• Internet banking is convenient but carries legal risks.gold bank image by John Sfondilias from Fotolia.com
  
  Electronic banking, also known as Internet banking or e-banking, is a growing trend among financial institutions. This method of banking allows clients to access their financial account through computers and mobile devices like cell phones. Although this is extremely convenient, electronic banking carries with it a handful of significant legal issues. Any bank that considers implementing electronic banking needs to be aware of these issues to avoid penalties or loss of business.
  
  

Regulation

• As of 2010, there are no "universal" laws for Internet banking, which means that all regulation of Internet banking follows the laws for each jurisdiction. However, use of the Internet in banking means that clients who have accounts at financial institutions may live and travel all over the globe. The result, according to Andrea Schaechter of All Business, is that it is much harder to assess whether banks and their clients are following regulations appropriately and to hand down punishments. Internet banking also creates muddy waters in terms of regulation because lines of jurisdiction may be blurred, depending on the violation and how it was committed.
  
  

Violations

• Even when banks have every intention of functioning in adherence to regulations, there are dozens of countries that use Internet banking. Subsequently, there are dozens of different Internet laws. The sheer number of local, state or federal regulations in the U.S. makes it hard for banks and their clients in the U.S. to know whether they are fulfilling necessary guidelines properly. Schaechter claims that this opens clients and banks up to legal ramifications like lawsuits and penalties such as fines.
  
  

Security

• Even if a bank uses a fairly secure server to access client data, the use of technology in banking opens banks up to security risks. For example, if a person can get hold of a client's password and user name, then that person can log in to the client's account without authorization and complete any number of transactions or account modifications (i.e., he may be guilty of identity theft). Banks also have to deal with the legal side of keeping their Internet banking security systems up to date, such as making sure all of their security software licenses are current. This may be more difficult in rural areas, where banks are less likely to have the financial or technological resources to cover all security bases, according to Rupa Rege Nitsure and Jiaquin Yang of Georgia College and State University.