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An Analysis Of The CBN’s Cybersecurity Guidelines To Other Financial Institutions -By Oyetola Muyiwa Atoyebi & John Oladipo

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Based on the foregoing, it is clear that there are similarities in the three countries observed in this article. The CBN’s cybersecurity risk management system and resilience assessment pursue the same as that of the CBK’s (Central Bank of Kenya) Cybersecurity Guidelines, which mandate periodical reports on new technologies and potential threats to the central bank.

INTRODUCTION

Set to take effect from January 1, 2023, this regulatory guideline is aimed at the Other Financial Institutions (OFIs) (such as microfinance, development banks, etc.), to enhance cybersecurity and strengthen the defense against cyberattacks, targeted at the information and communications system of the financial industry, which is heavily relied upon to operate. It was triggered by the recent spike and sophisticated nature of the cyberattacks, and threats posed by hackers targeted at the finance industry.[1]

Cyberattack refers to an attempt to compromise and steal confidential data, or destroy a computer system/network. They include malware, phishing, and DoS/DDoS (denial-of-service/distributed denial-of-service) attacks. These attacks, when launched on the host system, barrage it with illegitimate requests which make it unable to ‘provide service’ to those who need it.[2]They drain the resources of a system by making it impossible to grant users’ requests, and leaving it vulnerable to other forms of attack to the point that it could crash down.[3]

Cybersecurity is the protection of internet-connected systems and data from cyber threats, to protect against unauthorized access to confidential information.[4]

The regulations comprise 6 major parts:[5]

Compliance with Statutory and Regulatory Requirements: Non-compliance with the guidelines shall attract appropriate sanctions to be determined by the CBN, in accordance with the CBN Act and Banks and Other Financial Institutions Act(BOFIA).[6]The BOFIA 2020, set in place to repeal that of 1991 as it was out of touch with technological advancement, lends the following powers for sanctions to the CBN, some of which include:[7]

Incident Response and Disaster Recovery:[9] The guidelines also make provision for addressing the aftermath of a security breach, with the objective of reducing damage, recovery time and costs. The ‘disaster recovery’ allows for immediate response to reduce damage and resume business functions quickly. OFIs are mandated to review their Disaster Recovery/Business Continuity documents to ensure adequacy in supporting breaches. This must be tested, so that any necessary improvements can be made. A response plan shall also be shared with stakeholders, stipulating the establishment of a dedicated team focused on detecting and responding to cyber incidents.

As seen with Kenya’s Cyber Security Guidelines for Payment Service Providers, CBN also makes provision for the establishment of a PSP Security Assurance Programme, to ensure due diligence and thorough vetting of the PSPs before establishing relationships with them.

What Gave Rise to Its Enactment?

As stated earlier, threats such as ransomware, phishing and Advance Persistent Attacks (APT) have become prevalent, thus creating a need to strengthen cyber resilience and security to secure critical information in the financial sector.[10] Key pieces of information stored by these industries need to be protected, to prevent data from being misused by third parties for fraud, such as phishing scams and identity theft,[11] or even a country’s general economic/financial data being used against it. Its key function is to protect the OFIs from cyberattacks, and then the whole financial sector by extension.

Advantages of the Guidelines[12]

Comparative Analysis: Ghana and Kenya as Case Studies

As of 2019, an increasing number of businesses had migrated online, and cybersecurity became rampant, referred to as a national security issue by President Nana Akufo-Addo. According to the Cybercrime Unit of Ghana’s Criminal Investigations Department, Ghana lost approximately $97m to cybercrime in 2018, higher than $69m in 2017 and $26m in 2016.[13]

The Bank of Ghana implemented a Cyber and Information Security Directive, providing a framework for security measures for IT data centers and control rooms to assure data and network security. There is also the Cyber Security Directive for Financial Institutions, which was launched in October, 2018, to establish guidelines for cybersecurity and information security in the financial sector, and to strengthen bank and customer confidence in the security of banking technology. Banks will be obliged to implement cybersecurity controls and follow a timeline to ensure that they are meeting requirements. All banks will also be required to appoint a cyber and information security officer to advise senior management and shape policies regarding cybersecurity issues. This applies to all entities regulated by the Bank of Ghana and must comply with the standards as stipulated.[14]

Kenya’s Central Bank, on the other hand, has developed Cyber Security Guidelines for Payment Service Providers, with an objective to create safer cyberspace that underpins information system security priorities, to promote stability of the Kenyan payment system sub-sector.[15]Also, reporting requirements (backed up by the National Payment System Act, Banking Act, and CBK’s Guidance Note on Cybersecurity) have also been put in place for licensed banks and payment system providers, to disclose major security breaches and incidents of fraud, especially those that could have an adverse effect on the ability to provide adequate services to customers to the Central Bank of Kenya.[16]

It can be deduced that these two countries have been proactive in the measures taken to ensure that cyberattacks are minimized and have little impact on their financial industries. This has established a more coordinated approach to the prevention and combating of cybercrime.

