Benjamin Lawsky, who as superintendent of the state Department of Financial Services oversees 3,800 banks and insurance companies, said that trying to stop cyber attacks on the state's financial system — from data breaches to cyber terrorism — is his biggest concern.
"It's the one issue that I personally work on every single day," Lawsky said at UAlbany's Business School, where he delivered the first-ever Massry Lecture. "What should we do to prevent these nightmare scenarios?"
Although Lawsky doesn't have criminal prosecution powers, his office has been aggressive in negotiating civil penalties with banks that have been investigated for wrongdoing in New York state. On Thursday, just an hour before his UAlbany speech, his office announced a $1.45 billion fine for Commerzbank of Germany — of which $610 million will go to New York state.
Lawsky said that vigilance and severe punishments are needed to maintain the integrity of the financial system to weed out bad actors and stop money from flowing to terrorists.
"Money is the oxygen that is fueling the fire of international terrorism," Lawsky said.
Commerzbank was accused of processing tens of thousands of transactions in New York, valued at more than $253 billion, on behalf of Iranian and Sudanese clients who are subject to U.S. banking sanctions put in place because of their ties to terrorism.
Lawsky said Commerzbank employees modified the bank's internal monitoring systems that put "red flags" on transactions to make processing them easier. He said that, based on experiences with other banks accused of doing the same thing, it may be important for his office to start auditing monitoring systems, which differ from bank to bank.
"It's an approach that no other financial regulator (is) doing," Lawsky said.
He told the Times Union after the UAlbany speech that a massive cyber attack on financial markets could force a run on banks and cripple the economy. He said a successful attack that freezes or wipes out bank accounts for even a day would cause panic.
"If we knew (what to expect), we'd be a lot less worried," Lawsky said.
©2015 the Times Union (Albany, N.Y.) Distributed by Tribune Content Agency, LLC
