Final Guidance on Response Programs Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice
FederalAgency guidance
Ask Donna
How this section applies to your facts.
FDIC Financial Institution Letters › Final Guidance on Response Programs Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice
Text
15736
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
1 This document renames the ‘‘Interagency
Guidelines Establishing Standards for Safeguarding
Customer Information’’ as the ‘‘Interagency
Guidelines Establishing Information Security
Standards.’’ Therefore, all other references in the
Agencies’ regulations to the former title of the
Security Guidelines shall be read to refer to the new
title.
2 12 CFR part 30, app. B (OCC); 12 CFR part 208,
app. D–2, and part 225, app. F (Board); 12 CFR part
364, app. B (FDIC); and 12 CFR part 570, app. B
(OTS). In this Guidance, citations to the Agencies’
§ 1479.123
Misrepresentation, and scheme
or device.
(a) A producer who is determined to
have erroneously represented any fact
affecting a program determination made
in accordance with this part shall not be
entitled to disaster payments and must
refund all such payments received, plus
interest as determined in accordance
with part 1403 of this chapter.
(b) A producer shall refund to CCC all
disaster payments, plus interest as
determined in accordance with part
1403 of this chapter, received by such
producer with respect to all applications
under this part if the producer is
determined to have knowingly done any
of the following:
(1) Adopted any scheme or device
that tends to defeat the purpose of the
program;
(2) Made any fraudulent
representation; or
(3) Misrepresented any fact affecting a
program determination.
§ 1479.124
Offsets, assignments, and debt
settlement.
(a) Except as provided in paragraph
(b) of this section, any payment or
portion thereof to any person shall be
made without regard to questions of title
under State law and without regard to
any claim or lien against the crop, or
proceeds thereof, in favor of the owner
or any other creditor except agencies of
the U.S. Government. The regulations
governing offsets and withholdings
found at part 1403 of this chapter apply
to any payments made under this part.
portion thereof to any person shall be
made without regard to questions of title
under State law and without regard to
any claim or lien against the crop, or
proceeds thereof, in favor of the owner
or any other creditor except agencies of
the U.S. Government. The regulations
governing offsets and withholdings
found at part 1403 of this chapter apply
to any payments made under this part.
(b) Any producer entitled to any
payment may assign any payments in
accordance with regulations governing
the assignment of payments found at
part 1404 of this chapter.
(c) A debt or claim may be settled
according to part 1403 of this chapter.
§ 1479.125
Compliance with highly
erodible land and wetland conservation
provisions.
(a) The highly erodible land and
wetland conservation provisions of part
12 of this title apply to the receipt of
disaster assistance for 2003, 2004, and
2005 crop losses made available under
this authority.
(b) All eligible producers must be in
compliance with the highly erodible
land and wetland conservation
compliance provisions for the year(s) for
which disaster assistance is requested.
Signed in Washington, DC March 23, 2005.
Thomas B. Hofeller,
Acting Executive Vice-President, Commodity
Credit Corporation.
[FR Doc. 05–6080 Filed 3–28–05; 8:45 am]
BILLING CODE 3410–05–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 30
[Docket No. 05–07]
RIN 1557–AC92
FEDERAL RESERVE SYSTEM
12 CFR Parts 208 and 225
[Docket No. OP–1155]
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 364
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 568 and 570
[No. 2005–11]
RIN 1550–AB97
Interagency Guidance on Response
Programs for Unauthorized Access to
Customer Information and Customer
Notice
AGENCIES: Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); Office of
Thrift Supervision, Treasury (OTS)
pervision
12 CFR Parts 568 and 570
[No. 2005–11]
RIN 1550–AB97
Interagency Guidance on Response
Programs for Unauthorized Access to
Customer Information and Customer
Notice
AGENCIES: Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); Office of
Thrift Supervision, Treasury (OTS).
ACTION: Interpretive guidance and OTS
final rule.
