💨 This Week in GRC: IT Crash
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Welcome to Issue 68 of This Week in GRC, MBK Search's weekly digest of the news and views in the world of governance, risk, and compliance.
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🔔 This Week's Opening Bell
If you're actually reading this, welcome to Thunderdome.
State services and businesses from airlines to financial services and media groups were hit by a global IT outage on Friday, causing massive disruption to a vast range of services and operations. Security experts are calling it the biggest problem of its kind.
The widespread IT outage is a stark reminder of our increasing reliance on digital infrastructure and the potential for catastrophic consequences when it fails.
Anyone got a hard copy of the third-party risk management strategy we can borrow?
📰 This Week's Issue
💻 A global outage affects IT systems worldwide
🏦 What new AVM rules will mean for hiring
💵 The FSB's new cross-border payment guidelines
✍️ What MBK Search is Talking About
What New Mortgage AVM Rules Mean for Hiring
Federal regulators have introduced new rules to ensure the quality and reliability of automated valuation models (AVMs) used in mortgage lending. These rules, required by the Dodd-Frank Act, are set to impact how AVMs are used in the industry.
Here’s a breakdown of what you need to know about these changes and how they’ll affect hiring in GRC.
EU's Corporate Sustainability Due Diligence Directive: What it means and what comes next
The European Union has taken a big step toward corporate responsibility with the Corporate Sustainability Due Diligence Directive. This new law ensures companies address human rights and environmental impacts throughout their value chains. Here are five key aspects to consider:
FSB Unveils Cross-Border Payment Guidelines
The Financial Stability Board (FSB) wants banks and payment service providers (PSPs) involved in cross-border payments to enhance the consistency of their regulatory and supervisory practices. In a report released in July, the FSB outlined six key recommendations along with steps for implementation.
📰 This Week's GRC Headlines
Global IT Outage Linked to Windows PCs Affects Major Companies and Services
A widespread outage linked to Windows workstations has affected various businesses and services around the globe, including banks, airlines, telecommunications companies, TV and radio broadcasters, and supermarkets. Users reported a blue screen of death error screens on their Windows PCs.
Sky News in the UK experienced several hours of broadcasting disruption, while GP surgeries in England reported issues accessing patient records and booking appointments. Melbourne Airport advised passengers of potential check-in delays due to the global technology issue.
Govia Thameslink Railway, a major UK train company, warned passengers of potential short-notice cancellations and disruptions to real-time customer information platforms. Australian broadcasters ABC and Sky News also confirmed broadcast difficulties.
Cybersecurity firm Crowdstrike reported that the issue is related to its Falcon Sensor product. Engineering teams are working to resolve the problem. The company later identified the cause as a content deployment issue and reverted the changes.
Australia's national cyber security coordinator confirmed that government advice suggested a third-party software issue was responsible for the outage. Microsoft also reported that users might have difficulty accessing its 365 cloud-based app services, adding to the tech giant's daily challenges.
UK Financial Regulator Urges Banks to Improve Treatment of Politicians
The UK's Financial Conduct Authority (FCA) has advised the country's financial institutions to improve their treatment of politically exposed persons (PEPs) and their families following a controversy involving private bank Coutts and Brexit advocate Nigel Farage.
Last year, Coutts abruptly closed Farage's accounts after judging him a reputational risk, prompting an FCA review. Farage, now leader of the right-wing Reform UK party, recently gained a seat in the House of Commons for the first time.
While UK banks are required to perform extra checks on PEPs due to their unique risks, the FCA found that most firms did not subject PEPs to excessive or disproportionate checks, and none would deny them an account based on their status alone. However, the regulator noted that all firms could improve their practices.
The FCA suggested that financial firms ensure PEP definitions are as narrow as possible under the law, review individuals' PEP status promptly after they leave office, increase staff training, and consider actual customer risks. The regulator also stated that U.K.-based PEPs should be treated as lower risk.
The controversy began when Farage released an internal Coutts document describing him as "xenophobic and racist" and "a disingenuous grifter." The incident led to the resignation of NatWest Group's chief executive, Alison Rose, under pressure from the UK government.
FTX Reaches $12.7 Billion Settlement with CFTC
Bankrupt cryptocurrency exchange FTX and the United States Commodity Futures Trading Commission (CFTC) have reached a $12.7 billion settlement, pending court approval, resolving a 19-month lawsuit filed by the regulator in December 2022.
The settlement agreement, which comes after months of negotiations, comprises $8.7 billion in restitution and $4 billion in disgorgement. The CFTC did not seek a civil monetary penalty, acknowledging FTX's substantial potential liability due to the conduct and convictions of its former executives.
FTX's CEO, John J. Ray III, and CFTC senior trial attorney, Carlin R. Metzger, stated that the proposed settlement is integral to FTX's chapter 11 reorganization plan. It will resolve ongoing litigation, avoid further costs and delays, and mitigate risks to assets available for distribution to creditors.
The CFTC, which sued FTX, its former CEO Sam Bankman-Fried, and sister trading firm Alameda Research for fraud and misrepresentations in marketing FTX.com, is considered the most significant single creditor in the bankruptcy cases.
A hearing on the settlement is scheduled for Aug. 6 in the Bankruptcy Court for the District of Delaware. Based on asset prices at the time of FTX's November 2022 bankruptcy filing, FTX's proposed reorganization plan could provide a 118% return for 98% of creditors with claims under $50,000.
🔥 This Week's GRC Hot Takes
Hot takes and analysis from those on the shop floor
📺 This Week's GRC Podcast
FINRA's Financial Intelligence Unit acts as a nerve center for information on emerging threats impacting FINRA members with the aim of providing actionable intelligence to firms, other regulators and law-enforcement to keep investors safe.
Blake Snyder, senior director of FIU, joins FINRA's "Unscripted" podcast to share how the group has grown and matured over the last few years and how they are evolving the way they share information, including through the introduction of the new Threat Intelligence Products, or TIPs.
🧑💼This Week's Hottest GRC Jobs
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Our client, a leading Providence law firm, is looking for an experience attorney/junior partner to join their growing Estate Planning practice.
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