Cybersecurity In Financial Services

How To Handle Sensitive Information in your next AI Project It's crucial to handle sensitive user information with care. Whether it's personal data, financial details, or health information, understanding how to protect and manage it is essential to maintain trust and comply with privacy regulations. Here are 5 best practices to follow: 1. Identify and Classify Sensitive Data Start by identifying the types of sensitive data your application handles, such as personally identifiable information (PII), sensitive personal information (SPI), and confidential data. Understand the specific legal requirements and privacy regulations that apply, such as GDPR or the California Consumer Privacy Act. 2. Minimize Data Exposure Only share the necessary information with AI endpoints. For PII, such as names, addresses, or social security numbers, consider redacting this information before making API calls, especially if the data could be linked to sensitive applications, like healthcare or financial services. 3. Avoid Sharing Highly Sensitive Information Never pass sensitive personal information, such as credit card numbers, passwords, or bank account details, through AI endpoints. Instead, use secure, dedicated channels for handling and processing such data to avoid unintended exposure or misuse. 4. Implement Data Anonymization When dealing with confidential information, like health conditions or legal matters, ensure that the data cannot be traced back to an individual. Anonymize the data before using it with AI services to maintain user privacy and comply with legal standards. 5. Regularly Review and Update Privacy Practices Data privacy is a dynamic field with evolving laws and best practices. To ensure continued compliance and protection of user data, regularly review your data handling processes, stay updated on relevant regulations, and adjust your practices as needed. Remember, safeguarding sensitive information is not just about compliance — it's about earning and keeping the trust of your users.

API Security: 16 Critical Practices You Need to Know Drawing from OWASP guidelines, industry standards, and enterprise security frameworks, here are 16 critical API security practices that every development team should implement: 1. Authentication Your first line of defense. Implement OAuth 2.0, JWT, and enforce MFA where possible. 2. Authorization RBAC and ABAC aren't buzzwords - they're essential. Implement granular access controls. 3. Rate Limiting Had an API taken down by a simple script? Rate limiting isn't optional anymore. 4. Input Validation Every parameter is a potential attack vector. Validate, sanitize, and verify - always. 5. Encryption TLS is just the beginning. Think end-to-end encryption and robust key management. 6. Error Handling Generic errors for users, detailed logs for systems. Never expose internals. 7. Logging & Monitoring You can't protect what you can't see. Implement comprehensive audit trails. 8. Security Headers CORS, CSP, HSTS - these headers are your API's immune system. 9. Token Expiry Long-lived tokens are ticking time bombs. Implement proper rotation and expiry. 10. IP Whitelisting Know who's knocking. Implement IP-based access controls where appropriate. 11. Web Application Firewall Your shield against common attack patterns. Configure and monitor actively. 12. API Versioning Security evolves. Your API versioning strategy should account for security patches. 13. Secure Dependencies Your API is only as secure as its weakest dependency. Audit regularly. 14. Intrusion Detection Real-time threat detection isn't luxury - it's necessity. 15. Security Standards Don't reinvent security. Follow established standards and frameworks. 16. Data Redaction Not all data should be visible. Implement robust redaction policies. The key lesson? These aren't independent practices - they form an interconnected security mesh. Miss one, and you might compromise the entire system. What's your experience with these practices? Which ones have you found most challenging to implement?

