Precaution to be taken by Bank for internet banking

Compared with other forms/channels of banking activities, Internet banking depends greatly on the integrity or trust in the confidentiality of customer data and on the availability of the system. In this context, there should be in place appropriate redundancy and fallback options, as well as disaster recovery procedures. In the case of Internet banking involving payments or funds transfers, nonrepudiation and integrity of the transactions are essential attributes. In such cases, the review of Internet banking should address the effectiveness of the Internet banking system controls in assuring nonrepudiation and integrity. Due attention should be given to them while evaluating the availability of Internet banking solutions, especially if the continuity is based on cross-border processing, because it might infringe a regulation or might run counter to compliance with bank regulations.

3.1.6 It is essential in Internet banking to confirm that any communication, transaction or access request is legitimate. Accordingly, banks should use reliable methods for verifying the identity and authorisation of new customers as well as authenticating the identity and authorisation of established customers seeking to initiate electronic transactions. Customer verification during account origination is important to reduce the risk of theft, fraudulent transactions and money laundering activities. Strong customer identification and authentication processes are particularly important in the cross-border context given the difficulties that may arise from doing business electronically with customers across national and international borders, including the risk of identity impersonation and the difficulty in conducting effective credit checks on potential customers.
3.1.7 Auditability has more significance in the Internet banking environment, because a significant proportion of the transactions take place in paperless environments.

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