ELECTRONIC FUNDS TRANSFER SYSTEMS (EFTS) ARE EXTREMELY VULNERABLE TO CRIMINAL PENETRATION THROUGH SUCH TECHNIQUES AS LINE TAPS, COUNTERFEITING, AND ILLEGAL TERMINALS. CRIMINALS CAN EXPLOIT THESE SYSTEMS BY POSING AS LEGITIMATE CUSTOMERS, SINCE ALL METHODS OF CUSTOMER IDENTIFICATION CAN BE PENETRATED. DRIVERS' LICENSES CAN BE COUNTERFEITED AND IDENTIFICATION CARDS CAN BE USED BY CRIMINALS TO OBTAIN THE NAMES AND ACCOUNT NUMBERS OF LEGITIMATE CUSTOMERS. EFTS ARE ALSO VULNERABLE TO EMPLOYEE PENETRATION. COMPUTER TERMINALS CAN BE PENETRATED IN A NUMBER OF WAYS WITH THE PRIMARY PURPOSE BEING THE APPROVAL OF FRAUDULENT TRANSACTIONS. EFTS COMMUNICATIONS ARE PROBABLY MOST VULNERABLE WHEN VITAL INFORMATION, SUCH AS ACCOUNT AND IDENTIFICATION NUMBERS, CAN BE ACQUIRED BY TAPPING INTO THE SYSTEM'S TELEPHONE CIRCUITS. THE CRYPTOGRAPHIC TECHNIQUE OF AUTHENTICATION CAN SATISFY MANY OF THE REQUIREMENTS OF EFTS' INFORMATION SECURITY SUBSYSTEM (ISS) AND THEREBY DETECT MANY OF THE CRIMINAL PENETRATION TECHNIQUES. SUCH A CRYPTOGRAPHIC ISS WOULD BE HIGHLY RESISTANT TO PENETRATION. EACH CUSTOMER WOULD BE GIVEN A PERSONALIZED 'KEY' WHICH THE SYSTEM'S TERMINAL WOULD USE, ALONG WITH THE BUILT-IN CRYPTOGRAPHIC ALGORITHM, TO APPPLY CRYPTOGRAPHIC PROTECTION AND AUTHENTICATION TO ALL TRANSACTIONS. THE SYSTEM WOULD USE MANY DIFFERENT KEYS, THEREBY INCREASING THE OBSTACLES TO CRIMINAL PENETRATION. HOWEVER, EFFORTS WOULD HAVE TO BE TAKEN TO PROVIDE SECURITY FOR THESE KEYS SINCE THEY COULD BE USED FOR CRIMINAL PURPOSES. AS EFTS BECOMES NATIONWIDE IN SCOPE, THE INDUSTRY WILL HAVE TO DEVELOP SOME DEGREES OF STANDARDIZATION OF CODE AND FORMAT STRUCTURES AND A COMMON CRYPTOGRAPHIC ALGORITHM. REFERENCES ARE INCLUDED. (KCP)