United States: Proposed New York Cybersecurity Bill Requires Increased Protections For Financial Industry

On December 28, 2016, New York published a revised version of its proposed "Cybersecurity Requirements for Financial Services Companies" aimed at increasing the requirements and protections for information security, auditing, and reporting for financial institutions doing business within New York state. The regulation was announced on September 13, 2016 as the first-of-its-kind regulation to protect consumers and financial institutions and had intended to go into effect January 1, 2017. However, in response to the 45-day public comment period, a revised version was distributed mere days before the end of the year on December 28, 2016 with an expected implementation date of March 1, 2017.

Although the revised version will be subject to an additional 30-day public comment period, there are a number of key provisions in the current versions that financial institutions should be aware of:

  1. 500.02. Cybersecurity Program: The required Cybersecurity Program will be based upon the Covered Entity's Risk Assessment (described in §500.09) and must comply with the items described in §500.02(b):

    1. identify and assess internal and external cybersecurity risks that may threaten the security or integrity of Nonpublic Information stored on the Covered Entity's Information Systems;
    2. use defensive infrastructure and the implementation of policies and procedures to protect the Covered Entity's Information Systems, and the Nonpublic Information stored on those Information Systems, from unauthorized access, use or other malicious acts;
    3. detect Cybersecurity Events;
    4. respond to identified or detected Cybersecurity Events to mitigate any negative effects;
    5. recover from Cybersecurity Events and restore normal operations and services; and
    6. fulfill applicable regulatory reporting obligations.
    • 500.02(c) allows a Covered Entity to adopt the cybersecurity program of an Affiliate if the Affiliate's cybersecurity program meets the above requirements and covers the Covered Entity's information.
  1. 500.03. Cybersecurity Policy: This section outlines the areas that the Cybersecurity Program should address and is quite expansive, including (but not limited to) information security, data governance, network security and monitoring, physical security and environmental controls, customer data privacy, and incident response.
  2. 500.05. Penetration Testing and Vulnerability Assessments: The Cybersecurity Program shall include monitoring and testing on a periodic basis, but at a minimum, annual penetration testing based on risks identified in the Covered Entity's Risk Assessment and bi-annual vulnerability assessments, including the identification of any publicly known cybersecurity vulnerabilities.
  3. 500.06. Audit Trail: Covered Entities, to the extent applicable based upon its Risk Assessment, will need to maintain for at least five years information to reconstruct material financial transactions and specific audit trails related to Cybersecurity Events.
  4. 500.08. Application Security: The Cybersecurity Program shall include written procedures, guidelines, and standards governing the development of in-house applications and the testing of externally developed applications.
  5. 500.09. Risk Assessment: The Risk Assessment will be implemented based upon written policies and procedures and will address the following:

    1. criteria for the evaluation and categorization of identified cybersecurity risks or threats facing the Covered Entity;
    2. criteria for the assessment of the confidentiality, integrity, security and availability of the Covered Entity's Information Systems and Nonpublic Information, including the adequacy of existing controls in the context of identified risks; and
    3. requirements describing how identified risks will be mitigated or accepted based on the Risk Assessment and how the cybersecurity program will address the risks.
  1. 500.11. Third Party Service Provider Security Policy: Each Covered Entity must maintain a written policy regarding the security of Information Systems and Nonpublic Information accessible to, or held by, Third Party Service Providers. This includes methods of assessing risks for these providers and outlining minimum cybersecurity practices that each provider must implement.
  2. 500.12. Multi-Factor Authentication: Any individual that accesses a Covered Entity's internal network from an external network must use multi-factor authentication unless the Covered Entity's Chief Information Security Officer ("CISO") has approved in writing a reasonable alternative with equal or greater secure access controls.
  3. 500.16. Incident Response Plan: The Cybersecurity Program should include a written incident response plan to respond to, and recover from, Cybersecurity Events that materially affect the confidentiality, integrity, or availability of its Information Systems or the continuing functionality of its business or operations, including:

    1. the internal processes for responding to a Cybersecurity Event;
    2. the goals of the incident response plan;
    3. the definition of clear roles, responsibilities and levels of decision-making authority;
    4. external and internal communications and information sharing;
    5. identification of requirements for the remediation of any identified weaknesses in Information Systems and associated controls;
    6. documentation and reporting regarding Cybersecurity Events and related incident response activities; and
    7. the evaluation and revision as necessary of the incident response plan following a Cybersecurity Event.
  1. 500.17. Notices to Superintendent: A Covered Entity must notify the superintendent of the New York State Department of Financial Services ("Superintendent") within 72 hours from a determination that a Cybersecurity Event has occurred that (1) necessitates reporting to a government body, self-regulatory agency, or any other supervisory body, and (2) has a reasonable likelihood of material harming any material part of the normal operation(s) of the Covered Entity.

Each year by February 15, a Covered Entity must submit to the Superintendent a written certification stating that it is in compliance with these regulations and the steps it has taken to ensure compliance. All documentation and information supporting such compliance should be available for at least five years.

  1. 500.19. Exemptions: There are a number of exemptions to all or part of these regulations.
  2. 500.22. Transitional Periods: In general, Covered Entities will have 180 days from March 1, 2017 to comply with these regulations, with certain exceptions identified in §500.22(b) addressing individual sections of these regulations.

The current version of these regulations can be found here and we will continue to monitor any further revisions that occur before March 1, 2017. To ensure that you are aware of any further updates regarding this story or others involving eDiscovery, Data Privacy, and Cybersecurity, please subscribe to the blog.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Richard D. Lutkus
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions