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Workplace Privacy, Data Management & Security Report

IRS Issues Fraud Alert to Financial Institutions Complying with FATCA

By Joseph J. Lazzarotti on September 25, 2014
Posted in Data Security, Identity Theft, Information Management, Information Risk, International, Uncategorized, Written Information Security Program

The Internal Revenue Service issued a fraud alert for international financial institutions complying with the Foreign Account Tax Compliance Act (FATCA). According to the report, scam artists posing as the IRS – through attacks known as “phishing attacks” – have fraudulently solicited financial institutions seeking account holder identity and financial account information. Financial institutions regularly face these threats, but all organizations can be subjected to them and need to have safeguards in place.

Of course, phishing attacks can come in many different forms. For example, emails that impersonate a bank ask customers to click a link that directs them to a phony website made to look like the bank’s site, but which is operated by the attackers and prompts the customers to disclose confidential information. There are some steps an organization can take to address this risk:

  • Know your systems and your IT department. Management needs to work closely with IT and other departments to identify all of the company’s sites and systems at risk. Management also needs to assess whether its IT department has the appropriate resources to address these risks – resources could include more experienced individuals and more sophisticated software and other tools.
  • Help your employees learn how to recognize a phishing attack and respond. Some employees may still think “phishing” is something you do with a worm and a hook. Companies would be wise to inform employees about these dangers and help them to recognize attacks at work and at home. This is particularly the case as more employees telecommute or otherwise work remotely. Employees also should be instructed on how to report an incident that could be an attack.
  • Have a response plan. When these kinds of attacks occur, they will require prompt action by persons ready and able to act. In developing a plan, consider the following questions. Who in the company will be altered of the attack? Is your list complete and include appropriate persons from management, IT, legal, risk management, compliance, customer/employee relations, and other relevant departments? Does the list have up to date emergency contact information? What external vendors need to be altered? Do you have a communications strategy to inform employees, customers, clients, government agencies? How should you communicate the plan internally, and how often? Have you tested the plan?

In the case of the IRS alert, it reminds these institutions that the IRS does not require financial institutions to provide specific account holder identity information or financial account information over the phone or by fax or email. Further, the IRS does not solicit FATCA registration passwords or similar confidential account access information. The alert also provides financial institutions and their representatives with information on how they should report incidents.

Tags: FATCA, Foreign Account Tax Compliance Act, Internal Revenue Service, IRS, phishing
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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.

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