United States: New York Stiffens Data Protection Regs

New York has once again positioned itself as a leader among states by recently implementing one of the most detailed and stringent data security regulations to date. It should come as no surprise that New York is a prime target for those looking to steal financial information. The Big Apple is one of the, if not the, center of the world's financial community, and a massive volume of financial data is stored and processed there.

To bolster the security of this information, the New York Department of Financial Services has created and implemented a new set of regulations designed to force certain regulated businesses to employ necessary policies, procedures and technologies to protect consumer and corporate financial information. While not necessarily controversial, the requirements of this statute could be confusing and potentially onerous to those unfamiliar with cybersecurity best practices.

What is the new cybersecurity regulation?

The new regulation is entitled "Cybersecurity Requirements for Financial Services Companies" and can be found at 23 NYCRR § 500 et seq. 

Who is covered by the new regulations?

The Cybersecurity Regulation applies to all "covered entities," which includes all individuals and non-governmental entities (i.e., corporations, partnerships, associations, etc.) "operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the Banking Law, the Insurance Law or the Financial Services Law." Thus, essentially any company or other entity that is not a government agency doing business in the insurance and financial services industry in New York is covered by this new regulation. This regulation casts a very broad net, as many organizations that are not traditional banks or insurance companies are still required to obtain certificates, permits or other authorizations under the applicable laws and will be required to comply with the regulations. 

What does the cybersecurity regulation cover?

The Cybersecurity Regulation imposes new requirements on those covered by the regulation, designed to impose new policies, procedures and technical protections to prevent and limit unauthorized access to protected data. Among these requirements are the following:

  • Cybersecurity Program -- Covered entities must create, document and implement an internal cybersecurity policy. This policy must be based on a risk assessment (described below), and implements "defensive infrastructure and ... policies and procedures" to protect the financial data the entity possesses.
  • Cybersecurity Policy -- The Cybersecurity Program described above is documented in the form of a comprehensive Cybersecurity Policy. This policy must be approved by company leadership and address the following:
  • Information security
  • Data governance and classification
  • Asset inventory and device management
  • Access controls and identity management
  • Business continuity and disaster recovery
  • System operations and availability measures
  • System and network security
  • Systems and network monitoring
  • Systems and application development and quality assurance
  • Physical records security
  • Vendor and third party service provider management
  • Risk assessment
  • Incident response
  • Chief Information Security Officer -- Each entity must appoint a Chief Information Security Officer ("CISO"), whose role it is to lead the company's Cybersecurity Program and oversee the creation and implementation of the Cybersecurity Policy.
  • Penetration Testing and Vulnerability Assessment - The entity's program must include annual penetration testing of vital systems and bi-annual system scans to assess the system and network requirements for known vulnerabilities.
  • Risk Assessment -- The Cybersecurity Regulation includes a requirement that each entity perform a risk assessment based on written policies and procedures created and documented within the Cybersecurity Policy. This risk assessment is performed on the entity's computer and network systems and forms the backbone of the Cybersecurity Program. The risk assessment is designed to highlight the major risks to the entity's financial data, customer data, and other sensitive data and assist the entity in understanding how data flows through its systems and where it is most vulnerable. The Risk Assessment should be periodically revisited and updated as necessary.
  • Third-Party Service Provider Security Policy --  The Cybersecurity Regulation specifically identifies the risks posed by the use of third parties in handling financial or customer data. Whenever data is moved between systems, risks and vulnerabilities are often exposed and can be exploited. Entities are expected to incorporate third parties into the Risk Assessment described above, as well as perform the necessary due diligence to ensure that third party service providers provide sufficient security to the data they are handling.
  • Multi-factor Authentication -- Now, under the Cybersecurity Regulation, all covered entities must utilize multi-factor authentication technologies for all remote-access services, unless the entity's CISO has approved the use of reasonably equivalent remote access controls.
  • Encryption -- The Cybersecurity Regulation also requires that nonpublic information is encrypted while in motion and while at rest unless this encryption is infeasible. If such a determination is made, it must be documented and revisited by the CISO at least annually. The kind and strength of the encryption is not provided by the Cybersecurity Regulation.
  • Incident Response Plan -- All covered entities must create and implement an incident response plan ("IRP"). An IRP is a documented, practices and tested policy that outlines the steps that are taken by all relevant employees in the event of a suspected or actual data breach.

Recognizing that not all companies are built alike, the regulations permit the covered entity to use an affiliate or "qualified" third-party service provider to assist in complying with the regulation. This alleviates the burden on smaller organizations that may not have the infrastructure or resources to implement all requirements with in-house personnel.

The Cybersecurity Regulation went into effect March 1, 2017, and represents a first in the nation approach to targeting a specific industry. New York has already signaled that it aims to be aggressive and vigilant in its enforcement of the regulations and there is little reason to think otherwise. Which means covered entities who have not already complied should do so as quickly as possible. 

The requirements, long considered best practices in the cybersecurity world, will be new and potentially confusing to many companies. At Thompson Coburn, we have a team of attorneys with experience implementing corporate programs like New York's Cybersecurity Program, including the creation and implementation of IRPs.

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.

Similar Articles
Relevancy Powered by MondaqAI
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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.


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.


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