced it would tighten its own security procedures, and experts in the industry are criticizing SWIFT for not being proactive about its cyber security, instead waiting for a breach to occur to address vulnerabilities that have long been an open secret in the banking industry. While SWIFT has a monopoly on its niche market in the short-term, if more banks are hacked, and especially if Western banks are victimized, the long-term future of the SWIFT network will be in question.

What All Organizations Can Learn from the SWIFT Network Attacks

The SWIFT attacks have rocked the banking world, but organizations in all industries can learn from the mistakes made by SWIFT and its member banks, specifically:

• An organization’s people are the weak link in any cyber security plan. The SWIFT network hackers got into the banks’ SWIFT terminals through keystroke-logging malware, possibly installed through a human hacking technique such as spear-phishing. Enterprise cyber security begins with organizations having robust cyber security plans, including continuous employee training on cyber security awareness and best practices.
• “Security through obscurity” does not work in the Internet Age. Before the internet, proprietary niche networks such as SWIFT – which few people outside the banking industry have ever heard of – enjoyed what is known as “security through obscurity.” These networks were largely unknown outside their niche markets, and little public information was available about them. The internet changed all of that; information about these obscure networks is now widely available. Hackers, knowing that many niche networks built pre-internet have multiple security vulnerabilities, are seeking these networks out as easy targets.
• Appropriate security controls are needed for both users and transactions. After the Bangladeshi heist broke, JPMorgan Chase and Bank of England announced they were going to limit the number of employees with access to SWIFT terminals. Giving employees access only to those systems they need to perform their jobs is a sound practice, and access levels should be reviewed periodically. Different types of transactions also require different security levels. A user name and password may be sufficient for a billing employee to send an invoice or a customer to log in to their account, but sensitive transactions such as large money transfers should require multi-factor authentication and multiple levels of confirmation.

Author's Bio: 

Michael Peters is the CEO of Lazarus Alliance, Inc., the Proactive Cyber Security™ firm, and Continuum GRC. He has served as an independent information security consultant, executive, researcher, and author. He is an internationally recognized and awarded security expert with years of IT and business leadership experience and many previous executive leadership positions.

He has contributed significantly to curriculum development for graduate degree programs in information security, advanced technology, cyberspace law, and privacy, and to industry standard professional certifications. He has been featured in many publications and broadcast media outlets as the “Go-to Guy” for executive leadership, information security, cyberspace law, and governance.