The FDIC, with the other FFIEC agencies, has issued the attached guidance, which describes updated supervisory expectations regarding customer authentication, layered security, and other controls in an increasingly hostile online environment. Financial institutions will be expected to comply with the guidance no later than January 1, 2012.
Statement of Applicability to Institutions with Total Assets under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised institutions offering online banking services.
In 2005, the FFIEC issued guidance entitled Authentication in an Internet Banking Environment.
This FFIEC guidance supplements the FDIC's supervisory expectations regarding customer authentication, layered security, and other controls in an increasingly hostile online environment.
The FDIC expects institutions to upgrade their controls for high-risk online transactions through:
Yearly risk assessments;
For consumer accounts, layered security controls;
For business accounts, layered security controls consistent with the increased level of risk posed by business accounts; and
More active consumer awareness and education efforts.
Layered security controls should include processes to detect and respond to suspicious or anomalous activity and, for business accounts, administrative controls.
Certain types of device identification and challenge questions should no longer be considered effective controls.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Information Security Officer
FIL-103-2005, Authentication in an Internet Banking Environment, October 12, 2005