Palau scrambles after cyberattack cripples financial systems 

Photo: Belau Submarine Cable Corporation

Palau’s financial management system was crippled last week after a cyberattack, forcing the Ministry of Finance to temporarily revert to manual payroll processing.  

This marked the first major cyberattack and the first ransomware attack on the Palauan government, according to President Surangel Whipps Jr

Ransomware attacks typically encrypt or lock a victim’s data, essentially holding it hostage until a ransom is paid for its release. 

President Whipps Jr. believes the attack originated in Malaysia from a company with possible links to Russia or China. 

The Ministry of Finance’s National Treasury notified all government employees on the payroll that standard deductions for social security tax, national health insurance, pension, and income tax would be withheld from their salaries. However, employees would be responsible for making other voluntary payments such as bank loans, utility bills, and the like. 

As of Wednesday, 26 March, the financial system was still down while the government works to restore it. 

“Cybersecurity is one of the biggest threats we face,” President Whipps Jr said at a press conference last Wednesday, calling it “a different type of warfare.”  

He emphasised the need for a comprehensive cybersecurity plan to protect Palau. 

Cyber security threats extend beyond government financial systems and can target critical infrastructure such as public utilities, healthcare systems, and private businesses. 

President Whipps Jr stressed the importance of vigilance against this new threat and called for assistance from the United States and Taiwan.