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Financial Services Law Insights and Observations

G7 urges financial services sector to mitigate ransomware attacks

Federal Issues Ransomware Privacy/Cyber Risk & Data Security Of Interest to Non-US Persons FATF

Federal Issues

On October 13, the member nations of the G7 issued a joint statement stressing their commitment to working with the financial services sector to address and mitigate ransomware attacks. The statement highlights the recent increase in ransomware attacks over the last few years and notes that the scale, sophistication, and frequency has intensified as attackers “demand payments primarily in virtual assets to facilitate money laundering.” These ransom payments, the G7 warns, “can incentivize further malicious cyber activity; benefit malign actors and fund illicit activities; and present a risk of money laundering, terrorist financing, and proliferation financing, and other illicit financial activity.” The G7 reminds financial institutions that paying ransom is subject to anti-money laundering/combating the financing of terrorism (AML/CFT) laws and regulations, and warns non-financial services companies that providing certain services, such as money transfers, may subject them to the same obligations. The G7 further urges entities to follow international obligations for reporting ransom payments as suspicious activity and to take measures to prevent sanctions evasions. Moreover, the G7 recommends that entities implement standards set by the Financial Action Task Force to reduce criminals’ access to and use of financial services and digital assets, and emphasizes the importance of implementing effective programs to “hold and exchange information about the originators and beneficiaries of virtual asset transfers.” The G7 plans to share information related to ransomware threats, explore opportunities for coordinated targeted financial sanctions, and encourage a global implementation of AML/CFT obligations on virtual assets and virtual asset service providers.

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