Tuesday, September 4, 2018 marked the New York State Department for Financial Service’s deadline for compliance with several sections of cybersecurity regulation 23 NYCRR 500 (the “Regulation”). The Regulation covers any organization that operates (or is required to operate) under a license, registration, charter, certificate, permit, accreditation, or similar authorization under the Banking Law (Title 3 of the NYCRR), the Insurance Law (Title 11 of the NYCRR), or the Financial Services Law (Title 23 or the NYCRR) (a “Covered Entity”). This is the third compliance deadline in a series of milestones under the Regulation and requires that five new requirements must be in place. The September 4 compliance requirements include:
- Audit Trail (Section 500.06): Maintain systems that (1) are designed to rebuild material financial transactions to allow the Covered Entity to conduct normal operations and meet their obligations and (2) include audit trails that can detect and respond to cybersecurity attacks. Records supporting (1) and (2) must be preserved for five years and three years, respectively.
- Application Security (Section 500.08): Have a cybersecurity program with written procedures and standards covering the in-house development of applications used by the Covered Entity, as well as procedures for evaluating the security of externally developed applications.
- Limitations on Data Retention (Section 500.13): Include in the cybersecurity program policies and procedures for the secure disposal of certain non-public information on a periodic basis after it is no longer necessary for business operations or other legitimate business purposes.
- Activity Monitoring (Section 500.14(a)): Maintain policies and procedures designed to monitor the activity of employees and agents authorized to access a Covered Entities information systems and data and detect unauthorized access or use of certain non-public information.
- Encryption of Nonpublic Information (Section 500.15): Have in its cybersecurity program controls—including encryption—that protect non-public information held or transmitted by the Covered Entity. If encryption is not feasible, the Covered Entity must use alternative compensating methods to secure the data. To the extent that a Covered Entity uses alternatives methods to encryption, the feasibility of encryption must be reviewed annually.
By February 15, 2019, each Covered Entity must submit to the NYS DFS a certification of compliance with the above requirements. The last compliance deadline is March 1, 2019, when a Covered Entity must implement policies and procedures to ensure the security if information systems and non-public information accessible by third-party vendors. The third-party requirements are expected to be the most difficult to implement, as larger institutions may need to review and revise policies with hundreds and thousands of third-party vendors that manage critical aspects of business operations.
About Data Points: Privacy & Data Security Blog
The technology and regulatory landscape is rapidly changing, thus impacting the manner in which companies across all industries operate, specifically in the ways they collect, use and secure confidential data. We provide transparent and cutting-edge insight on critical issues and dynamics. Our team informs business decision-makers about the information they must protect, and what to do if/when security is breached.
Data Points: Privacy & Data Security Blog Updates
- The Consumer Financial Protection Bureau Stakes Out Its Enforcement Authority Over Unfair Information Security Practices
- Maryland Amendments to Data Security and Breach Notification Law
- The Devil Really is in the Details: The SEC Proposed Rule on Cybersecurity Risk Management for Investment Advisors, Registered Investment Companies and BDCs
- Will the U.S. Finally Pass Comprehensive Data Privacy Legislation?