SUMMARY: The OCC, Board, FDIC, and
OTS (the Agencies) are publishing an
interpretation of the Gramm-Leach-
Bliley Act (GLBA) and the Interagency
Guidelines Establishing Information
Security Standards (Security
Guidelines).1 This interpretive
guidance, titled ‘‘Interagency Guidance
on Response Programs for Unauthorized
Access to Customer Information and
Customer Notice’’ (final Guidance), is
being published as a supplement to the
Security Guidelines in the Code of
Federal Regulations in order to make the
interpretation more accessible to
financial institutions and to the general
public. The final Guidance will clarify
the responsibilities of financial
institutions under applicable Federal
law. OTS is also making a conforming,
technical change to its Security
Procedures Rule.
DATES: Effective March 29, 2005.
FOR FURTHER INFORMATION CONTACT:
OCC: Aida Plaza Carter, Director, Bank
Information Technology, (202) 874–
4740; Amy Friend, Assistant Chief
Counsel, (202) 874–5200; or Deborah
Katz, Senior Counsel, Legislative and
Regulatory Activities Division, (202)
874–5090, at 250 E Street, SW.,
Washington, DC 20219.
Board: Donna L. Parker, Supervisory
Financial Analyst, Division of Banking
Supervision & Regulation, (202) 452–
2614; or Joshua H. Kaplan, Attorney,
Legal Division, (202) 452–2249, at 20th
and C Streets, NW., Washington, DC
20551.
FDIC: Jeffrey M. Kopchik, Senior
Policy Analyst, Division of Supervision
and Consumer Protection, (202) 898–
3872; Kathryn M
Street, SW.,
Washington, DC 20219.
Board: Donna L. Parker, Supervisory
Financial Analyst, Division of Banking
Supervision & Regulation, (202) 452–
2614; or Joshua H. Kaplan, Attorney,
Legal Division, (202) 452–2249, at 20th
and C Streets, NW., Washington, DC
20551.
FDIC: Jeffrey M. Kopchik, Senior
Policy Analyst, Division of Supervision
and Consumer Protection, (202) 898–
3872; Kathryn M. Weatherby, Examiner
Specialist, Division of Supervision and
Consumer Protection, (202) 898–6793;
or Robert A. Patrick, Counsel, Legal
Division, (202) 898–3757, at 550 17th
Street, NW., Washington, DC 20429.
OTS: Lewis C. Angel, Program
Manager, (202) 906–5645; Glenn
Gimble, Senior Project Manager,
Consumer Protection and Specialized
Programs, (202) 906–7158; or Richard
Bennett, Counsel, Regulations and
Legislation Division, (202) 906–7409, at
1700 G Street, NW., Washington, DC
20552.
SUPPLEMENTARY INFORMATION: The
contents of this preamble are listed in
the following outline:
I. Introduction
II. Overview of Comments Received
III. Overview of Final Guidance
IV. Section-by-Section Analysis of the
Comments Received
A. The ‘‘Background’’ Section
B. The ‘‘Response Program’’ Section
C. The ‘‘Customer Notice’’ Section
V. Effective Date
VI. OTS Conforming and Technical Change
VII. Impact of Guidance
VIII. Regulatory Analysis
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. Executive Order 12866
D. Unfunded Mandates Reform Act of 1995
I. Introduction
The Agencies are jointly issuing final
Guidance that interprets the
requirements of section 501(b) of the
GLBA, 15 U.S.C. 6801, and the Security
Guidelines 2 to include the development
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
xibility Act
C. Executive Order 12866
D. Unfunded Mandates Reform Act of 1995
I. Introduction
The Agencies are jointly issuing final
Guidance that interprets the
requirements of section 501(b) of the
GLBA, 15 U.S.C. 6801, and the Security
Guidelines 2 to include the development
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15737
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
Security Guidelines refer only to the appropriate
paragraph number, as these numbers are common
to each of the Guidelines.
