Finance & Economics

China Orders Banks to Review Cyber and Data Security

In China, local authorities have appealed to banks and insurance companies with a strong recommendation to inspect security systems, focusing in this case on issues such as data protection and anti-cybercrime tools.

China Orders Banks to Review Cyber and Data Security

The media, citing insiders, reported that the National Financial Regulatory Administration, in a directive that was sent out at the end of 2023, stated the need to eliminate any so-called weaknesses in the mechanisms to combat threats of ransomware attacks by mid-January. This appeal of the regulator was addressed to banks and companies providing insurance services. Insiders also reported that the Chinese government has now stepped up efforts to ensure a high level of national security. The protection of data integrity is also an area of close attention of the leadership of the Asian country.

Chinese financial institutions were advised to strengthen measures to ensure the safe use of e-mail and improve phishing protection systems. The relevant information was provided by insiders who used the right of anonymity since this issue currently has a confidential status.

The above-mentioned directive is a kind of continuation of the brief notice that was sent to the largest financial institutions in the Asian country after the cyber attack on Industrial & Commercial Bank of China Ltd. in November. As a result of this incident, the specified lender faced damage caused to part of its operations in the United States. The cyberattack also disrupted the trading process on the US Treasury market.

The mentioned bank, which is one of the largest in the world in terms of assets, lost the opportunity to clear trades with US Treasury bonds after the November incident. Against this background, the US Treasury Department has called on all lenders to ensure that they apply the best security practices. Also, after the cyberattack, the understanding crystallized that at some point the actions of criminals in the digital environment can disrupt the main functional areas of the financial system. Many banks, realizing this threat, have put their security systems on high alert.

After the cyber attack, the American unit Industrial & Commercial Bank of China created a new IT infrastructure and resumed service.

The National Financial Regulatory Administration did not respond to a media request for comment on the directive on the need to check security systems.

In recent years, control over data flows has been significantly strengthened at the official level in China. The government of the Asian country has also begun to pay more attention to national security. The current head of the People’s Republic of China, Xi Jinping, has identified the relevant issues as one of the priorities. In 2021, Beijing passed a comprehensive data security law. In this case, according to the media, the goal of the Chinese leadership was to strengthen control over the flow of information. The law adopted in 2021 has a kind of side effect, which is that the new rules have become an obstacle to the expansion of the activities of foreign companies in the Asian country. This background has raised concerns about investing in China.

Recently, there has been an increase in cases of ransomware attacks. After the website of the New Zealand Stock Exchange was subjected to a cyber attack in 2020, it turned out that more than 100 banks, exchanges, and insurers around the world simultaneously faced similar criminal actions.

As we have reported earlier, Canada Reportedly to Use AI to Combat Money Laundering.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.