“Cyber Security Loophole”- Bank Hackers “Unfettered Access” To Accounts

- Bank accounts at majority of banks in Britain and Ireland are vulnerable to hacking says Financial Times

- Two-step authentication process used by most banks is inadequate

- Vulnerabilities identified similar to those that were used by hackers to steal up to $1 billion across Eastern Europe

- UK regulator says bank customers must be reimbursed, banks are responsible for security

- Highlights risks to deposits and systemic risk should such vulnerabilities be exploited in cyber-warfare or indeed for monetary gain

The vulnerability of banks and the global banking system - reliant as it has become on computer systems, information technology and the internet - was highlighted yet again in an important article in the Financial Times on Tuesday which was largely ignored elsewhere.

The FT reports that it has come into possession of documents and correspondence between the Financial Conduct Authority (FCA) and a cyber-security firm, Bronzeye that identify “serious security issues” at British high street banks.

"Britain’s markets watchdog, the Financial Conduct Authority, was warned last July about a loophole in the cyber security of one of Britain’s biggest banks that could give hackers unfettered access to customer accounts," reports the FT.

Bronzeye identified a weakness in the two-step authentication process used by most banks and reported it to the FCA in July of last year. It is apparently similar to the flaw that allowed hackers to raid up to $1 billion from around 100 banks, predominantly in Eastern Europe.

Bronzeye identified one "large British bank", the name of which was redacted in the documents that had "22 critical vulnerabilities". One of these flaws could "stop the bank in its tracks", according to the firm.

We are not suggesting that readers should dash out and empty their bank accounts. We are simply identifying risks to the system of which people should be aware and that they take reasonable precautions including diversification of deposits and diversification from deposits.

Having all your eggs in a deposit account is no longer prudent.

Market Update

Today’s AM fix was USD 1,199.75, EUR 1,086.04 and GBP 786.46 per ounce.
Yesterday’s AM fix was USD 1,204.25, EUR 1,082.67 and GBP 785.19  per ounce.

Gold fell 0.32% percent or $3.80 and closed at $1,199.40 an ounce yesterday, while silver slipped 0.49% or $0.08 to $16.18 an ounce. Gold steadied around $1,200 this morning in trading in London after a three days of slight losses

Important News

Gold Rises Above $1,200, But Robust Dollar Curbs Gains - Reuters
Draghi’s Inflation Gap Dashboard Points To Stimulus Extending - Bloomberg
Fed’s Evans Wants No Rate Hikes Until Early 2016 - Reuters
Reserve Bank Reveals Probe Into USD Spike Ahead Of Rate Announcement - SMH
BOE’s Crisis Liquidity Auctions Face Unprecedented Fraud Probe - Bloomberg
Presidents Should Be Able To Declare Economic Emergencies: Bernanke – Market Watch

Important Analysis

Is This A New Snag For Gold Demand? - CNBC
Gold Has Worked For Indians, Says Thomas Kaplan – Economic Times
The Ups and Downs of Gold Recycling – World Gold Council
Bernanke Wants US President To Declare "Economic Emergencies" In Future Crises – Zero Hedge
The Chinese Buy Billboards Announcing The Renminbi As "The New World Currency – Zero Hedge
Which Are The 15 Most Miserable Countries In The World? - The Telegraph

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