Financial firms facing serious hacking threat in COVID-19 era

Lawmakers on Tuesday received a loud warning about the danger of hackers zeroing in on financial institutions as prime targets during the COVID-19 pandemic.

“America is grappling with a cyber insurgency and our financial sector is the number one target,” Tom Kellermann, a former member of a presidential cybersecurity commission during the Obama administration, told a House Financial Services subcommittee during a Tuesday hearing on the threat. 

While cybersecurity has long been a major issue for the financial sector, a huge spike in cyberattacks in connection to the COVID-19 pandemic has only underlined the risks.

Kellermann now heads cybersecurity strategy at VMWare, a software company that released a report last month reporting a 238 percent surge in cyberattacks against banks between February and April.

Many of these cyberattacks stem from non-affiliated malicious actors, but experts warned Tuesday that Russia, China, and North Korea also may be targeting financial institutions during the pandemic.

“State-sponsored hacking is the biggest threat to our financial sector because of the capacities that they can bring to bear,” Jamil Jaffer, the founder and executive director of George Mason University’s National Security Institute, testified at the same hearing. “They have almost unlimited resources…you just can’t beat a nation state at their own game.”

Jaffer argued that Congress needed to spearhead efforts to bring the financial sector together to protect the whole instead of individual companies in order to fight back against nation state threats.

“We don’t expect Target and Walmart to defend against Russian Bear bombers coming across the horizon, yet today in cyberspace we expect exactly that of JPMorgan and Citibank,” said Jaffer, who also serves as vice president for Strategy, Partnerships & Corporate Development at IronNet Cybersecurity. “That is simply an unsustainable scenario, and we have got to bring the nation together, large banks have to protect small banks.”

Members of the House Financial Services subcommittee on national security, international development, and monetary policy rolled out a raft of bills during Tuesday’s hearing that are designed to fend off hackers.

These bills include a measure proposed by Rep. Brad Sherman (D-Calif.) that would take steps to cut down on business email compromise (BEC) scams, which involve tricking a user into disclosing sensitive information, such as financial information. 

Another proposed measure from Rep. Tulsi Gabbard (D-Hawaii) would require depository institutions, such as banks and credit unions, to develop guidance to educate customers about how to avoid financial scams, while a third proposal would give funds to states to help protect senior citizens from malicious hackers, a group often seen as an easy target. 

A fourth piece of legislation would establish a restitution fund to help victims of coronavirus-related fraud. 

“In this time of suffering and hardship for so many, we are seeing criminal actors here and at home and around the world redoubling their efforts to target families, financial institutions, and even governments,” subcommittee Chairman Emanuel Cleaver (D-Mo.) said Tuesday. “It is abundantly clear that our financial security systems are being taxed right now.”

Subcommittee ranking member French Hill (R-Ark.) emphasized that “we cannot allow the actions of a few bad actors and foreign threats to inhibit our financial institutions.”

In addition to these bills, Reps. Denny Heck (D-Wash.) and Roger Williams (R-Texas) introduced a measure last week that would move the Secret Service back to the Treasury Department from the Department of Homeland Security, a move they argued would help the Secret Service address cyber financial fraud. 

The Secret Service, known for protecting the president and other key federal individuals, was originally founded after the Civil War to investigate financial crimes against the United States, a function it still fulfills. 

Hackers have not only targeted banks during the pandemic, but stimulus payments sent to U.S. households by he federal government. A top Secret Service official testified to the Senate Judiciary Committee last week “more than $30 billion in stimulus funds” would likely be stolen by criminals from an earlier COVID-19 stimulus package.

The FBI last week put out a public service announcement warning that hackers were targeting mobile banking apps, and telling Americans to be wary of downloading these apps from insecure websites. 

“With city, state, and local governments urging or mandating social distancing, Americans have become more willing to use mobile banking as an alternative to physically visiting branch locations,” the agency wrote. “The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps.”

The Treasury Department’s Financial Crimes Enforcement Network put out an alert in May detailing how financial institutions could spot customers running coronavirus-related scams, and noted that this alert was the “first of several” alerts it would release around financial scams. 

Cyber threats have increased across a variety of industries, including those against the healthcare industry and groups involved in COVID-19 research, along with targeting of Americans working from home on less secure networks. 

Subcommittee member Rep. Stephen Lynch (D-Va.) said Tuesday that on top of legislation, he had requested a classified briefing from intelligence community officials about cyber threats to financial institutions and disinformation from foreign adversaries online.

“We want to drill down and see what the actions are of these malign actors overseas, both government-wise but also individual hackers,” Lynch said. 

Kellermann warned that even with congressional action, hackers were likely to continue taking advantage of the chaos and confusion caused by the pandemic, noting that “cyberspace is not peaceful.”

“Although the sector is generally more secure than other industry, it is facing the world’s elite hackers, composed of organized crime syndicates and motivated nation-states,” Kellermann testified. “Geopolitical tension is manifesting in cyberspace.”