Blog

Blocking Robocalls, Stepping Up Suicide Prevention for Vets, and Appropriating Funds for a New Space Force

Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (S 151) – Approximately 58.5 billion robocalls were made in the United States last year, a 22 percent increase over 2018. That works out to an average of 178.3 robocalls per person, per year. Perhaps it’s no wonder then that this law was passed by an overwhelming bipartisan majority in Congress. The legislation requires that phone companies ensure all calls come from real numbers, do not charge extra to block robocalls, and authorize government regulators to punish scammers with fines of up to $10,000 per call. This legislation was sponsored by Sen. John Thune (R-SD) and Frank Pallone Jr (D-NJ); it was signed into law by the president on Dec. 30, 2019.

Building Blocks of STEM Act (S 737) – This bill modifies National Science Foundation (NSF) grant programs that support STEM education (science, technology, engineering and mathematics) to promote the role of teachers and caregivers in encouraging participation by female students in STEM activities. Specifically, the bill authorizes the development of gender-inclusive computer science enrichment programs in pre-kindergarten through elementary school. The legislation was sponsored by Sen. Jacky Rosen (D-NV). It was introduced on March 11, 2019, and signed into law by the president on Dec. 24.

Support for Suicide Prevention Coordinators Act (HR 2333) – This legislation requires the Government Accountability Office to report on the responsibilities, workload, training and vacancy rates of suicide prevention coordinators. The bill responds to reports that coordinators are overworked and unable to keep up with their many responsibilities, particularly in light of the recent increase in veteran suicides. The Act was introduced on April 18, 2019, by Rep. Anthony Brindisi (D-NY); it passed the House in May, the Senate in December and was signed into law on Dec. 20, 2019.

Further Consolidated Appropriations Act, 2020 (HR 1865) – This annual appropriations bill sets government spending limits for the current fiscal year (Oct. 1, 2019, through Sept. 30, 2020). Among a myriad of provisions, the bill extends funding for various health-related programs; deters pharmaceutical companies from blocking lower-cost generic alternatives from entering the marketplace; and repeals the Cadillac tax on expensive employer plans, the medical device excise tax, and the health insurance fee that was initially imposed by the Affordable Care Act. The final version of the bill was passed by the House and Senate in mid-December and signed by the president on Dec. 20, 2019.

National Defense Authorization Act for Fiscal Year 2020 (S 1790) – This $738 billion defense bill authorizes fiscal year 2020 appropriations and policies for the Department of Defense. Provisions include authorization for a sixth, stand-alone branch of the U.S. military service (Space Force); guaranteed 12 weeks of paid parental leave for federal workers; a 3.1 percent pay raise for active-duty personnel; allows for Liberian nationals living in the United States under Deferred Enforced Departure to apply for permanent residency; funding for improvements to military housing and health care; funding to purchase 60 F-35s for the Air Force; and a dictate that prohibits Turkey from participating in the F-35 program as long as it maintains a Russian-made missile system. Note that passage of this bill does not provide budget appropriations, which is authorized in subsequent legislation. This bill was passed in both the House and Senate on Dec. 17, 2019, and signed into law on Dec. 20, 2019.

FUTURE Act (HR 5363) – This bill permanently authorizes funding for historically Black colleges and universities and other minority-serving institutions, and increases appropriations for Pell Grants. The legislation was introduced by Rep. Alma Adams (D-NC) on Dec. 9, 2019, passed in both the House and Senate on Dec. 10, 2019, and signed into law on Dec. 19, 2019.

How Businesses Benefit from Big Data Analytics

Previously we looked at the key technology trends in accounting to watch out for in 2020. Among the trends are big data and data analytics, which can have a great impact on businesses.

Business data has existed for a long time, whether in filing cabinets, ledgers or storage devices. But today businesses both large and small have to deal with huge collections of data every day. This has seen the rise of data analytics trends that include deep learning, machine learning and dark data.

Unfortunately, small and medium businesses (SMB) have to struggle with making a decision on implementing data analytics. This is largely because many SMB owners assume that data analytics is strictly for large organizations – especially because of the expectation that it’s expensive and complicated.

Luckily, reduced tech costs have made it possible for small and medium businesses to afford technologies that were previously only cost-effective for big organizations.

Is the Cost and Effort Worth It?