"Why are we spending millions on security when nothing ever happens?" The most dangerous question in the boardroom Because when security works, nothing happens. When it fails, you make headlines. Security should be boring But leadership needs to know the value... 🧙🏼♂️Here's how you translating cyber-speak into money-speak and win their hearts and minds: ❌ "We blocked 4 million attacks" ✅ "We prevented $2M in revenue disruption" ❌ "We're patching critical CVEs" ✅ "We closed risks to that could stop operations" ❌ "We completed our pentesting" ✅ "We validated our defense against real world scenarios" ❌ "We're adding more to disaster recovery" ✅ "We've improved our ability to recover operations for an outage or breach" ❌ "We added threat intelligence" ✅ "We are focusing our efforts on our mostly likely weaknesses and using data from our industry" ❌ "We completed a risk assessment" ✅ "We identify risks that could cause $2M / day losses and have a plan to reduce that" ❌ "We maintain compliance" ✅ "We're able to work in regulated markets and have advantages to win" ❌ "We deployed MFA" ✅ "We've reduce the chance of someones account being taken impacting operations" ❌ "We need more budget for tools" ✅ "We have $1M / day risk that can be protected from a one time $250k investment" ❌ "We need security monitoring" ✅ "Without visibility we won't know if our operations are impacted until it happens" ❌ "We completed our IR Tabletop" ✅ "We tested out plans for resilience, and found ways to improve our business recovery" ❌ "Phishing fail rates are at 15%" ✅ "Most of our staff are trained to not expose data, we have plans to train the remaining few" The formula that works: Technical skills build the defense Business language gets the budget 🎯 Use both to win 💬 Which translation helped you most? 🔄 Repost to keep cyber budgets growing 📲 Follow Wil Klusovsky for wisdom on cyber & tech leadership

My recent congressional testimony highlighted the impacts of AI-driven attackers and the expanding AI attack surface on the financial services industry. Organizations can reclaim the advantage by moving toward AI-driven security operations and implementing a "Secure AI by Design" roadmap. Protecting the global financial system requires us to match the speed of our adversaries with autonomous, intelligent defense. Read the full breakdown of my testimony and policy recommendations here: https://lnkd.in/gh6tGr7n

Will AI agents become the ultimate tool for financial criminals? Imagine this: sophisticated AI agents not just obeying commands, but actively working on behalf of criminals to evade sanctions and launder money. It sounds like science fiction, but the reality is closer than we think. As we advance AI capabilities, we also face the prospect of these tools being misused by those who seek to game the system. Financial criminals are often early adopters of new technologies, and AI is no exception. In the future, it's possible to imagine AI agents that can conduct complex transactions, adapt to compliance measures, and leverage vast datasets to navigate around AML checks, all in real-time and with a level of sophistication that would make traditional methods of evasion seem almost outdated. These AI agents could potentially identify weak spots in compliance systems, mimic legitimate customer behaviour to pass KYB/KYC checks, and even automate entire laundering operations across multiple jurisdictions, all with minimal human involvement. For compliance teams and regulators, this will present a whole new level of challenge: not just identifying traditional red flags, but also recognising when an AI is pulling the strings behind transactions. The question is, how do we prepare? As much as AI can be used for good, streamlining financial crime detection, automating tedious compliance tasks, and making systems more robust, it’s crucial that we recognise and mitigate the potential dark side of these technologies. This means investing in AI that can predict and counteract such misuse, strengthening our collective defences against a rapidly evolving threat landscape. Collaboration across financial institutions, tech developers, and regulators will be critical in developing new safeguards that can adapt just as quickly as these potential threats evolve. The future of AML isn’t just about automation—it's about staying one step ahead of the AI agents that may one day work for the wrong side. How are you and your organisation preparing for the possibility of AI agents in the hands of criminals? This topic is just one of many we discussed during our live podcast show in London. Tune in to this week's podcast for an exciting episode recorded live at The Ministry of Sound in London! Subscribe to my newsletter for AML insights, podcasts, and industry news: https://lnkd.in/dURrx3Ea

The CFO was furious. He had just wired $65,000 to a scammer because he thought he was paying a trusted vendor. It wasn’t a hack. No one broke a firewall. No one cracked a password. It was a classic Business Email Compromise (BEC). The attackers simply asked for the money, and because they looked legitimate, he sent it. His first reaction? "We need better software to stop this." I had to tell him the hard truth: Software can't fix a broken process. Technology alone cannot stop a human from being manipulated. If you rely solely on tools, you are bringing a firewall to a confidence game. We didn't solve this problem by buying an expensive new security appliance. We solved it by rewriting the company's Standard Operating Procedure (SOP). We implemented a simple, non-technical rule: Any request for a wire transfer received via email or text must be verbally verified by a second authorized signer. That one process change (which cost $0 in software licensing) did more to secure their finances than any tool on the market could have. 👇 I've attached the exact SOP template we use. Swipe through to see the specific language you can add to your finance policies today. In my book, Fire Doesn't Innovate, I share tools like this because cyber resilience is about People, Process, and Technology; not just Technology. #BusinessEmailCompromise #CFO #RiskManagement #FireDoesntInnovate #SOP

