NY Bank Regulator: Third Party Vendors Are a Backdoor to Hackers

Benjamin M. Lawsky, Superintendent of the New York State Department of Financial Services (NYDFS), released a report warning banks that insufficient security at third-party vendors could provide a backdoor for hackers to gain access to critical systems and pilfer sensitive financial information.
“A bank’s cyber security is often only as good as the cyber security of its vendors. Unfortunately, those third-party firms can provide a backdoor entrance to hackers who are seeking to steal sensitive bank customer data,” Lawsky said.
Financial institutions rely on third-party vendors for a broad-range of services, ranging from law firms to companies contracted to maintain HVAC systems, and those vendors often have access to a bank’s information technology networks, providing a potential point of entry for hackers as was seen in the Target breach.
NYDFS conducted a survey of 40 banks, including many of the largest institutions it regulates, examining the security standards those firms have in place in regards to their third-party vendors.
“Among other findings, the NYDFS report uncovered that nearly 1 in 3 banks surveyed do not require their third-party vendors to notify them of cyber security breaches,” NYDFS said in a statement.
 “I am deeply worried that we are soon going to see a major cyber attack aimed at the financial system that is going to make all of us to shudder. Cyber hacking could represent a systemic risk to our financial markets by creating a run or panic that spills over into the broader economy, “Lawsky.
“We are concerned that within the next decade, or perhaps sooner, we will experience an Armageddon-type cyber event that causes a significant disruption in the financial system for a period of time.”
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