On June 13, US and UK governments announced that they are developing prize challenges focused on advancing the maturity of privacy-enhancing technologies (PETs) to combat financial crime. The announcements highlight that up to $2 trillion of cross-border money laundering takes place each year. The White House explained that PETs could address financial crime through maturing technologies, which allows machine learning models to be trained on high quality datasets, without the data leaving safe environments. PETs also facilitate privacy-preserving financial information sharing and collaborative analytics; allowing suspicious types of behavior to be identified without compromising the privacy of individuals, or requiring the transfer of data between institutions or across borders.

Continue Reading US, UK Collaborate on Prize Challenges for Privacy-Enhancing Technologies

On June 7, Sen. Sherrod Brown (D-OH), Chair of the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Treasury Secretary Janet Yellen to request a review by the Financial Stability Oversight Council of financial institutions’ consumer data activities and their potential threat to U.S. financial stability and security. The letter raised concerns that this information may be sold to third-party purchasers or data brokers who compile it with personal data collected from other sources often associated with advertising and exploited for other uses. The Committee also raised concerns that such data could be used for nefarious purposes including “glean[ing] consumers’ tolerance for price hikes, or using certain people’s spending patterns to target them for blackmail or ransomware.” 

Continue Reading Senate Banking Committee Sends Letter to Yellen on Collection, Use of Consumer Data

The May 1 change to banks’ cyber-notification process is fast approaching. As we wrote previously the OCC, FDIC, and Federal Reserve Board implemented a final rule under which banks and their service providers must notify their primary federal regulators within 36 hours of certain incidents.  A notification incident that triggers this requirement is defined as a computer security incident that materially disrupts a banking organization’s operations or lines of business. Thus not all incidents will meet these levels. For those that do, banks will need to be prepared. Part of that is having the right points of contact, which include:
Continue Reading On the Clock: Cyber Incidents Notification Deadline Approaching for Banks

A California-based lead generation company recently settled with the FTC for $1.5 million over alleged privacy violations. The FTC argued that the company deceptively acquired consumer personal information and improperly
Continue Reading FTC Fines Lead Generation Company $1.5M Citing Misuse of Consumer Financial Data

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, recently announced that it fined UnaVista Limited, a UK-based trade repository, €238,500 ($280,000) for eight breaches of the European Market Infrastructure Regulation (EMIR).  The EMIR includes rules regulating the conduct of trade repositories, and in conjunction with its role as the supervisor of trade repositories under EMIR, ESMA is empowered to file enforcement actions in response to infringements of EMIR by trade repositories.

Continue Reading European Securities Watchdog Fine Highlights Importance of Data Integrity and Regulatory Access

The New York Department of Financial Service recently clarified security incident notification requirements and the use of multi-factor authentication. On its FAQ page, the NYDFS added two new questions and answers for financial services companies subject to 23 NYCRR Part 500.

Continue Reading NYDFS FAQ Provides Clarity on Breach Notification and Security Requirements

The Department of Labor recently issued cybersecurity guidance to retirement plans. The department’s Employee Benefits Security Administration (EBSA) issued guidance in three areas: (1) hiring and working with vendors and service providers; (2) implementing an internal cybersecurity program for the plan; and (3) online security for plan participants and end-users.
Continue Reading Cybersecurity Guidance Issued to Retirement Plan Sponsors

Artificial intelligence continues to remain a focus in 2021, as we predicted at the start of the year. From the FTC, to the EU, to others, regulators of all kinds are paying attention to companies’ use of these tools. In the latest, five US federal agencies are seeking input on how financial institutions are using AI tools. Comments from stakeholders are due by June 1, 2021.
Continue Reading Federal Financial Agencies Seek Comments on Use of Artificial Intelligence

The FTC recently settled with Ascension Data & Analytics for failure to oversee service providers. Ascension provides services to mortgage companies within its corporate family of entities. According to the complaint, Ascension uses third parties to provide some of its services. One of those, OpticsML, had access to tax returns for approximately 60,000 customers. OpticsML stored the information on a cloud-based server which server was publicly accessible for a year. During that time the tax documents were accessed by unauthorized individuals. The originating IP addresses were in Russia and China.  Although the security incident was that of OpticsML, the FTC alleged that Ascension violated the Gramm-Leach-Bliley Act’s Safeguards Rule. Namely, the company failed to properly oversee its service providers and it failed to adequately assess risk. In particular, the FTC alleged that:
Continue Reading FTC Settles Over Alleged Failure to Manage Service Providers

Israel’s investment industry has been reported as growing, and not surprisingly it has received interest from the Israeli Securities Authority. Late last year the ISA surveyed several funds and found that they were not following the requirements of Israel’s privacy laws. This resulted in a recent letter sent by the ISA to fund managers, warning the managers to take steps to protect customer information. Israel, like most countries around the globe, has a privacy law and corresponding regulations. Unlike many other jurisdictions, though, its privacy law has been deemed “adequate” by the EU, and as such, compliance can be a fairly rigorous exercise.  Accompanying the ISA letter were “insights” on how to protect information, including things like software updates and user authentication. Included in the insights were recommendations that are not included in Israel’s privacy law or regulation. However, the insights do mirror requirements that exist under Israeli laws for banks and insurance companies.
Continue Reading Israel Expresses Concerns Over Investment Fund Security Measures

In a recent letter, the New York Department of Financial Services provided guidance for insurers who use third party data to help with their underwriting decisions. The letter was drafted in response to reports that insurers are getting information about potential insureds from many “unconventional” data sources, including those that contain predictive models and algorithms. These sources are used to supplement medical underwriting, and include information that isn’t necessarily related to a person’s medical condition, but might impact an insurer’s decision. While these sources could improve the market, according to NYDFS (e.g., by simplifying and expediting life insurance sales and making pricing more accurate) the sources themselves are not uniformly reliable. NYDFS had two specific concerns about these sources: first, that the algorithms they use may have a negative impact on consumers; and second, that these sources are often used without the consumers’ knowledge.
Continue Reading New York Department of Financial Services Releases Letter Regarding Third Party Data Sources