Ukraine: Cyber Security In The Bank Sector: Can IT Outsourcing Help?

Last Updated: 27 March 2018
Article by Anastasiia Pavlovska and Zarina Khalimon

 Recently, the functioning of information systems in the world has revealed the problem of insufficient protection against computer viruses. BadRabbit, WannaCry, Petya and others unexpectedly surprised and paralyzed the computer systems of various institutions and enterprises. Their developers, although they had different purposes and methods of implementing viruses, have been basing their efforts on common ground - the shortcomings and weaknesses of cyber security systems. The mechanism of action of the virus Petya, which in a few days caused millions of dollars of losses both to Ukrainian businesses and government institutions, is the most illustrative in this issue. The virus affected a popular accounting software program M.E.Doc., gaining access to the administrative rights controlling computer systems and freely distributing its own copies.

Banking institutions were not an exception, even though they may have seemed to be protected by modern technical security systems. The worldwide experience of virus attacks and significant financial losses should have inevitably stimulated financial institutions to search for gaps in their own systems of cyber protection and engaging in constant updating. However, 2017 year has shown the unwillingness of Ukrainian banks to protect themselves from such interventions in their information systems. A general assessment of the events of 27-29 June 2017 shows that 70% of Ukrainian banks to some extent have been affected by the virus Petya. The consequences of such attacks were the following: stopping the work of terminals, payment systems, bank branches, as well as limited access to Internet banking and international transfers. Although banks continue to argue that attacks had a negative impact only on the infrastructure of the Windows system and the virus did not receive access to personalized customer databases, nobody can be sure that a more "sophisticated" program will not be able to do this.

The fact that banks did not withstand cyber attacks leads to the conclusion that the problem lies not only in the IT department of each individual bank. Underestimation of potential threats, lack of proper software and neglect of proper budgeting for the cyber security systems of banks - all this points to the lack of a systematic approach to cyber security.

NBU resolution No. 95 and its consequences

On 28 September 2017, the National Bank of Ukraine adopted resolution No. 95 "On Approval of the Provision on the Organization of Measures to Ensure Information Security in the Banking System of Ukraine" (the "Resolution"), which obliged banks to take measures during 2018 to strengthen their cyber security. This act contains two stages:

  1. 1. till 1 March 2018, banks have to carry out organizational changes, such as the mandatory creation of a collective body on the issues of implementation and functioning of information security management systems (the "ISMS") in order to ensure representation of the members of the bank's management and appointment of a responsible person for information security, as well as to update their basic information security systems and bring them into compliance with the International standards ISO/IEC 27001, ISO/IEC 27002 и PCI DSS, which are the basis of the Regulation.
  2. 2. till 1 September 2018, banks have to carry out additional measures to enhance information security – work with media carriers, the functioning of bank servers and the use of centralized monitoring tools.

The most significant changes were due for implementation by 1 March 2018. First of all, it is important for banks:

  1. to ensure proper distribution of the rights of access to information systems of the bank and the frequency of their control;
  2. to ensure the use of multi-factor authentication mechanisms;
  3. use of appropriate encryption standards;
  4. provision of centralized management of the bank's network;
  5. provision of appropriate levels of documentary processing of information security processes.

Thus, within a few weeks, banks should be prepared to submit their updated cyber security systems that are required to comply with more than a hundred requirements of the Regulation.

At the same time, the Resolution does not prescribe special sanctions for violations of established requirements. However, according to the Article 73 of the Law of Ukraine "On Banks and Banking Activities", it is possible to distinguish several types of sanctions for the violation of banking legislation that can be applied precisely where failure to meet the requirements on improvement of cyber defence systems are identified:

  1. written prevention;
  2. restriction, suspension or termination of certain types of activity performed by the bank, including transactions with related parties;
  3. imposition of fines;
  4. temporary removal of the bank official from position (until the violation is resolved).

