By Michael Shields
BERN (Reuters) – Cyber-attacks pose the biggest threat to the Swiss financial system with risks from hacking incursions on the rise, watchdog FINMA warned on Tuesday, calling on Switzerland to step up its national defenses against the menace.
“The risks connected with these attacks are growing in sync with the pace of global digitalization. Cyber-attacks are now the most serious operational hazard facing the financial system, and both the private sector and public authorities should take them extremely seriously,” Chief Executive Mark Branson told the Financial Market Supervisory Authority’s annual news conference.
He said on the whole Swiss banks seemed aware of the risks and were well equipped to deal with them, citing banks’ ability to repel around 100 attacks a day from “Retefe” malware attacks on ebanking systems.
But as a country Switzerland was lagging behind others with major financial hubs that have set up cybersecurity competence centers or imposed system-wide tests of hackers’ ability to penetrate banking systems, he said.
Branson also expressed concern about the concentration of outsourced business processes by banks.
“We expect to see here the same standards as the financial institutions themselves,” he said, adding FINMA had begun carrying out systematic checks of banks’ outsourcing partners.
Branson said FINMA had received generally positive feedback to guidelines it published last month on how to regulate digital currency issues, known as initial coin offerings (ICOs).
Switzerland has become a global leader in the hot fundraising method.
Most ICOs for tokens used to run a blockchain platform or representing underlying assets — like a share in a company or physical goods — will be regulated like securities.
There are some exceptions, such as for tokens used to access a platform that is already up and running, or for cryptocurrencies that function only as a means of payment and thus be subject to anti money-laundering rules.
Groups based in Switzerland have launched many of the world’s biggest ICOs. Embattled cryptocurrency project Tezos in July raised $232 million through a Swiss-based foundation, but has since been delayed by internal turmoil and multiple lawsuits. http://reut.rs/2gocfFp
Branson said FINMA would use the guidelines retroactively to review the deals that had already been launched.
“We will judge the ICOs that were already done in Switzerland along this template or this grid. That makes our work easier when looking at these ICOs to see if they would have been subject (to the guidelines),” he said.
(Reporting by Michael Shields, editing by John Revill)