Third, in a payments industry that is experiencing a period of rapid change in technology, Cloud technologies are growing in importance. The Bank is taking steps to facilitate its adoption, including issuing a supervisory statement later this year. The use of a Cloud model is an evolution of, and a key element in, the supply chain for many financial institutions – including those who access CHAPS. We believe the use of Cloud technologies has the potential, if used appropriately, to minimise end-to-end risk and improve operational resiliency of the CHAPS system, taken as a whole. As the operator of CHAPS we want to enable our current and potential Direct Participant to realise these benefits in a safe and controlled way, without compromising the resilience of the CHAPS ecosystem. We are assessing the risks that the use of Cloud technology  8 9  https://www.nist.gov/cyberframework https://www.fca.org.uk/publication/research/technology-cyber-resilience-questionnaire-cross-sector-report.pdf 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  presents to the CHAPS system, and the nature of mitigating controls that we require. In due course, we expect to propose new controls for Cloud usage as it relates to CHAPS. Policy Development  Development and implementation of requirements must be supported by strong and innovative policy thinking. The Bank works collaboratively on policy with other FMIs and central banks internationally. Some work-streams focus on resilience, others support greater innovation: and increasingly we look to combine the two.
In time, we will consider the case for reducing the 2% threshold to further enhance financial stability. Payments fraud and economic crime are becoming increasingly sophisticated, and the Bank as operator of CHAPS is engaging in initiatives to tackle these threats. The Committee on Payments and Market Infrastructures (CPMI) has developed guidance on reducing the risk of wholesale payments fraud related to endpoint security.10 The Bank is currently undertaking a number of initiatives to strengthen our position and support our CHAPS Direct Participants in line with CPMI strategy, which includes adjusting our CHAPS rulebook to focus on detection, prevention and response to security issues as I described earlier. 10  https://www.bis.org/cpmi/publ/d178.htm 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  At the level where fraud is most likely to touch on end-users, Vocalink piloted an anti-money laundering tool known as Mule Insights Tactical Solution (MITS)11 for a number of Faster Payments participants. MITS can retrospectively track fraudulent payments as they move between customer accounts, thereby helping to quickly identify and highlight to Payment Service Providers any suspected ‘mule accounts’. They can then take action to block funds and close these accounts, making it more difficult for fraudsters to undertake scams. We are currently in the exploratory phase of a pilot to use MITS on a subset of CHAPS data. The additional insights generated should help participating Direct Participants to better tackle further fraud activity.