3 Security Guidelines, III.B.2.
4 Under the Administrative Procedure Act (APA),
an agency may dispense with public notice and an
opportunity to comment for general statements of
policy. 5 U.S.C. 553(b)(A). Therefore, notice and
comment were not required under the APA for this
final Guidance. OTS has concluded that notice and
comment were also not required under the APA for
its conforming and technical change as discussed in
part VI of this SUPPLEMENTARY INFORMATION.
and implementation of a response
program to address unauthorized access
to, or use of customer information that
could result in substantial harm or
inconvenience to a customer. The
Guidance describes the appropriate
elements of a financial institution’s
response program, including customer
notification procedures.
Section 501(b) required the Agencies
to establish standards for financial
institutions relating to administrative,
technical, and physical safeguards to:
(1) Ensure the security and
confidentiality of customer information;
inconvenience to a customer. The
Guidance describes the appropriate
elements of a financial institution’s
response program, including customer
notification procedures.
Section 501(b) required the Agencies
to establish standards for financial
institutions relating to administrative,
technical, and physical safeguards to:
(1) Ensure the security and
confidentiality of customer information;
(2) protect against any anticipated
threats or hazards to the security or
integrity of such information; and (3)
protect against unauthorized access to
or use of such information that could
result in substantial harm or
inconvenience to any customer.
On February 1, 2001, the Agencies
issued the Security Guidelines as
required by section 501(b) (66 FR 8616).
Among other things, the Security
Guidelines direct financial institutions
to: (1) Identify reasonably foreseeable
internal and external threats that could
result in unauthorized disclosure,
misuse, alteration, or destruction of
customer information or customer
information systems; (2) assess the
likelihood and potential damage of
these threats, taking into consideration
the sensitivity of customer information;
and (3) assess the sufficiency of policies,
procedures, customer information
systems, and other arrangements in
place to control risks.3
To address the need for additional
interpretive guidance regarding section
501(b) and the Security Guidelines, on
August 12, 2003, the Agencies
published proposed Interagency
Guidance on Response Programs for
Unauthorized Access to Customer
Information and Customer Notice
(proposed Guidance) in the Federal
Register (68 FR 47954). This proposed
Guidance made clear that the Agencies
expect a financial institution’s
information security program, required
under the Security Guidelines, to
include a response program
03, the Agencies
published proposed Interagency
Guidance on Response Programs for
Unauthorized Access to Customer
Information and Customer Notice
(proposed Guidance) in the Federal
Register (68 FR 47954). This proposed
Guidance made clear that the Agencies
expect a financial institution’s
information security program, required
under the Security Guidelines, to
include a response program.
The Agencies were interested in the
public’s views on the proposed
Guidance and accordingly published it
for comment.4 The Agencies have used
these comments to assess the impact of
the proposed Guidance, and to address
the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501
et seq.).
II. Overview of Comments Received
The Agencies invited comment on all
aspects of the proposed Guidance and
collectively received 65 comments on
the proposed Guidance. In some
instances, several commenters joined in
filing a single comment. The
commenters included 10 bank holding
companies, eight financial institution
trade associations, 25 financial
institutions (including three Federal
Reserve Banks), five consumer groups,
three payment systems, three software
companies, three non-financial
institution business associations, three
service providers, two credit unions, a
member of Congress, a state office, a
compliance officer, a security and risk
consultant, a trademark protection
service, and a trade association
representing consumer reporting
agencies.
Commenters generally agreed that
financial institutions should have
response programs. Indeed, many
financial institutions said that they have
such programs in place. Comments from
consumer groups and the Congressman
commended the Agencies for providing
guidance on response programs and
customer notification. However, most
industry commenters thought that the
proposed Guidance was too
prescriptive. These commenters stated
that the proposed approach would stifle
innovation and retard the effective
evolution of response programs
such programs in place. Comments from
consumer groups and the Congressman
commended the Agencies for providing
guidance on response programs and
customer notification. However, most
industry commenters thought that the
proposed Guidance was too
prescriptive. These commenters stated
that the proposed approach would stifle
innovation and retard the effective
evolution of response programs.
Industry commenters raised concerns
that the proposed Guidance would not
permit a financial institution to assess
different situations from its own
business perspective, specific to its size,
operational and system structure, and
risk tolerances. These industry
commenters suggested modifying the
proposed Guidance to give financial
institutions greater discretion to
determine how to respond to incidents
of unauthorized access to or use of
customer information.
Two commenters also requested that
the Agencies include a transition period
allowing adequate time for financial
institutions to implement the final
Guidance. Some commenters asked for
a transition period only for the aspects
of the final Guidance that address
service provider arrangements.
III. Overview of Final Guidance
The final Guidance states that every
financial institution should develop and
implement a response program designed
to address incidents of unauthorized
access to customer information
maintained by the institution or its
service provider. The final Guidance
provides each financial institution with
greater flexibility to design a risk-based
response program tailored to the size,
complexity and nature of its operations.
The final Guidance continues to
highlight customer notice as a key
feature of an institution’s response
program. However, in response to the
comments received, the final Guidance
modifies the standard describing when
notice should be given and provides for
a delay at the request of law
enforcement
risk-based
response program tailored to the size,
complexity and nature of its operations.
The final Guidance continues to
highlight customer notice as a key
feature of an institution’s response
program. However, in response to the
comments received, the final Guidance
modifies the standard describing when
notice should be given and provides for
a delay at the request of law
enforcement. It also modifies which
customers should be given notice, what
a notice should contain, and how it
should be delivered.
A more detailed discussion of the
final Guidance and the manner in which
it incorporates comments the Agencies
received follows.
IV. Section-by-Section Analysis of the
Comments Received
A. The ‘‘Background’’ Section
Legal Authority
Section I of the proposed Guidance
described the legal authority for the
Agencies’ position that every financial
institution should have a response
program that includes measures to
protect customer information
maintained by the institution or its
service providers. The proposed
Guidance also stated that the Agencies
expect customer notification to be a
component of the response program.
One commenter questioned the
Agencies’ legal authority to issue the
proposed Guidance. This commenter
asserted that section 501(b) only
authorizes the Agencies to establish
standards requiring financial
institutions to safeguard the
confidentiality and integrity of customer
information and to protect that
information from unauthorized access,
but does not authorize standards that
would require a response to incidents
where the security of customer
information actually has been breached
asserted that section 501(b) only
authorizes the Agencies to establish
standards requiring financial
institutions to safeguard the
confidentiality and integrity of customer
information and to protect that
information from unauthorized access,
but does not authorize standards that
would require a response to incidents
where the security of customer
information actually has been breached.
The final Guidance interprets those
provisions of the Security Guidelines
issued under the authority of section
501(b)(3) of the GLBA, which states
specifically that the standards to be
established by the Agencies must
include various safeguards to protect
against not only ‘‘unauthorized access
to,’’ but also the ‘‘use of,’’ customer
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00013
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15738
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
5 12 CFR part 40 (OCC); 12 CFR part 216 (Board);
12 CFR part 332 (FDIC); and 12 CFR part 573 (OTS).
In this final Guidance, citations to the Agencies’
Privacy Rules refer only to the appropriate section
number that is common to each of these rules.
