FINRA Executives Describe the Increasing Sophistication of Cyber Adversaries

Two members of FINRA's National Cause and Financial Crimes Detection ("NCFC") program described the increasing sophistication of cyber adversaries and the need for firms to be prepared and to collaborate within and across the financial sector.

During an episode of FINRA Unscripted, Bryan Smith, senior vice president for Complex Investigations and Intelligence, and Brita Bayatmakou, vice president and leader of the Cyber and Analytics Unit, discussed the following topics:

• Cybersecurity Risks and Trends. Mr. Smith described the interconnectedness of cybersecurity, financial crimes, money laundering and cryptocurrency. He highlighted the global nature and specialization of cyber adversaries stating that threat actors now outsource tasks like acquiring code to steal money, steal identities, engage in market manipulation, engage in microcap fraud and engage in insider trading. Ms. Bayatmakou emphasized that "financial services continu[es] to be one of the top targets, if not the top target" of cyber-attacks, exacerbated by the "increasing move by organizations to the cloud and our constant online life."

• Adapting to Cyber Threats. Mr. Smith described the shift among threat actors towards "ransomware-as-a-service" model, a systemic change that allows affiliates to pay to launch ransomware attacks developed by operators, thereby allowing affiliates to engage new targets quickly and affordably. According to Mr. Smith, there is also an increased risk of DDoS ("distributed-denial-of-service") attacks against victims who fail to pay. He recommended firms conduct tabletop exercises, engage in simulations involving cyber-attack scenario and understand who the communication partners are going to be in the event of an attack.

• Priorities for the Financial Industry. Addressing the top priorities for cybersecurity, the speakers described the need for firms to comprehensively understand the cyber ecosystem, including the vulnerabilities introduced by third-party vendors. They pointed out that even firms with strong cybersecurity measures can be compromised through their vendors, emphasizing the interconnectedness of security risks.

Mr. Smith and Ms. Bayatmakou stated that agencies have increased cooperation to combat cyber threats. They encouraged firms to report incidents and engage with regulatory bodies and law enforcement.