Strengthening Online Child Safety: NCPCR Pushes for KYC Age Verification Mechanism

Introduction
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Generative AI, particularly deepfake technology, poses significant risks to security in the financial sector. Deepfake technology can convincingly mimic voices, create lip-sync videos, execute face swaps, and carry out other types of impersonation through tools like DALL-E, Midjourney, Respeecher, Murf, etc, which are now widely accessible and have been misused for fraud. For example, in 2024, cybercriminals in Hong Kong used deepfake technology to impersonate the Chief Financial Officer of a company, defrauding it of $25 million. Surveys, including Regula’s Deepfake Trends 2024 and Sumsub reports, highlight financial services as the most targeted sector for deepfake-induced fraud.

Deepfake Technology and Its Risks to Financial Systems

India’s financial ecosystem, including banks, NBFCs, and fintech companies, is leveraging technology to enhance access to credit for households and MSMEs. The country is a leader in global real-time payments and its digital economy comprises 10% of its GDP.  However, it faces unique cybersecurity challenges. According to the RBI’s 2023-24 Currency and Finance report, banks cite cybersecurity threats, legacy systems, and low customer digital literacy as major hurdles in digital adoption. Deepfake technology intensifies risks like:

• Social Engineering Attacks: Information security breaches through phishing, vishing, etc. become more convincing with deepfake imagery and audio.
• Bypassing Authentication Protocols: Deepfake audio or images may circumvent voice and image-based authentication systems, exposing sensitive data.
• Market Manipulation: Misleading deepfake content making false claims and endorsements can harm investor trust and damage stock market performance.
• Business Email Compromise Scams: Deepfake audio can mimic the voice of a real person with authority in the organization to falsely authorize payments.
• Evolving Deception Techniques: The usage of AI will allow cybercriminals to deploy malware that can adapt in real-time to carry out phishing attacks and inundate targets with increased speed and variations. Legacy security frameworks are not suited to countering automated attacks at such a scale.

Existing Frameworks and Gaps

In 2016, the RBI introduced cybersecurity guidelines for banks, neo-banking, lending, and non-banking financial institutions, focusing on resilience measures like Board-level policies, baseline security standards, data leak prevention, running penetration tests, and mandating Cybersecurity Operations Centres (C-SOCs). It also mandated incident reporting to the RBI for cyber events. Similarly, SEBI’s Cybersecurity and Cyber Resilience Framework (CSCRF) applies to regulated entities (REs) like stock brokers, mutual funds, KYC agencies, etc., requiring policies, risk management frameworks, and third-party assessments of cyber resilience measures. While both frameworks are comprehensive, they require updates addressing emerging threats from generative AI-driven cyber fraud.

Cyberpeace Recommendations 

• AI Cybersecurity to Counter AI Cybercrime: AI-generated attacks can be designed to overwhelm with their speed and scale. Cybercriminals increasingly exploit platforms like LinkedIn, Microsoft Teams, and Messenger, to target people.  More and more organizations of all sizes will have to use AI-based cybersecurity for detection and response since generative AI is becoming increasingly essential in combating hackers and breaches.
• Enhancing Multi-factor Authentication (MFA):  With improving image and voice-generation/manipulation technologies, enhanced authentication measures such as token-based authentication or other hardware-based measures, abnormal behaviour detection, multi-device push notifications, geolocation verifications, etc. can be used to improve prevention strategies.  New targeted technological solutions for content-driven authentication can also be implemented.
• Addressing Third-Party Vulnerabilities: Financial institutions often outsource operations to vendors that may not follow the same cybersecurity protocols, which can introduce vulnerabilities. Ensuring all parties follow standardized protocols can address these gaps.
• Protecting Senior Professionals: Senior-level and high-profile individuals at organizations are at a greater risk of being imitated or impersonated since they hold higher authority over decision-making and have greater access  to sensitive information. Protecting their identity metrics through technological interventions is of utmost importance.
• Advanced Employee Training:  To build organizational resilience, employees must be trained to understand how generative and emerging technologies work. A well-trained workforce can significantly lower the likelihood of successful human-focused human-focused cyberattacks like phishing and impersonation.
• Financial Support to Smaller Institutions: Smaller institutions may not have the resources to invest in robust long-term cybersecurity solutions and upgrades. They require financial and technological support from the government to meet requisite standards.

Conclusion

According to The India Cyber Threat Report 2025 by the Data Security Council of India (DSCI) and Seqrite, deepfake-enabled cyberattacks, especially in the finance and healthcare sectors, are set to increase in 2025. This has the potential to disrupt services, steal sensitive data, and exploit geopolitical tensions, presenting a significant risk to the critical infrastructure of India. 

As the threat landscape changes,  institutions will have to continue to embrace AI and Machine Learning (ML) for threat detection and response. The financial sector must prioritize robust cybersecurity strategies, participate in regulation-framing procedures, adopt AI-based solutions, and enhance workforce training, to safeguard against AI-enabled fraud. Collaborative efforts among policymakers, financial institutions, and technology providers will be essential to strengthen defenses.

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Sources 

• https://sumsub.com/newsroom/deepfake-cases-surge-in-countries-holding-2024-elections-sumsub-research-shows/ 
• https://www.globenewswire.com/news-release/2024/10/31/2972565/0/en/Deepfake-Fraud-Costs-the-Financial-Sector-an-Average-of-600-000-for-Each-Company-Regula-s-Survey-Shows.html 
• https://www.sipa.columbia.edu/sites/default/files/2023-05/For%20Publication_BOfA_PollardCartier.pdf 
• https://edition.cnn.com/2024/02/04/asia/deepfake-cfo-scam-hong-kong-intl-hnk/index.html 
• https://www.rbi.org.in/Commonman/English/scripts/Notification.aspx?Id=1721 
• https://elplaw.in/leadership/cybersecurity-and-cyber-resilience-framework-for-sebi-regulated-entities/ 
• https://economictimes.indiatimes.com/tech/artificial-intelligence/ai-driven-deepfake-enabled-cyberattacks-to-rise-in-2025-healthcarefinance-sectors-at-risk-report/articleshow/115976846.cms?from=mdr 

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Introduction

With the increasing reliance on digital technologies in the banking industry, cyber threats have become a significant concern. Cyberlaw plays a crucial role in safeguarding the banking sector from cybercrimes and ensuring the security and integrity of financial systems.

The banking industry has witnessed a rapid digital transformation, enabling convenient services and greater access to financial resources. However, this digitalisation also exposes the industry to cyber threats, necessitating the formulation and implementation of effective cyber law frameworks.

Recent Trends in the Banking Industry

Digital Transformation: The banking industry has embraced digital technologies, such as mobile banking, internet banking, and financial apps, to enhance customer experience and operational efficiency.

Open Banking: The concept of open banking has gained prominence, enabling data sharing between banks and third-party service providers, which introduces new cyber risks.

How Cyber Law Helps the Banking Sector

The banking sector and cyber crime share an unspoken synergy due to the mass digitisation of banking services. Thanks to QR codes, UPI and online banking payments, India is now home to 40% of global online banking transactions. Some critical aspects of the cyber law and banking sector are as follows:

Data Protection: Cyberlaw mandates banks to implement robust data protection measures, including encryption, access controls, and regular security audits, to safeguard customer data.

Incident Response and Reporting: Cyberlaw requires banks to establish incident response plans, promptly report cyber incidents to regulatory authorities, and cooperate in investigations.

Customer Protection: Cyberlaw enforces regulations related to online banking fraud, identity theft, and unauthorised transactions, ensuring that customers are protected from cybercrimes.

Legal Framework: Cyberlaw provides a legal foundation for digitalisation in the banking sector, assuring customers that regulations protect their digital transactions and data.

Cybersecurity Training and Awareness: Cyberlaw encourages banks to conduct regular training programs and create awareness among employees and customers about cyber threats, safe digital practices, and reporting procedures.

RBI Guidelines

The RBI, as India’s central banking institution, has issued comprehensive guidelines to enhance cyber resilience in the banking industry. These guidelines address various aspects, including:

Technology Risk Management

Cyber Security Framework

IT Governance

Cyber Crisis Management Plan

Incident Reporting and Response

Recent Trends in Banking Sector Frauds and the Role of Cyber Law

Phishing Attacks: Cyberlaw helps banks combat phishing attacks by imposing penalties on perpetrators and mandating preventive measures like two-factor authentication.

Insider Threats: Cyberlaw regulations emphasise the need for stringent access controls, employee background checks, and legal consequences for insiders involved in fraudulent activities.

Ransomware Attacks: Cyberlaw frameworks assist banks in dealing with ransomware attacks by enabling legal actions against hackers and promoting preventive measures, such as regular software updates and data backups.

Master Directions on Cyber Resilience and Digital Payment Security Controls for Payment System Operators (PSOs)

Draft of Master Directions on Cyber Resilience and Digital Payment Security Controls for Payment System Operators (PSOs) issued by the Reserve Bank of India (RBI). The directions provide guidelines and requirements for PSOs to improve the safety and security of their payment systems, with a focus on cyber resilience. These guidelines for PSOs include mobile payment service providers like Paytm or digital wallet payment platforms.

Here are the highlights-

The Directions aim to improve the safety and security of payment systems operated by PSOs by providing a framework for overall information security preparedness, with an emphasis on cyber resilience.

The Directions apply to all authorised non-bank PSOs.

PSOs must ensure adherence to these Directions by unregulated entities in their digital payments ecosystem, such as payment gateways, third-party service providers, vendors, and merchants.

The PSO’s Board of Directors is responsible for ensuring adequate oversight over information security risks, including cyber risk and cyber resilience. A sub-committee of the Board may be delegated with primary oversight responsibilities.

PSOs must formulate a Board-approved Information Security (IS) policy that covers roles and responsibilities, measures to identify and manage cyber security risks, training and awareness programs, and more.

PSOs should have a distinct Board-approved Cyber Crisis Management Plan (CCMP) to detect, contain, respond, and recover from cyber threats and attacks.

A senior-level executive, such as a Chief Information Security Officer (CISO), should be responsible for implementing the IS policy and the cyber resilience framework and assessing the overall information security posture of the PSO.

PSOs need to define Key Risk Indicators (KRIs) and Key Performance Indicators (KPIs) to identify potential risk events and assess the effectiveness of security controls. The sub-committee of the Board is responsible for monitoring these indicators.

PSOs should conduct a cyber risk assessment when launching new products, services, technologies, or significant changes to existing infrastructure or processes.

PSOs, including inventory management, identity and access management, network security, application security life cycle, security testing, vendor risk management, data security, patch and change management life cycle, incident response, business continuity planning, API security, employee awareness and training, and other security measures should implement various baseline information security measures and controls.

PSOs should ensure that payment transactions involving debit to accounts conducted electronically are permitted only through multi-factor authentication, except where explicitly permitted/relaxed.

Conclusion

The relationship between cyber law and the banking industry is crucial in ensuring a secure and trusted digital environment. Recent trends indicate that cyber threats are evolving and becoming more sophisticated. Compliance with cyber law provisions and adherence to guidelines such as those provided by the RBI is essential for banks to protect themselves and their customers from cybercrimes. By embracing robust cyber law frameworks, the banking industry can foster a resilient ecosystem that enables innovation while safeguarding the interests of all stakeholders or users.

Smart Wearable devices are designed to track several activities in defined parameters and are increasingly becoming a part of everyday life. According to Markets and Markets Report, the global wearable tech market is projected to reach a staggering USD 256.4 billion by 2026. One of the main areas of use of wearable devices is health, including biomedical research, health care, personal health practices and tracking, technology development, and engineering. These wearable devices often include digital health technologies such as consumer smartwatches that monitor an individual's heart rate and step count, and other body-worn sensors like those that continuously monitor blood glucose concentration. 

Wearable devices used by the general population are getting increasingly popular. Health devices like fitness trackers and smartwatches enable continuous monitoring of personal health. Privacy is an emerging concern due to the real-time collection of sensitive data. Vulnerabilities due to unauthorised access or discrimination in case of information being revealed without consent are the primary concerns with these devices. While these concerns are present a lot of related misinformation is emerging due to the same. 

While wearable devices typically come with terms of use that outline how data is collected and used, and there are regulations in place such as EU Law GDPR, such regulations largely govern the regulatory compliances on the handling of personal data, however, the implementation and compliances by the manufacturer is a one another aspect which might present the question on privacy protection. In addition, beyond the challenge of regulatory compliance, the rise of myths and misinformation surrounding wearable tech presents a separate issue. 