6 National banks, Federal branches and Federal
agencies of foreign banks and any subsidiaries of
these entities (except brokers, dealers, persons
providing insurance, investment companies, and
investment advisers) (OCC); member banks (other
than national banks), branches and agencies of
foreign banks (other than Federal branches, Federal
agencies, and insured State branches of foreign
banks), commercial lending companies owned or
controlled by foreign banks, Edge and Agreement
Act Corporations, bank holding companies and
their nonbank subsidiaries or affiliates (except
brokers, dealers, persons providing insurance,
investment companies, and investment advisers)
(Board); state non-member banks, insured State
branches of foreign banks, and any subsidiaries of
such entities (except brokers, dealers, persons
provid
or
controlled by foreign banks, Edge and Agreement
Act Corporations, bank holding companies and
their nonbank subsidiaries or affiliates (except
brokers, dealers, persons providing insurance,
investment companies, and investment advisers)
(Board); state non-member banks, insured State
branches of foreign banks, and any subsidiaries of
such entities (except brokers, dealers, persons
providing insurance, investment companies, and
investment advisers) (FDIC); and insured savings
associations and any subsidiaries of such savings
associations (except brokers, dealers, persons
providing insurance, investment companies, and
investment advisers) (OTS).
7 See Security Guidelines, I.C.2.c.
8 See Security Guidelines, I.C.2.b.; Privacy Rules,
§ __.3(h).
9 Section 507 provides that state laws that are
‘‘inconsistent’’ with the provisions of Title V,
Subtitle A of the GLBA are preempted ‘‘only to the
extent of the inconsistency.’’ State laws are ‘‘not
inconsistent’’ if they offer greater protection than
Subtitle A, as determined by the Federal Trade
Commission, after consultation with the agency or
authority with jurisdiction under section 505(a) of
either the person that initiated the complaint or that
is the subject of the complaint. See 15 U.S.C. 6807.
information that could result in
‘‘substantial harm or inconvenience to
any customer.’’ This language
authorizes standards that include
response programs to address incidents
of unauthorized access to customer
information. A response program is the
principal means for a financial
institution to protect against
unauthorized ‘‘use’’ of customer
information that could lead to
‘‘substantial harm or inconvenience’’ to
the institution’s customer. For example,
customer notification is an important
tool that enables a customer to take
steps to prevent identity theft, such as
by arranging to have a fraud alert placed
in his or her credit file
incipal means for a financial
institution to protect against
unauthorized ‘‘use’’ of customer
information that could lead to
‘‘substantial harm or inconvenience’’ to
the institution’s customer. For example,
customer notification is an important
tool that enables a customer to take
steps to prevent identity theft, such as
by arranging to have a fraud alert placed
in his or her credit file. Accordingly,
when evaluating the adequacy of an
institution’s information security
program required by the Security
Guidelines, the Agencies will consider
whether the institution has developed
and implemented a response program as
described in the final Guidance.
Scope of Guidance
In a number of places throughout the
proposed Guidance, the Agencies
referenced definitions in the Security
Guidelines. However, the Agencies did
not specifically address the scope of the
proposed Guidance. Commenters had
questions and suggestions regarding the
scope of the proposed Guidance and the
meaning of terms used.
Entities and Information Covered
Some commenters had questions
about the entities and information
covered by the proposed Guidance. One
commenter suggested that the Agencies
clarify that foreign offices, branches,
and affiliates of United States banks are
not subject to the final Guidance. Some
commenters recommended that the
Agencies clarify that the final Guidance
applies only to unauthorized access to
sensitive information within the control
of the financial institution. One
commenter thought that the final
Guidance should be broad and cover
frauds committed against bank
customers through the Internet, such as
through the misuse of online corporate
identities to defraud online banking
customers through fake web sites
(commonly known as ‘‘phishing’’).
Several commenters requested
confirmation in the final Guidance that
it applies to consumer accounts and not
to business and other commercial
accounts
should be broad and cover
frauds committed against bank
customers through the Internet, such as
through the misuse of online corporate
identities to defraud online banking
customers through fake web sites
(commonly known as ‘‘phishing’’).
Several commenters requested
confirmation in the final Guidance that
it applies to consumer accounts and not
to business and other commercial
accounts.
