Official Says Fed is Looking to Step Up Supervision of Tech Firms Serving Banking Industry
As cybersecurity breach concerns have risen, the Federal Reserve has indicated in recent weeks that the nation’s central bank may soon boost supervision of technology firms in the banking industry. They are considering examining governance and compliance systems at the firms to ensure that data is protected and provided securely.
Richard Ashton, deputy general counsel for litigation, enforcement, and system matters of the Fed, told the Wall Street Journal that under the Bank Service Company Act, financial regulators can investigate banking services provided by third-party vendors.
“How far the authority goes to conduct examinations, I think, is something we are closely looking at. Is it something that we can look at the governance structure at these third-party providers? Can we look at their overall compliance management program?” said Mr. Ashton.
Four months prior to Mr. Ashton’s comments, a hacker accessed the personal material of 106 million Capital One Financial Corp. consumers, which was stored on Amazon’s cloud service. Mr. Ashton stated that while banks are primarily responsible for managing vendor-related risks, financial regulators may be necessary when numerous banks depend on the same third-party provider.