Before the advent of big data analytics, customer data was collected using surveys or customer feedback forms. Analyzing such data is tedious, and it’s possible to miss out on important trends.

Also, imagine running marketing campaigns and having no way to track how effective the campaign was. If you do this in your business, you have no way to know who saw the ad or even the response.

Enter big data and analytics and the whole marketing landscape changes. With big data, a business has clear insights about customer behavior. This is possible because we now can track visitors to a website, the time a visitor spends on a given page, action taken such as making an order, the location the purchase came from and so many other details that help a business refine its marketing strategy.

Is it costly? You’d be surprised to know that you don’t need to purchase expensive software. You’ll find, for instance, that you can take advantage of data collected by the QuickBooks accounting software. And depending on your business needs, the software can be connected with low-cost platforms that enable more detailed analytics.

You also can get free platforms such as Google Analytics to analyze website traffic and gain insight into consumer behavior. Whatever your company size, you can take advantage of big data insights to better understand your customers.

Here are some reasons why it’s worth it:

Analytics help to launch effective marketing campaigns that result in better ROI.
Analytics help to track the customers in their sales cycle.
It’s possible to track the outcome of business decisions, such as promotional strategies.
You get to know which suppliers or other business partners to work with.
Provides insights on customers who are likely to pay on time based on historical payment data.
Improves customer service. This is possible when customer conversations from different channels are analyzed.
It helps to improve the product or service offered by a business.
Identifies trends and patterns. For instance, you can track frequently asked questions and then create a page to handle the common questions.
Helps create a strong bond with customers. By understanding customer interests, a business will then engage with their customers by creating personalized offers and campaigns.
On the tech side, big data is being used to detect and prevent fraud.
Analytics identify problematic areas of a business, and this makes it easier to come up with a response quickly before the problem escalates.

Become Smarter

When used correctly, data analytics can help a business gain a competitive advantage over other businesses. At the same time, it will also boost your business conversions and revenue. But collecting just any piece of data can be overwhelming and even a waste of time. The secret is in collecting data that will help you reduce business costs and increase your revenue.

Why eSignatures Are Better Than Handwritten Signatures

Signatures play an important role in authenticating a document or binding an individual by the provisions contained in a document. And sometimes, a handwritten signature can slow down the process. This is because it’s dependent on the availability of the parties that are involved. It also includes the exchange of paper. You can imagine if you are doing business with an overseas company and have to wait for the documents to be delivered before you can continue with the transaction.

Many business processes have now been automated – and the signing of documents is one of these processes that has been streamlined.

Here are some reasons that make e-signatures better than handwritten ones:

More secure: With handwritten signatures, you are never 100 percent sure that the signature has not been forged. To the contrary, with an e-signature you can always track it to see if the document was tampered with.
Reduces costs: E-signatures eliminate the cost of printing documents and the postage incurred with handwritten signed documents.
Speeds up processes: E-signatures speed up business processes, considering that today almost all documents can be delivered online in an instant.
You can do it for free: Some online programs provide signing digital documents for free. To prevent forgery, online signatures are protected through verification methods and security audits.
Integrates with modern business: Technology has helped businesses evolve to be automated, saving time and speeding up processes.
Easy to use: Users can sign documents online by tracing their handwritten signature using a stylus or with the click of a mouse button.
Easy to track documents: Unlike tracking a physical document, it’s easy to track documents signed online using most of the available e-signature software. This eliminates lost paperwork problems.

Clearly, electronic signatures now play a big role in businesses today due to their convenience. And with the growing trend for businesses to go paperless, anyone who wants to enhance the efficiency of their business has no choice but to use e-signatures.

6 Ways to Keep Safe When Using Mobile Banking

For the most part, smartphones are your lifeline to the world. You connect with friends and family, shop and update your status on social media. However, you also store all your personal information on them and, these days, use them to do your banking. That’s why you need to take precautions. Here are a few critical things to do to make sure your information isn’t compromised.

Protect Your Smartphone

Your desktop and laptop are secure with anti-virus software and firewalls; the same should go for your phone. Here are five basic things you need to do ASAP: 1) Use a 4-digit PIN to lock your screen. If your phone is stolen, it’s harder for a thief to unlock it. Also, check to see if your phone has a feature that allows you to locate and remotely lock or erase data, should you lose it. This is called a “kill switch.” 2) Back up your data. Kind of basic, but it’s always important to be reminded. 3) Use location-based software to find your lost phone. 4) Install an antivirus app and software to erase the contents of a lost phone. And finally, 5) Update your apps to the latest versions and when downloading them, only choose those from publishers you trust.

