On April 6, 2017, Sal Scanio presented at a webinar, Cybercrime: Maximizing Opportunities and Minimizing Threats for Financial Institutions. Sal joined panelists Alejandro Mijares, Manager, Risk Advisory Services, Kaufman Rossin, P.A., and Roy Zur, CEO and Founder, Cybint, in discussing how cybercrime affects the financial services industry.
Sal’s presentation focused on the legal regime for allocating liability for unauthorized fund transfers, including wire transfers, ACH transactions, and SWIFT transfers. He discussed several key and recent cases under UCC Article 4A that have grappled with the breadth of the “security procedure” defense, applied the UCC test for determining whether a bank’s procedures are “commercially reasonable,” and addressed circumstances where banks were considered to have or have not acted in “good faith.” He covered applicable regulatory guidelines issued by the Federal Financial Institutions Examination Council and the New York State Department of Financial Services, including recent developments on reporting cybercrime.
Sal’s presentation also addressed the continuing trend in the payment card arena in which fraud liability is shifting from issuers to acquirer/merchants under card network rules and recent suits brought by issuing banks against merchants for data breaches. (For an overview of the evolving payment card system and developing loss allocation, see Sal Scanio’s prior article, Payment Card Fraud, Data Breaches and Emerging Payment Technologies, XXI Fidelity L.J. 59 (2015)).
Finally, Sal outlined a number of practical measures that can be taken by financial institutions to reduce their legal and compliance risk.
For further information, contact Salvatore Scanio at sscanio@ludwigrobinson.com or 202-289-7605.