- With little fanfare, the Federal Reserve will begin transferring
the nation's money supply over an Internet-based system this month ó
a move critics say could open the U.S.'s banking system to cyber threats.
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- The Fed moves about $1.8 trillion a day on a closed,
stand-alone computer network. But soon it will switch to a system called
FedLine Advantage, a Web-based technology.
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- Proponents say the system is more efficient and flexible.
The current system is outdated, using DOS ó Microsoft's predecessor
to the Windows operating system.
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- But security experts say the threat of outside access
is too big a risk.
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- "The Fed is now going to be vulnerable in two distinct
ways. A hacker could break in to the Fed's network and have full access
to the system, or a hacker might not have complete access but enough to
cause a denial or disruptions of service," said George Kurtz, co-author
of "Hacking Exposed" and CEO of Foundstone, an Internet security
company.
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- "If a security breach strikes the very heart of
the financial world and money stops moving around, then our financial system
will literally start to collapse and chaos will ensue."
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- FedLine is expected to move massive amounts of money.
Currently, Fedwire transfers large-dollar payments averaging $3.5 million
per transaction among Federal Reserve offices, financial institutions and
federal government agencies.
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- Patti Lorenzen, a spokeswoman for the Federal Reserve,
said the agency is taking every precaution.
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- "Of course, we will not discuss the specifics of
our security measures for obvious reasons," she said. "We feel
confident that this system adheres to the highest standards of security.
Without disclosing the specifics, it is important to note that our security
controls include authentication, encryption, firewalls, intru sion detection
and Federal Reserve conducted reviews."
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- Ron Gula, president of Tenable Network Security and a
specialist in government cyber security, said he's sure the Fed is taking
every precaution. But no system is 100 percent foolproof.
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- "If the motive was to manipulate the money transferring,
there are Tom Clancy scenarios where there are ways to subvert underlying
technologies," Gula said. "For example, a malicious programmer
can put something in the Fed's network to cause the system to self-destruct
or to wire them money."
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- The biggest concern isn't the 13-year-old who hacks into
the Fedwire and sends himself some money ó it's terrorism.
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- On July 22, the Department of Homeland Security released
an internal report saying a cyber attack could result in "widespread
disruption of essential services ... damag(ing) our economy and put(ting)
public safety at risk."
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- But the Fed's undertaking of this massive overhaul is
considered a necessity.
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- "Our strategy is to move to Web-based technology
because there are inherent limitations with DOS based technology and our
goal is to provide better and robust product offerings to meet our customers'
needs," said Laura Hughes, vice president of national marketing at
the Chicago Fed, which has spearheaded this program.
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- Copyright 2004 NYP Holdings, Inc. All rights reserved.
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- http://www.nypost.com/business/18671.htm
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