Create a Strong Password

This is a no-brainer, but it’s imperative. Don’t use any part of your name or numbers from your birthday, or anything remotely personal. Make your password as complex and obscure as you can. Thieves can be smart. Don’t give them any chance to wreak havoc in your life.

Don’t Use Public Wi-Fi to Access Your Bank

Public Wi-Fi doesn’t have heightened levels of security, so make sure you use your phone’s data network or a secured Wi-Fi network when accessing sensitive information. If you don’t do this, you become vulnerable to hackers. You can never be too careful.

Don’t Save Usernames and Passwords in Your Browser

Sometimes, browsers give you the option to save your username and password. As convenient as this is, don’t do this. It could be easy for someone to gain direct access to your bank account if your phone is lost or stolen.

Don’t Follow Links

If you get an email or text from your bank, don’t click. It could be a phishing scam and could lead you to a “spoofed” website, which is a fake site created to look just like your bank’s official site. Always go to your bank’s site directly. Enter your bank’s web address into your phone and bookmark it. This way, you’ll avoid bogus sites and keep your money safe.

Log Out After Use

Even if you haven’t saved your credentials, it’s always important to do this when you’re finished banking. While this is convenient for the next time you do your banking, it’s leaving thieves an easy way in to steal all your assets should you leave your phone unattended, or worse, if it’s lost or stolen.

In a world that’s getting more and more digitized every day, shoring up your personal banking information just makes good sense. No one wants to put all that they’ve worked so hard for in jeopardy.

Sources

https://www.discover.com/online-banking/banking-topics/how-to-stay-safe-with-mobile-banking/

https://money.howstuffworks.com/personal-finance/online-banking/5-mobile-banking-security-tips.htm

https://en.wikipedia.org/wiki/Phishing

https://www.indiatoday.in/technology/tech-tips/story/tech-tips-wifi-can-be-used-to-hack-your-phone-here-s-how-to-prevent-it-1397211-2018-11-27

https://us.norton.com/internetsecurity-wifi-why-hackers-love-public-wifi.html

Safety vs. Probability: Planning For Retirement

As we progress through life, we find there are certain things we can control and others we cannot. However, even with the things we can’t control, we can exercise good judgment based on facts, due diligence, historical patterns and a risk/reward calculation.

These strategies play an important role in retirement planning. When it comes to accumulation, spending and protecting your nest egg, financial analysts rely heavily on safety and probability planning strategies.

For example, a probability-based approach generally refers to investing. In other words, prices of stocks and bonds will vary over time, and as investors, we do not have control over the factors that cause those price swings – such as poor company management, a dip in sector growth, an economic decline, political instability and even global economic implications. We basically have to do our due diligence to ensure the securities we invest in are stable and well-managed, but in the end it’s a bit of a leap of faith. The markets will inevitably rise and fall and our equity investments will be impacted.

When it comes to retirement, financial advisors often recommend the following probability-based investments because they tend to be more stable and reliable:

Investment-grade bonds
High dividend-paying stocks
Real estate investment trusts (REITS)
Master limited partnerships (MLPs)

On the other hand, the safety side of the equation involves insurance products. Note that all guaranteed payouts are backed by the issuing insurer, not the Federal Deposit Insurance Corporation (FDIC) or the U.S. Treasury Department. So even though insurance products represent strategies that we consider “safe,” they are only as secure as the financial strength of the issuing insurance company.

Insurance contracts are based on insurance pools. This means they spread the risk of losing money across a wide pool of insured participants, betting that a portion of that pool will die early while others live longer. However, that risk is managed by the insurer instead of the contract owner, who is guaranteed to get paid no matter what happens in the investment markets or how many people in the insurance pool live a long time.

Among safety-based vehicles, you might want to consider a long-term care insurance policy to cover expenses should you need part- or full-time caregiving in the later stages of your life. Like homeowner’s insurance, this type of contract leverages manageable premiums to pay for expenses that you might otherwise not be able to afford.

Another safety contract is an income annuity, which offers the option to pay out a steady stream of income for the rest of your life and the life of your spouse – even if the payouts far exceed the premiums you paid. This is a way of ensuring you continue to receive income even if you run out of money.