Common Misconceptions About Privacy with Wearable Tech

• With the rapid development and growth of wearable technology their use has been subject to countless rumours which fuel misinformation narratives in the minds of general public. Addressing these misconceptions and privacy concerns requires targeted strategies.
• A prevalent misconception is that they are constantly spying on users. While wearable devices collect users’ data in real time, their vulnerability to unauthorised access is similar to that of a non-wearable device.  The issue is of consent when it comes to wearable technology because it gives the ability to record.  If permissions are not asked when a person is being recorded then the data is accessible to external entities.
• There is a common myth that wearable tech is surveillance tool. This is entirely a conjecture. These devices collect the user data with their prior consent and have been created to provide them with real-time information, most commonly physical health information. Since users choose the information shared, the idea of wearable tech serving as a surveillance tool is unfounded.
• Another misconception about wearable tech is that it can diagnose medical conditions. These devices collect real-time health data, such as heart rate or activity levels, they are not designed for medical diagnosis. The data collected may not always be accurate or reliable for clinical use to be interpreted by a healthcare professional. This is mainly because the makers of these devices are not held to the safety and liability standards that medical providers are.
• A prevalent misconception is that wearable tech can cure health issues, which is simply untrue. Wearable tech devices are essentially tracking the health parameters that a user sets. It in no way is a cure for any health issue that one suffers from. A user can manage their health based on the parameters they set on the device such as the number of steps that they walk, check on the heart rate and other metrics for their mental satisfaction but they are not a cure to treat diseases. Wearable tech acts as alerts, notifying users of important health metrics and encouraging proactive health management.

Addressing Privacy and Health Concerns in Wearable Tech

Wearable technology raises concerns for privacy and health due to the colossal amount of personal data collected. To address these, strong data protection measures are essential, ensuring that sensitive health information is securely stored and shared only with consent. Providing users with control over their data is one of the ways to build user trust. It includes enabling them to opt in, access, or delete the data in question. Regulators should establish clear guidelines, ensuring wearables ensure the compliances with data protection regulations like HIPPA, GDPR or DPDP Act, whichever is applicable as per the jurisdiction. Furthermore, global standards for data encryption, device security, and user privacy should be implemented to mitigate risks. Transparency in data usage and consistent updates to software security are also crucial for protecting users' privacy and health while promoting the responsible use of wearable tech.

CyberPeace Insights

• Making informed decisions about wearable tech starts with thorough research. Start by reading reviews and comparing products to assess their features, compatibility, and security standards. 
• Investigate the manufacturer’s reputation for data protection and device longevity. Understanding device capabilities is crucial. One should evaluate whether the wearable meets their needs, such as fitness tracking, health monitoring, or communication features. Consider software security and updates, and data accuracy when comparing options.  Opt for devices that offer two-factor authentication for an additional layer of security.
• Check the permissions requested by the accompanying app; only grant access to data that is necessary for the device's functionality. Always read the terms of use to understand your rights and responsibilities regarding the use of the device. Review and customize data-sharing settings for better control to prevent unauthorised access.
• Staying updated on the tech is equally important. A user should follow the advancements in wearable technology be it regular security updates, or regulatory changes that may affect privacy and usability. This ensures getting tech that aligns with user lifestyle while meeting privacy and security expectations.

Conclusion

Privacy and Misinformation are key concerns that emerge due to the use of wearable tech designed to offer benefits such as health monitoring, fitness tracking, and personal convenience. It requires a combination of informed decision-making by users and stringent regulatory oversight to overcome the issues that emerge due to misinformation about these devices. Users must ensure they understand the capabilities and limitations of their devices, from data accuracy to privacy risks. Additionally, manufacturers and regulators need to prioritise transparency, data protection, and compliance with global standards like GDPR or DPDP to build trust. As wearable tech continues to evolve, a balanced approach to innovation and privacy will be essential in fostering its responsible and beneficial use for all.

References

1. https://thehealthcaretechnologyreport.com/privacy-data-security-concerns-rise-as-healthcare-wearables-gain-popularity/ 
2. https://journals.plos.org/digitalhealth/article?id=10.1371/journal.pdig.0000104
3. https://www.marketsandmarkets.com/Market-Reports/wearable-electronics-market-983.html?gclid=Cj0KCQjwgMqSBhDCARIsAIIVN1V0sqrk6SpYSga3rcDtWcwh8npZ08L0_s4X91gh7yPAa6QmsctB-lMaAlpqEALw_wcB 
4. https://www.cambridge.org/core/journals/legal-information-management/article/health-data-on-the-go-navigating-privacy-concerns-with-wearable-technologies/05DAF11EFA807051362BB39260C4814C

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