Written prevention is likely to be the initial type of sanctions to be imposed by the NBU in case of detecting a non-compliance with the provisions of the Regulation and provides for a further additional period for the introduction of new cyber security systems. In the event of further systematic failure to meet its obligations, banks will risk restrictions on certain types of activity that are most vulnerable to the consequences of cyber attacks or the temporary dismissal of officials directly responsible for implementing the provisions of the Resolution on the activities of the bank. Moreover, the functioning of such banks will attract the attention of the NBU, because the bank's unwillingness to protect its information systems from possible cyber attacks poses a real threat to the personal data both of customers of the bank and the entire banking system.

Implementation IT outsourcing

Are banks ready to independently develop, finance and introduce all the necessary measures in such a short time? After all, such innovations require both significant financial expenses and the involvement of qualified IT specialists. Although the search and implementation of the software itself do not provide for significant challenges, it is much more difficult to find specialists who could conduct a competent assessment of the system's shortcomings and the associated risks for cybersecurity. Whereas the market of international integrating companies (for example, Windows) have a full range of necessary software and hardware, the market of national specialists in the field of cybersecurity remains quite narrow.

Hence, not every bank maintaining its own IT department will be able to withstand the next virus attack. Nevertheless, the strongest security factor for the bank remains preparatory work, as well as the continuous updating of systems and the analysis of deficiencies that require a comprehensive assessment by a subject matter expert.

Other negative factors which affect the capacity of banks to independently improve their own systems of cybersecurity include:

  1. "inadequacy" of expert opinions of IT departments on the introduction of modern methods of protecting information systems;
  2. significant financial expenses for the employment of subject matter experts;
  3. inappropriate implementation of international ISO standards;
  4. insufficient external independent assessment of the bank's security systems.

This is why IT outsourcing for banks becomes increasingly popular as the fastest way to bring information protecting methods in compliance with the Regulation. First of all, such services are offered by several IT companies which conduct general technical audits and assessment of the regulatory maintenance of the bank's protection systems. Such an assessment primarily includes a "penetration test", which is aimed at identifying the technical weaknesses of information systems and determining the list of required protection systems.

However, is this assessment sufficient to identify all potential risks? A preliminary comprehensive audit is indeed a determining factor for understanding the weaknesses of the information systems of the bank, but is only the first stage towards assessing all possible risks. Along with the information and technological aspect, it is also necessary to assess the risks of management and legal regulation that affect the general policy of the bank on information security assurance.

Unfortunately, an assessment of regulatory maintenance alone is not able to identify all the risks of improper work of personnel on information security assurance and, in general, the attitude of the bank's administration to preventing attacks on information systems.

Thus, the cybersecurity of the bank requires a comprehensive, well-planned, step-by-step project to improve its protection systems. This should include three main approaches to identify threats to the functioning of information systems of the bank:

  1. technological – first-priority audit, implementation of updated security methods and further optimization of the entire IT infrastructure of the bank - with the aim not only to eliminate shortcomings, but also to prevent them in future;
  2. personnel and administration development – at this stage it is necessary not only to confirm the proper regulatory support of the operation of information systems, but also to carry out further explanatory work with personnel. On the other hand, this step will engage the top management of the bank for better understanding of all the possible risks of the further cyberattacks and sanctions of the NBU for non-compliance with the provisions of the Resolution;
  3. legal groundwork that would allow for proper regulation of the confidential relationships between the bank and the IT company.

The development of such an integrated project would help to establish long-term relationships between banks and specialized IT companies which render services in the field of cybersecurity. Even though the implementation of measures bringing the information systems of banks into line with the provisions of the Resolution is quite possible by certain IT companies, it remains the case that further protection from possible cyberattacks will not be fully provided. After all, only continuous work on preventing viral threats can protect banks from possible material losses.

There is a need for banks to understand that the NBU's sanctions are the least significant threat to their operation and existence compared with a viral attack which can strike personal customer databases and lead to more extensive consequences for the functioning of the entire banking system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions