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NYDFS addresses use of cyber assessment framework in risk assessment process
On December 9, NYDFS updated its FAQs regarding 23 NYCRR Part 500, which established cybersecurity requirements for banks, insurance companies, and other financial services institutions. (See InfoBytes coverage on 23 NYCRR Part 500 here.) New FAQ 41 addressed whether covered entities should use a cyber assessment framework as part of their risk assessment process as required by Sections 500.9 and 500.2(b). NYDFS clarified that while it “does not require a specific standard or framework for use in the risk assessment process," it expects covered entities “to implement a framework and methodology that best suits their risk and operations.” Commonly employed frameworks cited by NYDFS include the FFIEC Cyber Assessment Tool, the CRI Profile, and the NIST Cybersecurity Framework.
NYDFS, insurance company reach $1.8 million cyber breach settlement
On May 13, NYDFS announced a settlement with an insurance company to resolve allegations that the broker violated the state’s cybersecurity regulation (23 NYCRR Part 500) by failing to implement multi-factor authentication or reasonably equivalent or more secure access controls. Under Part 500.12(b), covered entities are required to implement such protocols (see FAQs here). NYDFS’s investigation also revealed that the insurance company falsely certified its compliance with the cybersecurity regulation for 2018. Under the terms of the consent order, the company will pay a $1.8 million civil monetary penalty and will undertake improvements to strengthen its existing cybersecurity program to ensure compliance with 23 NYCRR Part 500. NYDFS acknowledged the broker’s “commendable” cooperation throughout the examination and investigation and stated that the broker had demonstrated its commitment to remediation.
NYDFS, insurance broker reach $3 million cyber breach settlement
On April 14, NYDFS announced a settlement with an insurance broker to resolve allegations that the broker violated the state’s cybersecurity regulation (23 NYCRR Part 500) by failing to report it was the subject of two cyber breaches between 2018 and 2020. Under Part 500.17, regulated entities are required to provide timely notice to NYDFS when a cybersecurity event involves harm to customers (see FAQs here). A September 2019 examination revealed that the cyber breaches involved unauthorized access to an employee’s email account, which could have provided access to personal data, including social security and bank account numbers. NYDFS also alleged that the broker failed to implement a multi-factor authentication as required by 23 NYCRR Part 500. Under the terms of the consent order, the broker will pay a $3 million civil monetary penalty and will make further improvements to strengthen its existing cybersecurity program to ensure compliance with 23 NYCRR Part 500. NYDFS acknowledged the broker’s “commendable” cooperation throughout the examination and investigation and stated that the broker had demonstrated its commitment to remediation.
NYDFS, mortgage lender reach $1.5 million cyber breach settlement
On March 3, NYDFS announced a settlement with a mortgage lender to resolve allegations that the lender violated the state’s cybersecurity regulation (23 NYCRR Part 500) by failing to report it was the subject of a cyber breach in 2019. Under Part 500.17, regulated entities are required to provide timely notice to NYDFS when a cybersecurity event involves harm to customers (see FAQs here). A July 2020 examination revealed that the cyber breach involved unauthorized access to an employee’s email account, which could have provided access to personal data, including social security and bank account numbers. NYDFS also claimed that the lender allegedly failed to implement a comprehensive cybersecurity risk assessment as required by 23 NYCRR Part 500. Under the terms of the consent order, the lender will pay a $1.5 million civil monetary penalty, and will make further improvements to strengthen its existing cybersecurity program to ensure compliance with 23 NYCRR Part 500. NYDFS acknowledged that the mortgage lender had controls in place at the time of the cyber incident and implemented additional controls since the incident. NYDFS also acknowledged the mortgage lender’s “commendable” cooperation throughout the examination and investigation and stated that the lender had demonstrated its commitment to remediation.
NYDFS’ cybersecurity FAQs provide process for covered entities that no longer qualify for exemptions
On February 2, NYDFS updated its answers to FAQs regarding 23 NYCRR Part 500, which established cybersecurity requirements for banks, insurance companies, and other financial services institutions. (See here for previous InfoBytes coverage on updates to the FAQs.) Among other things, the update outlines the procedures covered entities must follow if the entity ceases to qualify for exemptions under Section 500.19. Covered entities who no longer qualify for an exemption will have 180 days from the end of their most recent fiscal year to comply with all applicable requirements of 23 NYCRR Part 500. NYDFS further notes that covered entities may be required to periodically refile their exemptions to ensure qualification.
NYDFS updates cybersecurity FAQs to address use of utilization review agents
On October 25, NYDFS provided a new update to its answers to FAQs relating to 23 NYCRR Part 500, which took effect March 1, 2017, and establishes cybersecurity requirements for banks, insurance companies, and other financial services institutions. The original promulgation of the FAQs was covered in Infobytes, as were the last updates in February, March, and August.
The new update states that when a covered entity uses an independent “Utilization Review” agent (UR agent) who receives nonpublic information, the covered entity should treat the UR agent as a third-party service provider in order to properly assess and address any potential risks to their data and systems. NYDFS emphasizes that covered entities bear the responsibility for these protections.
NYDFS reminds covered entities of upcoming cybersecurity regulation compliance dates; updates FAQs
On August 8, the New York Department of Financial Services (NYDFS) issued a reminder for regulated entities required to comply with the state’s cybersecurity requirements under 23 NYCRR Part 500 that the third transitional period ends September 4. Banks, insurance companies, and other financial services institutions (collectively, “covered entities”) that are required to implement a cybersecurity program to protect consumer data must be in compliance with additional provisions of the cybersecurity regulation by this date. As of September 4, a covered entity must (i) start presenting annual reports to the board by the Chief Information Security Officer on “critical aspects of the cybersecurity program”; (ii) create an “audit trail designed to reconstruct material financial transactions” in case of a breach; (iii) institute policies and procedures to ensure the use of “secure development practices for IT personnel that develop applications”; and (iv) implement encryption to protect nonpublic information it holds or transmits. Covered entities are also required to have policies and procedures in place “to ensure secure disposal of information that is no longer necessary for the business operations, and must have implemented a monitoring system that includes risk based monitoring of all persons who access or use any of the company’s information systems or who access or use the company’s nonpublic information.” Covered entities are further reminded that they have until March 1, 2019, to assess the risks presented by the use of a third-party service provider to ensure the protection of their security systems and data.
In coordination with the reminder, NYDFS provided new updates to its FAQs related to 23 NYCRR Part 500. The original promulgation of the FAQs was covered in InfoBytes, as were the last updates in February and March. The four new updates to the FAQs add the following guidance:
- Clarifies that in certain circumstances, an entity can be a covered entity, an authorized user, and a third party service provider, and therefore must comply fully with all applicable provisions;
- Outlines specific compliance provisions for covered entities that have limited exemptions from the NYDFS cybersecurity requirements;
- Identifies a covered entity’s responsibilities when addressing cybersecurity risks with respect to bank holding companies; and
- Clarifies situations and requirements for when a covered entity can rely upon the cybersecurity program that another covered entity has implemented for a common trust fund.
Find continuing InfoBytes coverage on NYDFS’ cybersecurity regulations here.
NYDFS updates cybersecurity regulation FAQs
On March 23, the New York Department of Financial Services (NYDFS) provided a second update to its answers to FAQs relating to 23 NYCRR Part 500, which took effect March 1, 2017 and establishes cybersecurity requirements for banks, insurance companies, and other financial services institutions. The original promulgation of the FAQs was covered in InfoBytes, as was the last update in February. The new update to the FAQs adds the following guidance:
- An individual filing a Certificate of Compliance for his or her own individual license with no Board of Directors is acting as a Senior Officer as defined by 23 NYCRR 500 and should complete the filing process in that manner; and
- Entity ID is defined as an entity’s state-issued unique license or charter number. Specific information is provided for insurance companies and mortgage loan originators in the FAQs.
NYDFS issues cybersecurity compliance certificate reminder
On March 5, the New York Department of Financial Services (NYDFS) published FAQs for regulated entities that have not yet filed cybersecurity certifications of compliance (Certification of Compliance) required under 23 NYCRR 500. The deadline to file was February 15 and notices recently were sent to regulated entities. Among other things, the FAQs state that a separate Certification of Compliance must be filed for each license an entity holds, and that entities who have failed to submit a Certification of Compliance must do so “as soon as possible.” Entities that received a reminder to certify their compliance but filed for an exemption under Section 500.19 are still required to file the Certificate of Compliance to “confirm that they are in compliance with those provisions of the regulation that apply.”
Find continuing InfoBytes coverage on NYDFS’s cybersecurity regulation here.
NYDFS releases new updates to cybersecurity regulation FAQs
On February 21, the New York Department of Financial Services (NYDFS) updated its answers to FAQs relating to 23 NYCRR Part 500, which was last updated in December 2017. As previously covered in InfoBytes, 23 NYCRR Part 500 took effect March 1, 2017, and establishes cybersecurity requirements for banks, insurance companies, and other financial services institutions. This week’s updates to the FAQs add the following guidance:
- Due to increasing cybersecurity risks facing financial institutions, NYDFS “strongly encourages all financial institutions, including exempt Mortgage Servicers, to adopt cybersecurity protections consistent with the safeguards and protections of 23 NYCRR Part 500”;
- Not-for-profit mortgage brokers are Covered Entities under the cybersecurity regulation;
- Covered Entities, when acquiring or merging with a new company, must conduct a factual analysis of how the cybersecurity regulation applies to the acquisition or merger. In addition, NYDFS emphasized that Covered Entities must have in place serious due diligence processes and ensure cybersecurity is a priority; and
- Health Maintenance Organizations and continuing-care retirement communities are Covered Entities and must comply with the cybersecurity regulation requirements.
As previously covered in InfoBytes, on January 22, NYDFS issued a reminder to all NYDFS-regulated banks, insurance companies, and other financial services institutions that the deadline to file cybersecurity certifications of compliance was February 15.