The new regulation, called the first of its kind in the US, requires banks, insurance companies and other regulated financial services institutions to establish and maintain a cyber security programme for protecting consumers’ data.
It sets out minimum regulatory standards and encourage firms to stay abreast of technological advances. The DFS introduction to the regulation specifies that it is not intended to be “overly prescriptive” so that “cybersecurity programmes can match the relevant risks and keep pace with technological advances”.
It went on: “The number of cyber events has been steadily increasing and estimates of potential risk to our financial services industry are stark. Adoption of the programme outlined in these regulations is a priority for New York State.”
The rules include controls around the governance framework for a robust cyber security programme. Programmes must be adequately funded and staffed, and overseen by qualified management, while the most senior governing body of the organisation must receive reports on the programme periodically.
Minimum standards for technology systems will apply to access controls, data protection encryption and penetration testing, and to the manner in which cyber breaches are addressed if they do occur.
These standards will apply to a firm’s incident response plan and preservation of data for incident response, and they will have to send notice to the DFS if a significant breach occurs.
Finally, the new rules bring in additional accountability, with the DFS requiring annual certification of regulatory compliance, remediation plans and identification and documentation of material deficiencies.
Governor of New York Andrew Cuomo said: "New York is the financial capital of the world, and it is critical that we do everything in our power to protect consumers and our financial system from the ever increasing threat of cyber attacks."
He added: "These strong, first-in-the-nation protections will help ensure this industry has the necessary safeguards in place in order to protect themselves and the New Yorkers they serve from the serious economic harm caused by these devastating cyber crimes."
DFS superintendent Maria Vullo said: “With this landmark regulation, DFS is ensuring that New York consumers can trust that their financial institutions have protocols in place to protect the security and privacy of their sensitive personal information. As our global financial network becomes even more interconnected and entities around the world increasingly suffer information breaches, New York is leading the charge to combat the ever-increasing risk of cyber attacks.”
The announcement follows publication of a proposed regulation in September 2016, followed by a 45-day comment period, and a second proposal in December 2016, followed by a 30-day comment period.