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New York Releases Updated Proposed Cybersecurity Regulation
On December 28, the New York State Department of Financial Services (DFS) issued an updated version of its first-in-the-nation cybersecurity regulation after having “carefully considered all comments submitted” during the comment period following the issuance of the original regulation in September. The comments received by the DFS included a strongly worded and detailed letter authored by banking and insurance industry groups. The updated draft is subject to an additional comment period of 30 days and the final version will become effective March 1, 2017. The updated proposed regulation provides significantly more wiggle room than the original version, shifting from an approach that enforces minimum standards to a risk-based approach with increased transition periods for compliance. A few highlights of the changes are summarized below:
Timeline
In addition to the delayed effective date of March 1 (from January 1)and the default transition period of 180 days to comply (which now runs on August 28, 2017), the DFS has built in longer transition periods for certain sections. New deadlines include:
- February 15, 2018 – deadline for submission of Certificate of Compliance
- March 1, 2018 – deadline for compliance with Risk Assessment, Multi-Factor Authentication and Penetration Testing and Vulnerability Assessment sections as well as portions of the Chief Information Security Officer and Training and Monitoring sections
- August 30, 2018 – deadline for compliance with Audit Trail, Application Security, Limitations on Data Retention and Encryption of Nonpublic Information sections as well as a portion of the Training and Monitoring section
- March 1, 2019 – deadline for compliance with Third-Party Service Provider Security Policy
Other Changes of Significance
Penetration Testing and Vulnerability Assessments (Section 500.05): In addition to the longer transition period provided, this section was updated to allow for “continuous monitoring or periodic penetration testing and vulnerability assessments.” If the proposed regulation becomes final in its current form, vulnerability assessments will only required bi-annually. In the DFS's original proposed regulations, penetration testing would have been required annually and vulnerability assessments quarterly “at a minimum,” and there was no suggestion of continuous monitoring as a substitute option.
Third Party Service Provider Security Policy (Section 500.11): In addition to the 18 month extension on implementation of this section, this section sets a lower threshold of accountability for vendors with access to information systems and nonpublic information and then, only “to the extent possible.” Notable changes include removal of the requirement that contracts with third party service providers require “prompt notice” of cybersecurity events and the right “to perform cyber security audits” of the third party.
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