Proposed Rule – Computer-Security Incident Notification Requirements

The OCC, Federal Reserve, and FDIC have published a two-pronged proposed rule regarding notification of computer-security incidents.

The first prong of the proposed rule would require a banking organization to notify its primary federal regulator of any computer-security incident that rises to the level of a notification incident as soon as possible and no later than 36 hours after the banking organization believes in good faith that a notification incident has occurred. The agencies do not expect that a banking organization would typically be able to determine that a notification incident has occurred immediately upon becoming aware of a computer-security incident. Rather, the agencies anticipate that a banking organization would take a reasonable amount of time to determine that it has experienced a notification incident. In this context, the agencies recognize banking organizations may not come to a good faith belief that a notification incident has occurred outside of normal business hours. Only once the banking organization has made such a determination would the requirement to report within 36 hours begin.

Computer-security incident is defined as an occurrence that (i) results in actual or potential harm to the confidentiality, integrity, or availability of an information system or the information the system processes, stores, or transmits; or (ii) constitutes a violation or imminent threat of violation of security policies, security procedures, or acceptable use policies.

Notification incident is a computer-security incident that a banking organization believes in good faith could materially disrupt, degrade, or impair the ability of the banking organization to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base, in the ordinary course of business; any business line of a banking organization, including associated operations, services, functions and support, and would result in a material loss of revenue, profit, or franchise value; or those operations of a banking organization, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States.

The second prong requires a bank service provider of a service described under the BSCA to notify at least two individuals at affected banking organization customers immediately after experiencing a computer-security incident that it believes in good faith could disrupt, degrade, or impair services provided subject to the BSCA for four or more hours. As technological developments have increased in pace, banks have become increasingly reliant on bank service providers to provide essential technology-related products and services. The impact of computer-security incidents at bank service providers can flow through to their banking organization customers. Therefore, in order for a banking organization to be able to provide relevant notifications to its primary federal regulator in a timely manner, it needs to receive prompt notification of computer-security incidents from its service providers.

Comments will be accepted for 90 days after publication in the Federal Register (TBD).


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