1. AUTHENTICATION IN AN INTERNET ENVIRONMENT Dominick E. Nigro NCUA Information Systems Officer

2. Reason For Guidance  Changes to Privacy and Security Regulations  Increased Incidents of Identity Theft/Fraud  Authentication Methods Contribute to Identity Theft/Fraud  Authentication Technology Advances

3. Why Effective Authentication?  Safeguard Member Information  Reduce Fraud/Identity Theft  Prevent Money Laundering and Terrorist Financing  Promote Legal Enforceability of Electronic Agreements and Transactions  Reduce Risk of Business with Unauthorized Individuals

4. What does NCUA expect?  Assess the Authentication Risks associated with Internet Based Services  Assess effectiveness of Authentication Methodology  Implement/Review program to Monitor Systems  Determine reporting policies/procedures in place if Unauthorized Access occurs  Evaluate Member Awareness Program

5. Authentication Risk Assessment  Identify all Access and Transactions associated with Internet-based products and services  Determine if Internet Based Services provide High Risk Transactions  Identify Authentication Methods used for Internet Based Services  Determine effectiveness of Authentication Methods for High Risk Transactions

6. Member Account Authentication  If Risk Assessment identifies inadequate Authentication for High Risk Transactions  Multifactor Authentication  Layered Security  Other Controls

7. Authentication Methods  Multifactor Authentication  Something the user knows (pin/password)  Something the user has (smart card/token)  Something a user is (biometrics, fingerprint)

8. Authentication Methods  Layered Security – Multiple controls and multiple control points  Other Controls – Technology and controls that are emerging or that may be introduced in the future

9. Monitoring Systems  Detection of Unauthorized Access  Implement Audit procedures which Assist in detection of fraudAssist in detection of fraud Money launderingMoney laundering Compromised passwordsCompromised passwords Other unauthorized activitiesOther unauthorized activities

10. Reporting Requirements  Unauthorized Access Requires Notifying  Management  NCUA Regional Director  Appropriate Law Enforcement  Filing Suspicious Activity Report  Member Notification  Appendix B of Part 748 of NCUA RR

11. Member Awareness Programs  Key to reduce Fraud and Identity Theft  Implement/Revise Member Awareness Program  Evaluate Education efforts  Identify additional efforts

12. Conclusion  Assess Risk of Internet-based products and services  Establish effective Authentication methods  Monitor systems for Unauthorized Access  Report Unauthorized Access  Notify Members of Unauthorized Access, if warranted  Educate members  Complete process by Year-end 2006