Would your organization detect a cyberattack before it’s too late? Cyber threats are evolving. A single undetected breach can cost millions. The Global Technology Audit Guide (GTAG) on Cybersecurity Operations helps internal auditors assess how well organizations prevent and detect cyber threats before damage is done. Key areas of cybersecurity operations: ↳ Security in design: is cybersecurity embedded in system planning and governance?  ↳ Prevention: using encryption, antivirus, email filtering, and security training to block attacks. ↳ Detection: monitoring logs, vulnerability scanning, penetration testing, and threat hunting. What internal auditors should do: ↳ Review cybersecurity governance: ensure leadership sets clear policies and oversight. ↳ Assess prevention controls: check if security measures (firewalls, DLP, access controls) are effectively implemented. ↳ Evaluate detection capabilities: verify if monitoring tools and incident response processes identify threats. ↳ Test for gaps: use risk-based audits to detect weak controls before attackers do. ↳ Engage IT & security teams: collaborate with CIOs, CISOs, and security teams for a comprehensive view. ↳ Leverage cybersecurity frameworks: align with NIST, COBIT, and CIS Controls for industry best practices. Source: The IIA. 2025. Auditing Cybersecurity Operations: Prevention and Detection 2nd Edition How is your audit team approaching cybersecurity risks? Let’s discuss 😊

The UK just told every FTSE 350 CEO to PRINT their cyber response plan on actual paper. Here’s why that might be the smartest thing they’ve said in years: The National Cyber Security Centre (NCSC) is advising leaders to literally print out their cyber incident response plans and keep them offline. The thinking is simple (and blunt): When a cyber breach hits, assume your entire digital infrastructure is gone. • email locked • servers offline • collaboration tools dead If your plans are stuck inside those systems, you’ll be flying blind in a crisis. This might sound like fearmongering at first glance, but it's a reflection of the new reality. The UK has faced 204 nationally significant cyber-attacks in just 9 months. • Jaguar Land Rover • Marks & Spencer • Co-op These are just 3 of many that have stopped production lines cold and, in the worst cases, cost lives in hospitals. Under every big name, hundreds of smaller suppliers, partners, and vendors are quietly being used as a way in. I think the advice is dead right and wildly overdue. In traditional disaster recovery (pre-cloud), we always had a printed plan in a grab-and-go folder. It wasn’t cutting-edge, but it worked. Today, attacks are more sophisticated, faster, and nastier. But most SMEs don’t even have a basic cyber incident plan. Forget paper copies – they’ve got nothing to print. And even worse, many still believe they’re not targets because they’re not household names. That’s the real vulnerability. If you’re an SME leader, start with 3 steps: 1) Write your plans down. Your incident response plan should live outside your IT systems. If your systems are offline, you’ll still be able to lead your team through the chaos. Print your plan. Store it in a physical location. Make sure leadership knows where it is. 2) Run tabletop exercises regularly. Test your incident response plan before you need it. Plans on paper are useless if no one’s practiced them. Reality never matches theory on the first run. Schedule sessions every 6–12 months. Simulate realistic breach scenarios. Update the plan based on what goes wrong. 3) Build resilience into your architecture. Most businesses still treat security as a bolt-on. When the system goes down, it goes all the way down. Resilience engineering means designing your systems to fail gracefully—not catastrophically. Use failover systems, redundant data centres, or separate core infrastructure from non-critical services. The more uptime your service needs, the stronger your resilience must be. ––– If you haven’t reviewed your cyber resilience in the last 6 months, you’re already behind. Get serious before you're forced to get reactive. When the lights go out, it’s too late to Google what to do next.

