There is an increasing focus on data and analytics at FINRA that will further Member Supervision’s vision of leveraging intelligence and data to drive decision making and operations.
The new Complex Investigations and Intelligence (CII) team and Cyber and Analytics Unit (CAU) are driving a shift in terms of how Member Supervision’s National Cause and Financial Crimes Detection Program comes at its work, Kaitlyn Kiernan, Associate Director, Corporate Communications, said during the latest FINRA Unscripted podcast.
Omer Meisel, Vice President of CII, said that one of CII’s main objectives is to be both proactive and preventative in identifying and mitigating the most complex threats that the financial industry faces.
“Within CII, we’ve intentionally built these teams to be agile and nimble, to be able to pivot quickly and adapt to address emerging threats or risks in their area of specialization,” he said.
The Cyber and Analytics Unit (CAU) is one group within CII, which Brita Bayatmakou, Senior Director of CAU, leads up.
The Unit’s mission is to conduct complex investigations in the cybersecurity, cyber-enabled fraud and crypto asset disciplines.
There is also a team called Analytics Threat Targeting Team that is “here to proactively target our top financial crime-related threats”, Bayatmakou said.
“When we are thinking about the type of threats that we’re seeing to markets and to investors when it comes to cyber and fraud associated with a variety of areas, including crypto,” she said.
“It’s really critical that we ensure we’re keeping pace with trends and important that we do establish a team like this bringing it together to proactively detect and address those threats that we see across the cyber discipline,” she added.
According to Bayatmakou, FINRA is building out a cyber-enabled fraud team, and this group is going to focus on all cyber-related fraud or misconduct related to things like account takeover incidents using compromised information, business email compromise, different scams, and ransomware attacks.
“For the first time FINRA will have a dedicated crypto asset focused group, which is really exciting,” she said.
She stressed that while FINRA’s current footprint and touch points might be limited today, it is really important that “we identify and address developments in markets to ensure that the investing public, even in adjacent markets, are protected, again, aligning with FINRA’s core mission”.
“We are putting ourselves in a position to be prepared for what’s to come,” she added.
Bayatmakou further said that there are a lot of exciting projects to come, adding that this is an area that has seen incredible amount of growth in recent years.
With the amount of regulatory uncertainty out there, there is also a lot of attention being paid and work being done to provide a regulatory framework that will certainly guide FINRA’s future role in this space, Bayatmakou said.
Meisel said that this is a great example of FINRA being forward leaning in thinking about the threat and how to be ahead of that threat.
“We aren’t waiting, necessarily, for someone to tell us we should be in this space or reacting to the events. Rather, we are positioning ourselves to be able to address the threats,” he said.
According to Bayatmakou, working with FINRA’s Exam and Risk Monitoring teams is absolutely imperative.
“The more these teams are aware of what we are seeing, the more quickly we can identify when an issue arises that needs to be addressed and represent maybe something larger that we should perform more training on,” she said.
“On the flip side, the risk monitoring teams really are the eyes and ears for us and can identify a lot of red flags that we may not have noticed. And so having that ongoing partnership, that ongoing dialogue is key to what we do,” she added.
Meisel thinks that a large part of the transformation that FINRA has gone through over the past couple years has really led to breaking down silos and being integrated in “a very intimate way”.
“Now really there is no daylight between the three departments,” he added.