CONCLUSION 

Based on the foregoing, it is clear that there are similarities in the three countries observed in this article. The CBN’s cybersecurity risk management system and resilience assessment pursue the same as that of the CBK’s (Central Bank of Kenya) Cybersecurity Guidelines, which mandate periodical reports on new technologies and potential threats to the central bank. There is also the appointment of a cyber and information security officer, to advise senior management and shape policies (adopted by both the CBN and Bank of Ghana).

It is known that the technology industry continues to grow in waves, and there is nothing to put it to a halt. Therefore, financial institutions must take initiative to implement policies capable of combating excesses presented by technological advancement so that crucial information is kept private and safe, and long-term financial health is ensured. Failure to do this puts not just the industry but the whole society in turmoil.

AUTHOR: Oyetola Muyiwa Atoyebi, SAN, FCIArb. (UK).

Mr. Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm) where he also doubles as the Team Lead of the Firm’s Emerging Areas of Law Practice.

Mr. Atoyebi has expertise in and a vast knowledge of Cyber Law and this has seen him advise and represent his vast clientele in a myriad of high level transactions.  He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of a Senior Advocate of Nigeria.

He can be reached at [email protected]

CONTRIBUTOR: John Oladipo.

John is a Team Lead in the Dispute Resolution Team at OMAPLEX Law Firm. He also holds commendable legal expertise in Cybersecurity and Data Privacy.

He can be reached at [email protected]

[1]Justice Okamgba, ‘CBN Sends a 41-Paged Cybersecurity Guidelines to OFIs’ (Tech Economy,4 July 2022) <https://techeconomy.ng/2022/07/cbn-sends-a-41-paged-cybersecurity-guidelines-to-ofis/> Accessed 18 July 2022. See also fn.5

[2] Top 20 Most Common Types of Cyber Attacks (Fortinet, No Date) <Top 20 Most Common Types Of Cyber Attacks | Fortinet> Accessed 21 July 2022

[3] Ibid 2

[4] Sharon Shea, ‘What is Cybersecurity’ (Tech Target, 2021) <https://www.techtarget.com/searchsecurity/definition/cybersecurity#:~:text=Cybersecurity%20is%20the%20protection%20of,centers%20and%20other%20computerized%20systems> Accessed 18 July 2022

[5]NkiruAsiegbu, Letter to All Other Financial Institutions (June 2022) https://www.cbn.gov.ng/Out/2022/OFISD/Letter%20to%20all%20OFIs%20Issuance%20of%20Risk-Based%20Cybersecurity%20Framework%20and%20Guidelines%20for%20Other%20Financial%20Institutions.pdf Accessed 18 July 2022. Applicable to numbers 1 – 6 respectively.

[6] Ibid 5

[7]OlayinkaAlao, ‘Nigeria: BOFIA 2020: What’s New?’ (Mondaq, 15 October 2021) <BOFIA 2020: What’s New? – Financial Services – Nigeria (mondaq.com)> Accessed 21 July 2022. Applicable to numbers 1 – 4.

[8] Christina Ngene, ‘BOFIA 2020 – Updated Act for the Bnaking and Financial Sector in Nigeria’ (Africa Reinvented, 20 November 2020) <BOFIA 2020 – Updated Act For The Banking and Financial Sector in Nigeria (africareinvented.com)> Accessed 21 July 2022

[9]NkiruAsiegbu, Letter to All Other Financial Institutions (June 2022) https://www.cbn.gov.ng/Out/2022/OFISD/Letter%20to%20all%20OFIs%20Issuance%20of%20Risk-Based%20Cybersecurity%20Framework%20and%20Guidelines%20for%20Other%20Financial%20Institutions.pdf Accessed 18 July 2022

[10]Ibid 1

[11] John Kyriazoglou, Reasons for Protecting Personal Data: A guide for managers (November 2021) (PDF) Reasons for Protecting Personal Data: A guide for managers (researchgate.net) Accessed 19 July 2022. See also Access denied (fsb.org.uk)

[12] Ibid 5

[13] ‘Cybersecurity of top priority for Ghanaian banks’ (Oxford Business Group, 2019) <https://oxfordbusinessgroup.com/analysis/safe-and-secure-use-online-services-continues-grow-strengthening-cybersecurity-remains-top-area> Accessed 18 July 2022

[14]AcquilesAlmansi et al, Financial Sector’s Cybersecurity: A Regulatory Digest (May 2019) <https://thedocs.worldbank.org/en/doc/208271558450284768-0130022019/original/CybersecDigest3rdEditionMay2019.pdf> Accessed 18 July 2022

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