Key Findings from the 2025 State of #Fraud Report 🔸 Rising Fraud Incidents Across All Sectors: 60% of financial institutions and #fintechs reported an increase in fraud events targeting #consumer and business accounts in 2024. Fraud was predominantly digital, with 80% of events occurring on #online or #mobilebanking channels 🔸 Key Fraud Types: Credit card fraud, identity theft, and account takeover (ATO) #fraud were the most common types of fraud reported. 20% of enterprise #banks ranked check fraud as their most frequent fraud type. 🔸 Financial and Reputational Costs: 31% of organizations experienced fraud losses exceeding $1M in 2024. 73% ranked #reputational damage as the most severe consequence of fraud, followed closely by direct financial losses (72%) and loss of clients (72%). 🔸 Role of Organized Crime: 71% of fraud attempts were attributed to financial #criminals or fraud rings, marking a shift from first-party to third-party fraud. 🔸 Fraud #Detection and Prevention: 56% of financial organizations most commonly detected fraud at the transaction stage, while 33% identified it during onboarding. Real-time interdiction was conducted by only 47% of respondents, highlighting a gap in immediate fraud prevention. 🔸 Fraud Detection Trends: Inconsistent user #behavior (28%) and mismatched personal data (20%) were leading indicators of fraud attempts. Mid-market banks reported the highest incidence of fraud, with 56% facing over 1,000 fraud cases. 🔸 AI and Technology Adoption: 99% of organizations reported using AI in fraud prevention, with 93% agreeing that machine learning and #generativeAI will revolutionize detection capabilities. #AI was predominantly used for anomaly detection (59%) and explaining large datasets for #risk analysis (67%). 🔸 Fraud Prevention Investments: 93% of respondents indicated ongoing #investments in fraud prevention, with identity risk solutions being the most impactful (34%). Top technologies for 2025 include identity risk solutions (64%), document #verification software (49%), and voice/facial recognition systems (38%). 🔸 Regulatory Impact: 62% of organizations plan to increase fraud prevention investments in response to #regulatory scrutiny and potential #reimbursement requirements for fraud losses. Predictions for 2025: 🔆 Fraud will continue to rise, driven by increased availability of consumer data on the #darkweb 🔆 Financial institutions are expected to adopt #centralized platforms for fraud and identity risk management to enhance efficiency and reduce losses 🔆 Advanced AI tools and real-time #payments systems will remain key focus areas for fraud mitigation strategies. These findings emphasize the need for a multi-layered approach to fraud prevention, prioritizing identity verification, AI-driven analytics, and real-time interdiction

RIAs should pay close attention to what’s happening at Mercer. Wealth Management reports that Mercer Advisors is now facing a proposed class action tied to a cyber incident allegedly involving the cybercrime group ShinyHunters. According to that report, the suit claims Mercer was hit around February 16, 2026, that the attackers demanded payment, and that stolen client data was later published after Mercer refused to pay. The bigger issue for RIAs is not just the headline. It is the pattern. That same reporting notes Beacon Pointe was also recently targeted, and Pathstone was reportedly named in related coverage. Separately, Edelman Financial Engines filed a data breach notification with Maine regulators in late January 2026, reinforcing that advisory firms are operating in an environment where sensitive client data is an increasingly attractive target. For RIAs, this is the practical takeaway: Modern attacks are not always loud. They do not always begin with ransomware encryption. In many cases, the real damage comes from unauthorized access, data theft, extortion pressure, client notification, and litigation risk. The Mercer suit itself alleges gaps around controls such as MFA, credential protection, encryption of personal information, network segmentation, and regular security audits. That is why firms need to be asking: 1. Could a social engineering attempt get past our people? 2. Would compromised credentials expose sensitive client data? 3. Do we have enough segmentation and least-privilege controls to limit the blast radius? 4. Are we prepared to detect, contain, investigate, and communicate quickly if data is taken? At AdvisorDefense, this is exactly where we see firms needing to mature: not just perimeter security, but identity hardening, control validation, incident readiness, and evidence that safeguards are actually working. Because when attackers go after client data, the fallout is not just technical. It becomes a client trust, regulatory, and legal problem. If your firm had to defend its safeguards after a data-theft event tomorrow, would your controls hold up under scrutiny? https://lnkd.in/eujSQbMF #Cybersecurity #RIA #WealthManagement #DataBreach #AdvisorDefense