United States: Developments In New York And Colorado Cybersecurity Regulations

New York
For the first time since New York's Cybersecurity Regulation (23 NYCRR Part 500) became effective on March 1, 2017, the Department of Financial Services (DFS) has issued Frequently Asked Questions to assist Covered Entities in their compliance and provide guidance into the DFS's interpretation and enforcement of its newly adopted regulation.

Since the new Regulation was promulgated, Covered Entities, including banks, financial institutions and insurance companies, have faced uncertainly as to how their compliance will be assessed by DFS. With the Regulation's first deadline for implementation quickly approaching on August 28, 2017, these updated FAQs offer some much needed clarification.

One of the most perplexing aspects of the Regulation is what constitutes a reportable "Cybersecurity Event." DFS recognizes that Covered Entities are regularly subjected to routine and unsuccessful attempts to gain unauthorized access to their information systems and underlying data. In such instances, DFS will defer to the Covered Entity's "appropriate judgment" as to when unsuccessful attacks must be reported. In using their appropriate judgment, Covered Entities should consider whether responding to the attack requires measures beyond those ordinarily taken, or if the risks unique to the Covered Entity would render an otherwise unsuccessful attack particularly significant.

While DFS has stated that it "does not intend to penalize Covered Entities for the exercise of honest, good faith judgment," if the attack is "sufficiently serious to raise a concern," it must be reported no later than 72 hours after determining that a reportable Cybersecurity Event has occurred. At minimum, a Cybersecurity Event is reportable under any of the following circumstances:

  • Notice is required to any government body, self-regulatory agency or any other supervisory body (23 NYCRR 500.17(a)(1))
  • Notice is required to affected consumers or government agencies under other laws or regulations, such as New York's information security breach and notification law (General Business Law Section 899-aa)
  • The event has a reasonable likelihood of materially harming any material part of the Covered Entity's normal operations (23 NYCRR 500.17(a)(2)).

To further assist Covered Entities with their reporting requirements, DFS has announced a new online portal to securely transmit Notices of Exemption, Certifications of Compliance and Notices of Cybersecurity Events, as required by 23 NYCRR Part 500.

In anticipation of the August 28, 2017, deadline, Covered Entities should be prepared to implement additional measures, including designating a Chief Information Security Officer (CISO); ensuring qualified Cybersecurity Personnel are in place; establishing a Board-approved written Incident Response Plan and Cybersecurity policies, and implementing infrastructure to limit access to nonpublic information.

Another common misconception is that Covered Entities qualifying for an exception need not comply with the Regulation. According to the FAQs, the exemptions listed in 23 NYCRR Part 500.19 are limited in scope. While certain organizations may be exempt from appointing a CISO, performing penetration testing and maintaining audit trails, they still must comply with the sections listed in the exemptions that apply to covered entities.

These requirements include establishing cybersecurity programs and policies, maintaining record retention and destruction programs, conducting risk assessments, and implementing policies and procedures to ensure the security of nonpublic information maintained by third-party service providers. These programs and policies and the Risk Assessment also must evaluate and address the risks to an information system or its stored nonpublic information presented by a Covered Entity's subsidiary or affiliate.

Colorado
Following in the footsteps of DFS, the Colorado Division of Securities has adopted cybersecurity regulations applicable to broker-dealers, investment advisers and other fund managers who purchase securities or conduct business in the state.

Colorado's regulations are more limited in scope than New York's and implementation is less costly. For instance, they apply only to broker-dealers purchasing securities in the state and investment advisors doing business there. There are no requirements for third-party vendors, and the requirement that broker-dealers and investment advisors establish written procedures "reasonably" designed to protect "Confidential Personal Information" does not cover publicly available information.

While the Colorado Division of Securities may consider a variety of factors in determining what is "reasonable," the cybersecurity procedures must include all of the following:

  • An annual risk assessment that does not need to be conducted by an independent third party
  • Secure email, including encryption and digital signatures for emails containing Confidential Personal Information
  • Authentication of clients' email instructions and employee access to electronic communication
  • Disclosure to clients of the risks of using electronic communications.

The Colorado regulations' most notable contrast from that of the DFS is the lack of a breach notification requirement, which was included in the initially proposed rules. However, entities may still have such obligations as provided by the SEC if they are subject to federal financial regulation and oversight.

Wilson Elser's Cybersecurity & Data Privacy practice has extensive experience guiding entities through the regulatory requirements imposed by state agencies. When clients need assistance, please contact a practice team member for assistance.

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
 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.