A retirement plan doesn’t have to rely on safety or probability alone – you can combine these strategies. Many retirees feel more comfortable knowing they have a growth component in their portfolio to help offset the impact of long-term inflation. And within the safety allocation, you can even combine strategies. For example, a hybrid life insurance policy that offers a long-term care benefits rider allows you to draw from the contract if you need to pay for your own long-term care, which simply reduces the death benefit for your heirs. This way you don’t have to pay for coverage you don’t need, but it’s there if you do.

How Will 20-Year Treasury Bonds Impact the Economy?

According to a Jan. 16 press release from the U.S. Department of the Treasury, within the first six months of 2020, the federal department will begin issuing a 20-year Treasury bond. This is the U.S. government’s attempt to maintain and support the federal government’s ability to borrow into the future. This action will also have an impact on the markets going forward, especially when it comes to the Federal Reserve and its monetary policy.

The Federal Reserve’s many purposes include promoting stability and growth in the economy by keeping prices stable and healthy employment levels. The ways The Fed does this is by influencing short-term interest rates, being active in Open Market Operations (OMO) and impacting reserve requirements.

The Federal Reserve Bank of St. Louis details that along with providing banks with loans from the federal funds market to support adequate reserves and liquidity, it’s important to understand how Open Market Operations function.

Much like individuals and institutions can buy or sell securities, The Fed can buy or sell securities, including U.S. Treasury bonds. The buying and selling are the operations portion. The open market refers to the fact that The Fed doesn’t transact directly with the U.S. Treasury, but works on the open market via auctions through the Trading Desk of the New York Fed.

Assuming there’s a modification to the federal funds rate’s target range by the Federal Open Market Committee (FOMC), the directive starts the reaction to either purchase or sell government securities to meet the new target. The OMO is one way the Fed adjusts its two-pronged mandate of promoting employment and maintaining target inflation.

If the Fed wants to stimulate the economy, it can do so through Treasury bond purchases. This occurs when the Fed makes a deposit into the seller’s bank account via the Trading Desk. This purchase increases the reserve balance of the bank offering the Treasury bond for sale, which increases the bank’s ability and willingness to lend.

In the opposite scenario, the Fed can reduce the amount of money available that banks can use for lending. This time the Fed sells government securities, prompting banks to remove money from their bank accounts, reducing the amount available for lending. As pressure on the federal funds rate increases, rates will go up, making loans cost more for borrowers and incentivizing savings.

During the financial crisis, the FOMC engaged in quantitative easing (QE) after it brought the federal funds rate to near zero. This approach consisted of buying longer-term U.S. Treasury securities and mortgage-backed securities (MBS) through open market operations. As the St. Louis Fed explains, in exchange for the Fed buying these securities, banks receive a credit that increases their reserve balances above reserve requirements. While this was far more prevalent during the financial crisis, the 20-year U.S. Treasury bonds will undoubtedly make QE easier to re-engage in.

While the government may benefit from the direct investment and its ability for the Fed to guide the economy, there are a few potential risks for those who invest in U.S. Treasury bonds. Compared to many other investments, Treasury bonds have lower yields, which are even lower when inflation runs high. Another risk is that when rates rise, the value of the Treasury bond goes down, creating less attractive debt if the owner wants to sell it.

The Jan. 16 press release noted that more details on the 20-year bond will be available in the U.S. Treasury’s quarterly refunding statement on Feb. 5. Only time will tell the level of interest among investors and how effective this instrument will be in creating further cash flow for the U.S. Treasury.

Understanding Four Types of Depreciation

Depreciation is an accounting process where the cost of an asset is accounted for and expensed over its useful life. It shows how the value of the asset decreases over time. Assets that can be depreciated include buildings, fixtures, production equipment, etc. For intangible assets, including many types of intellectual property, this process is called amortization. For commodities mined or harvested from the earth, such as lumber, crude oil or natural gas, this process is called depletion. Here are four common types of depreciation.

Straight Line Method

In order to determine depreciation using this method, the following formula is used:

Depreciation = (Asset cost – Salvage value) / Useful life

The salvage value is the asset’s remaining value after its useful life, and the remaining amount from the asset’s cost is depreciable. The depreciable amount is divided by the asset’s useful life that’s used for depreciation expensing.

Double Declining Balance Depreciation

In order to calculate this method of depreciation, the first step is to look at the asset cost. From there, its useful life must be established. Let’s assume an asset’s book value is $75,000, it has a useful life of 10 years and a salvage value of $8,050.

Depreciation = (100 percent / asset’s useful life) X 2

= (100 percent / 10) X 2 = 20 percent

Year 1 depreciation expense = $75,000 X 20 percent = $15,000

Year 2 depreciation expense = $60,000 ($75,000 – $15,000 from Year 1) X 20 percent = $12,000

When beginning the first year, the book value is used as a basis for the asset’s value. The ending book value, which is determined after subtracting depreciation, is the following year’s new book value that will be used to establish next year’s depreciation expense. After it’s repeated through its useful life, the salvage value is left.

Units of Production Depreciation Method

This type of depreciation method depreciates a business’ asset by the units it produces or how many hours the asset is to be run for production over its useful life.

Depreciation = (Number of items manufactured / useful life in measured units) X (asset cost – salvage value)

Let’s assume a supplement pill machine costs $50,000; it can produce 200 million vitamins over its lifetime; and it will have a salvage value of $2,500. This assumes it will produce 20 million vitamins in the first 12 months of operation.

(20 million / 200 million) = 10 percent X ($50,000 – $2,500) = $47,500

If the machine produces 10 percent of vitamins over its expected 200 million vitamin unit life, the resulting depreciation amount is $4,750. At the end of the first year the book value will be $45,250. Production amounts in future years will dictate how much may be depreciated.

Sum of the Years Digits Approach

Similar to other methods of depreciation, the Sum of the Years Digits (SYD) depreciation method is another type of depreciation that assigns the bulk of depreciation in the beginning years of an asset’s useful life. Looking at the formula is the best way to understand how it works.

Expensing Depreciation = (Asset’s remaining life / Sum of the years digits) X (Asset’s cost – salvage value)

If a machine that’s going to be used by a company to produce widgets costs $50,000, has a useful life of 16 years and a salvage value of $3,000, it would look as follows:

1. $50,000 – $3,000 = $47,000 Depreciation Base

2. With 16 years of useful life for the asset, the sum of the years would be: 1 + 2 + 3 + 4 + 5 +6 + 7 + 8 + 9 + 10 + 11 + 12 + 13 + 14 + 15 + 16 = 136. Using the machine referenced above during the first year would equal a Remaining Life of 16. Then, the Remaining Life of 16 years would be divided by the SYD of 136.

3. Using this example, for the first year of using the machine, the formula would be as follows:

16 years (remaining life) / 136 (SYD) = 0.11764. Then, 0.11764 X $47,000 (Depreciation Base) = $5,529.08

The next (or second) year’s depreciation expense would by 15 / 136 = 0.110294. Then, 0.110294 X $47,000 = $5,183.82

Each subsequent year the SYD would be divided by the remaining years until it’s exhausted and the salvage value should be met.

Depending on the type of business, the type of asset and the accounting approach, there are different ways to expense for property acquired during the course of business.

When Should You Switch Your Side Hustle to a Business Entity Structure?

Starting a side hustle today is easier than ever. Between the numerous websites that act as marketplaces and project jobs that can be found on the internet, almost anyone can turn a skill or hobby they have into something they can make money off. Many people who do this are just looking to make a little extra money on the side, but this side hustle can turn into something bigger – and this is where the tax and legal questions come in.

Sole Proprietorship

For someone just starting or looking to make a little extra on the side, there’s nothing special you need to do when it comes to filing your federal taxes. Just complete an extra form that is called Schedule C of your personal tax return. This is referred to as doing business as a sole proprietorship.

But that is where the simplicity stops. While organizing your business, the default way as a sole proprietor takes the least effort and expense; however, there are risks associated with this path, particularly legal liability risks.

Legal Risks

The biggest problem is that the sole proprietorships form leaves personal as well as business assets exposed to the risk of being sued. Lawyers will often recommend that the moment a business has paying clients, it should be converted to an LLC or corporation to provide legal protection by separating the business and personal assets.

While this legal advice is technically true, it doesn’t consider the cost-benefit of the situation. The problem is that the costs of forming and running an LLC or corporation can easily exceed the money earned from a side hustle. Combine this with the probability of getting sued at all (in each personal situation) and for most side hustles, it’s simply not worth it to form an LLC or corporation. The key question then is when is it worth it to switch from a sole proprietorship to an LLC or a corporation?

When Side Hustle Grows Up

What about the taxation issue? Generally, tax savings aren’t a good reason to convert a sole proprietorship to an LLC or corporation. Particularly, making the move from a sole proprietorship to a single-member LLC will not help for tax purposes and in fact may only increase your chances of an audit. Moreover, operating as an LLC will cost more both for the initial filing as well as ongoing annual expenses. Legal liability remains the main reason to convert the entity structure.

Hidden Tax Issues

All three pass-through entity types (sole proprietor, LLC and S-Corporations) calculate your income in the exact same way under current laws. There is however a hidden tax to consider: the self-employment tax. Self-employment taxes are paid on all sole proprietor earnings, but only on the salary portion of LLC or S-Corp earnings. Any profits over and above your salary are considered dividend payments and are not subject to self-employment taxes.

Unfortunately, the income level needed to change entity structures depends on each individual situation, but you’ll need the savings to at least cover the initial and long-term compliance costs of filings, fees and tax preparation costs. Let’s look at two examples to see how this works.

Imagine a business is earning $100,000 in net profit and from this, you pay yourself $40,000 as salary and take the remaining $50,000 as dividends. At the current 15.3 percent self-employment tax rate, this translates into a savings of $7,650. Now imagine a side hustle that only earns $25,000 from which you take $15,000 as salary and the remaining $10,000 as dividends. This only translates into $1,530 in tax savings.

In the first case above, you’ve not only generated enough tax savings to more than cover your tax preparation and filing costs, but you’ll end up with more money in your pocket and have stronger legal protection. In the second case, you’ll barely save enough to cover your costs – and you’ll create more work for yourself.

Conclusion

Your side hustle might be small right now, but tomorrow it could grow into the next big thing, so make sure your organizational structure makes sense now.

Fighting Foreign Terrorism on Homeland Soil, Increased Protections for Clean Water and Low-Income Veterans, and New Appropriations for FY2020

Terrorist and Foreign Fighter Travel Exercise Act of 2019 (HR 1590) – This bill promotes the identification and determent of terrorist activity from reaching the homeland, and enhances the United States government’s ability to respond to terrorism, including emerging threats. Specifically, the legislation requires the Department of Homeland Security to develop and conduct exercises related to foreign terrorism, including the National Incident Management System, National Response Plan, and other related plans and strategies. The legislation was introduced on March 7 by Rep. Michael Guest (R-MS). The president signed the bill into law on Oct. 9.

Alaska Remote Generator Reliability and Protection Act (S 163) – This bill is designed to prevent catastrophic failure or shutdown of remote diesel power engines due to emission control devices in remote areas of Alaska. It instructs the Environmental Protection Agency (EPA) to revise particulate matter emissions standards for nonemergency stationary diesel engines, and to report on methods for assisting these areas in meeting specified energy needs. The legislation was introduced by Rep. Dan Sullivan (R-AK) on Jan. 16 and signed into law by the president on Oct. 4.

A bill to permit States to transfer certain funds from the clean water revolving fund of a State to the drinking water revolving fund of the State in certain circumstances, and for other purposes (S 1689) – Introduced on May 23 by Rep. Cory Booker (D-NJ), this legislation was enacted on Oct. 4. The bill empowers states with the ability to transfer up to 5 percent of federal grant funds from its clean water fund to its drinking water fund to help address any threats to public health resulting from increased exposure to lead in drinking water. This reallocation is available for only one year.

Autism Collaboration, Accountability, Research, Education and Support Act of 2019 (HR 1058) – This legislation reauthorizes the previous Autism CARES Act of 2014 to expand government programs to include older people with autism who are often misdiagnosed and underdiagnosed. The bill allocates $1.8 billion in funding for autism programs to the Centers for Disease Control and Prevention, National Institutes of Health and the Health Resources & Services Administration. The legislation was sponsored by Rep. Chris Smith (R-NJ). It was introduced on Feb. 7 and signed into law by the president on Sept. 30.

Department of Veterans Affairs Expiring Authorities Act of 2019 (HR 4285) – This legislation reauthorizes funding for programs and services at the Veterans Administration, which were set to expire at the end of the fiscal year on Sept. 30. The bill extends funding for two specific programs. 1.) Keeping Our Commitment to Overseas Veterans Act of 2019, to keep the VA Regional Office and Outpatient Clinic in Manila, Philippines, open for business through Sept. 30, 2020. This clinic provides healthcare, benefits and services to thousands of U.S. veterans living in the Philippines. 2.) Supportive Services for Veteran Families program (through Sept. 30, 2021), which provides grants for supportive services to assist very low-income veterans and their families who are either residing in permanent housing or transitioning from homelessness. The bill was introduced on Sept. 11 by Rep. Anthony Brindisi (D-NY) and was signed into law by the president on Sept. 30.

Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 (HR 4378) – Known as a continuing resolution (CR), this bill prevents a government shutdown by continuing fiscal year 2020 appropriations to federal agencies through Nov. 21. The bill was introduced by Rep. Nita Lowey (D-NY) on Sept. 18 and signed into law on Sept. 27.

National Defense Authorization Act for Fiscal Year 2020 (S 1790) – Introduced on June 11 by Rep. Jim Inhofe (R-OK), this is an original bill that authorizes U.S. Military appropriations for fiscal year 2020 for the Department of Defense, military construction and Department of Energy defense activities. The legislation both authorizes appropriations and sets forth policies, requirements and limitations for how funds are used. The legislation was passed by Congress on Sept. 17 and is currently awaiting signature by the president.

How to Stay Safe with Business Email Compromise on the Rise

According to a report by the Financial Crimes Enforcement Network (FinCEN) released in July, financial institutions have incurred more than $9 billion in losses due to Business Email Compromise (BEC) schemes since 2016. With such staggering losses, businesses and even individuals can’t afford to ignore BEC attacks.

What is BEC?

BEC fraud involves cyber thieves posing as company executives or a business contact with the intention to commit wire transfer fraud or obtain sensitive information. The main targets are businesses working with foreign suppliers or a business that carries out regular wire-transfer payments.

To carry out this attack, criminals might pretend to be the company CEO and request that a junior staff member perform a task for them, such as transferring funds. Attackers take advantage of the fact that most organizations don’t have a set procedure to verify instructions received from the top management.

How Attackers Collect Data from their Targets

Cyber criminals use various techniques to carry out BEC fraud, with the main aim of stealing funds from the victims. The techniques used include:

Imposter techniques – this can be carried out in various ways. Attackers use a look-alike domain, display-name deception and spoofed emails that appear to come from legitimate addresses.
Social engineering – when a target has not set appropriate privacy settings on social media accounts, an attacker can easily collect information that will make their requests sound legitimate.
Malware – this enables attackers to have access to sensitive information that makes the fake request sound legitimate.
Mining from the Dark Web – here attackers can obtain stolen credentials.

How to Avoid BEC Attacks

It is difficult for conventional security systems to detect BEC schemes. Consider a case in which a transaction is initiated willingly by a legitimate user in response to a request from a legitimate source. Such an email has no payloads such as malicious attachments that can be blocked.

Here are some methods to help reduce the possibility of these attacks:

Raising awareness of common attack scenarios or tactics used by the cyber criminals, such as a false domain name that looks almost like the original one, impersonation of a vendor, false sense of urgency or a request for secrecy.
Training employees on cyber security risks and implications.
Implementing email authentication protocols like Domain-Based Message Authentication, Reporting and Conformance (DMARC) and email authentication, such as DomainKeys Identified Mail (DKIM).
Using layered defense, such as encryption, and virtual private networks.
Implementing a multifactor authentication that will introduce a secondary authorization control. This will help stop attackers even when they have access to the target’s credentials.
Establishing communication protocols that will allow for a follow-up. For instance, if the person is requesting financial transactions, an employee should call to ascertain the request.
Scrutinizing all emails that request for fund transfer.
Monitoring incoming email, especially those that use VIP names.
Optimizing accounting systems and controls.

Final Thoughts

Apart from taking precautionary measures, businesses also should make sure that their insurance specifically covers BEC attacks, as courts might have different interpretations of policies. Consider the case of Apache Corporation, which lost $7million due to a BEC attack. The judge ruled that since the money was sent to pay a legitimate invoice to the wrong bank, it was not covered by their insurance policy.

Note that a majority of these criminals are from countries that might not have strict laws on cybercrime, making it difficult to have them prosecuted.

So, whether you run a small, medium or large business, or even a personal account, it’s vital that you take precautionary measures against the increasing BEC schemes.

Category: Blog