Cosmos incident highlights lacunae in security of banking applications: Experts

Sunil Pradhan
Tuesday, 14 August 2018

Different cyber experts have called the claims made by Cosmos Bank about the hack as 'unappealing.' Following the siphoning of Rs 94.42 crore through 14,849 illegal transactions from different bank account holders of Cosmos Bank, Chairperson Milind Kale claimed that the attack was launched through a proxy switch and cash of Rs 80.5 crore was physically withdrawn from ATM machines across 29 countries including India.

Pune: Different cyber experts have called the claims made by Cosmos Bank about the hack as 'unappealing.' Following the siphoning of Rs 94.42 crore through 14,849 illegal transactions from different bank account holders of Cosmos Bank, Chairperson Milind Kale claimed that the attack was launched through a proxy switch and cash of Rs 80.5 crore was physically withdrawn from ATM machines across 29 countries including India.

Cyber expert Pankajj Ghode of Global Blockchain Foundation said that it is not an easy task to set up a proxy switch and carry out transactions at such a massive level. "Even if a proxy switch was used, there should have been enough penetration testing of the servers to root out the possibility of such illegal transactions through proxy switches. 

The money siphoned belongs to people and so somebody has to accept that there is a flaw in the system," added Ghode.

Another cyber expert, Anil Raj, said that physically withdrawing cash through 14,849 transactions seems a mammoth task and would require a massive workforce to channelise and withdraw cash. "It appears to be a case of movement of electronic money. Similarly, if a proxy switch is created by hackers then, how was it successful in verifying transactions from issuer and Cosmos Bank? When it comes to the cloning of a large number of customers, one way of executing this is by hacking the database to phish information of the customers," added Raj.

Nikhil Bedi, Partner, Deloitte India, said, “Robust security systems and incidence response capabilities are imperative for all companies and financial institutions that are custodians of customer data and customer assets including funds. While there is growing awareness to regularly update an organisation’s cyber preparedness and defence mechanism, a large number of institutions wake up to this reality only after an incident, which often leads to a loss of reputation and financial misappropriation.”

Another expert, Jayant Saran, Partner, Deloitte India, said that banking institutions are more vulnerable to cyberattacks and so continuous monitoring, surveillance and incidence response teams deployed on standby can be beneficial in preventing large-scale attacks. "Similarly, enabling a periodic and secure restore point and a volume shadow copy of all major applications and systems can also help in minimising impact and downtime when banking institutions are faced with such external intrusion attempt,” added Saran.

Anshuman Singh, Senior Director, Product Management at Barracuda Networks Inc, said that cyber attackers use a multi-pronged approach. They can start with a malware being downloaded into a system or via a web application being hacked. It is important to think of all the places where attacks could come from such as email, networks or internet facing applications, and take due precautions.”

Chairperson of Cosmos Bank Milind Kale assured that the bank has met all security parameters, which have also been tested through different auditors on a periodic basis.

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