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Navigating Cybersecurity Challenges in the Lending Industry
October 14, 2024
By Richard I. Simon, Esquire, and Steven W. Teppler, Esquire
Attorneys from Mandelbaum Barrett PC explore how the rising cyber threats and stringent regulations facing lenders and the essential strategies for developing robust cybersecurity programs, safeguarding data, and maintaining regulatory compliance in a rapidly changing landscape.
The lending industry, encompassing both traditional banks and non-traditional financial institutions, has become a prime target for cyber-attacks. These attacks range from sophisticated phishing schemes to ransomware assaults, posing significant risks not only to financial assets but also to sensitive customer data. The increasing frequency and severity of these cyber threats have prompted regulatory bodies to impose stringent cybersecurity requirements. Lenders must navigate these regulations to maintain defensible compliance and avoid substantial civil and regulatory penalties.
Challenges Facing the Lending Industry Evolving Threat Landscape:
Cyber threats are continually evolving, with attackers employing increasingly sophisticated techniques. Traditional lenders, such as banks, and nontraditional lenders, including fintech companies, are both at risk. The diversity of these attacks, ranging from data breaches to malware, makes it difficult for lenders to stay ahead.
Complex Regulatory Environment: Lenders must comply with various federal and state regulations designed to protect consumer data and ensure cybersecurity. Key regulations include:
Gramm-Leach-Bliley Act (GLBA): This federal law mandates that financial institutions explain their information-sharing practices to their customers and safeguard sensitive data. Key requirements include developing a comprehensive information security program, conducting risk assessments, and implementing safeguards to protect customer information. Additionally, institutions must provide annual privacy notices to customers and ensure that third-party service providers maintain appropriate security measures.
New York Department of Financial Services (DFS) Part 500: This regulation requires financial services companies to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of the state’s financial services industry.
Click here to continue reading.
The lending industry, encompassing both traditional banks and non-traditional financial institutions, has become a prime target for cyber-attacks. These attacks range from sophisticated phishing schemes to ransomware assaults, posing significant risks not only to financial assets but also to sensitive customer data. The increasing frequency and severity of these cyber threats have prompted regulatory bodies to impose stringent cybersecurity requirements. Lenders must navigate these regulations to maintain defensible compliance and avoid substantial civil and regulatory penalties.
Challenges Facing the Lending Industry Evolving Threat Landscape:
Cyber threats are continually evolving, with attackers employing increasingly sophisticated techniques. Traditional lenders, such as banks, and nontraditional lenders, including fintech companies, are both at risk. The diversity of these attacks, ranging from data breaches to malware, makes it difficult for lenders to stay ahead.
Complex Regulatory Environment: Lenders must comply with various federal and state regulations designed to protect consumer data and ensure cybersecurity. Key regulations include:
Gramm-Leach-Bliley Act (GLBA): This federal law mandates that financial institutions explain their information-sharing practices to their customers and safeguard sensitive data. Key requirements include developing a comprehensive information security program, conducting risk assessments, and implementing safeguards to protect customer information. Additionally, institutions must provide annual privacy notices to customers and ensure that third-party service providers maintain appropriate security measures.
New York Department of Financial Services (DFS) Part 500: This regulation requires financial services companies to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of the state’s financial services industry.
Click here to continue reading.