For greater clarity, the Agencies have
revised the Background section of the
final Guidance to state that the scope
and definitions of terms used in the
Guidance are identical to those in
section 501(b) of the GLBA and the
Security Guidelines which largely cross-
reference definitions used in the
Agencies’ Privacy Rules.5 Therefore,
consistent with section 501(b) and the
Security Guidelines, this final Guidance
applies to the entities enumerated in
section 505(a) of the GLBA.6 This final
Guidance does not apply to a financial
institution’s foreign offices, branches, or
affiliates. However, a financial
institution subject to the Security
Guidelines is responsible for the
security of its customer information,
whether the information is maintained
within or outside of the United States,
such as by a service provider located
outside of the United States.
This final Guidance also applies to
‘‘customer information,’’ meaning any
record containing ‘‘nonpublic personal
information’’ (as that term is defined in
§ __.3(n) of the Agencies’ Privacy Rules)
about a financial institution’s customer,
whether in paper, electronic, or other
form, that is maintained by or on behalf
of the institution.7 Consequently, the
final Guidance applies only to
information that is within the control of
the institution and its service providers,
and would not apply to information
directly disclosed by a customer to a
third party, for example, through a
fraudulent Web site.
Moreover, this final Guidance does
not apply to information involving
business or commercial accounts
alf
of the institution.7 Consequently, the
final Guidance applies only to
information that is within the control of
the institution and its service providers,
and would not apply to information
directly disclosed by a customer to a
third party, for example, through a
fraudulent Web site.
Moreover, this final Guidance does
not apply to information involving
business or commercial accounts.
Instead, the final Guidance applies to
nonpublic personal information about a
‘‘customer’’ within the meaning of the
Security Guidelines, namely, a
consumer who obtains a financial
product or service from a financial
institution to be used primarily for
personal, family, or household
purposes, and who has a continuing
relationship with the institution.8
Effect of Other Laws
Several commenters requested that
the Agencies explain how the final
Guidance interacts with additional and
possibly conflicting state law
requirements. Most of these commenters
urged that the final Guidance expressly
preempt state law. By contrast, one
commenter asked the Agencies to clarify
that a financial institution must also
comply with additional state law
requirements. In addition, some
commenters asked that the final
Guidance provide a safe harbor defense
against class action suits. They
suggested that the safe harbor should
cover any financial institution that takes
reasonable steps that regulators require
to protect customer information, but,
nonetheless, experiences an event
beyond its control that leads to the
disclosure of customer information.
These issues do not fall within the
scope of this final Guidance. The extent
to which section 501(b) of the GLBA,
the Security Guidelines, and any related
Agency interpretations, such as this
final Guidance, preempt state law is
governed by Federal law, including the
procedures set forth in section 507 of
GLBA, 15 U.S.C
nd its control that leads to the
disclosure of customer information.
These issues do not fall within the
scope of this final Guidance. The extent
to which section 501(b) of the GLBA,
the Security Guidelines, and any related
Agency interpretations, such as this
final Guidance, preempt state law is
governed by Federal law, including the
procedures set forth in section 507 of
GLBA, 15 U.S.C. 6807.9 Moreover, there
is nothing in Title V of the GLBA that
authorizes the Agencies to provide
institutions with a safe harbor defense.
Therefore, the final Guidance does not
address these issues.
Organizational Changes in the
‘‘Background’’ Section
For the reasons described earlier, the
Background section is adopted
essentially as proposed, except that the
latter part of the paragraph on ‘‘Service
Providers’’ and the entire paragraph on
‘‘Response Programs’’ are incorporated
into the introductory discussion of
section II. The Agencies believe that the
Background section is now clearer, as it
focuses solely on the statutory and
regulatory framework upon which the
final Guidance is based. Comments and
changes with respect to the paragraphs
that were relocated are discussed in the
next section.
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00014
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15739
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
10 Security Guidelines, III.B. and III.C.
11 A footnote has been added to this section to
make clear that institutions should also conduct
background checks of employees to ensure that the
institution does not violate 12 U.S.C. 1829, which
prohibits an institution from hiring an individual
convicted of certain criminal offenses or who is
subject to a prohibition order under 12 U.S.C.
1818(e)(6).
12 Security Guidelines, III.C.1.g.
13 See FFIEC Information Technology
Examination Handbook, Outsourcing Technology
Services Booklet, Jun. 2004; Federal Reserve SR Ltr
ensure that the
institution does not violate 12 U.S.C. 1829, which
prohibits an institution from hiring an individual
convicted of certain criminal offenses or who is
subject to a prohibition order under 12 U.S.C.
1818(e)(6).
12 Security Guidelines, III.C.1.g.
13 See FFIEC Information Technology
Examination Handbook, Outsourcing Technology
Services Booklet, Jun. 2004; Federal Reserve SR Ltr.
00–04, Outsourcing of Information and Transaction
Processing, Feb. 9, 2000; OCC Bulletin 2001–47,
‘‘Third-party Relationships Risk Management
Principles,’’ Nov. 1, 2001; FDIC FIL 68–99, Risk
Assessment Tools and Practices for Information
System Security, July 7, 1999; OTS Thrift Bulletin
82a, Third Party Arrangements, Sept. 1, 2004.
14 See footnote 6, supra.
15 See, e.g., FFIEC Information Technology
Examination Handbook, Outsourcing Technology
Services Booklet, Jun. 2004; OCC Bulletin 2002–16
(national banks); OTS Thrift Bulletin 82a, Third
Party Arrangements, Sept. 1, 2004 (savings
associations).
B. The ‘‘Response Program’’ Section
The Security Guidelines enumerate a
number of security measures that each
financial institution must consider and
adopt, if appropriate, to control risks
stemming from reasonably foreseeable
internal and external threats to an
institution’s customer information.10
The introductory paragraph of section II
of the final Guidance specifically states
that a financial institution should
implement those security measures
designed to prevent unauthorized access
to or use of customer information, such
as by placing access controls on
customer information systems and
conducting background checks for
employees 11 who are authorized to
access customer information. The
introductory paragraph also states that
every financial institution should
develop and implement security
measures designed to address incidents
of unauthorized access to customer
information that occur despite measures
to prevent security breaches
ols on
customer information systems and
conducting background checks for
employees 11 who are authorized to
access customer information. The
introductory paragraph also states that
every financial institution should
develop and implement security
measures designed to address incidents
of unauthorized access to customer
information that occur despite measures
to prevent security breaches.
The measures enumerated in the
Security Guidelines include ‘‘response
programs that specify actions to be
taken when the bank suspects or detects
that unauthorized individuals have
gained access to customer information
systems, including appropriate reports
to regulatory and law enforcement
agencies.’’12 Prompt action by both the
institution and the customer following
the unauthorized access to customer
information is crucial to limit identity
theft. As a result, every financial
institution should develop and
implement a response program
appropriate to the size and complexity
of the institution and the nature and
scope of its activities, designed to
address incidents of unauthorized
access to customer information.
The introductory language in section
II of the final Guidance states that a
response program should be a key part
of an institution’s information security
program. It also emphasizes that a
financial institution’s response program
should be risk-based and describes the
components of a response program in a
less prescriptive manner.
Service Provider Contracts
The Background section of the
proposed Guidance elaborated on the
specific provisions that a financial
institution’s contracts with its service
providers should contain. The proposed
Guidance stated that a financial
institution’s contract with its service
provider should require the service
provider to disclose fully to the
institution information related to any
breach in security resulting in an
unauthorized intrusion into the
institution’s customer information
systems maintained by the service
provider
tracts with its service
providers should contain. The proposed
Guidance stated that a financial
institution’s contract with its service
provider should require the service
provider to disclose fully to the
institution information related to any
breach in security resulting in an
unauthorized intrusion into the
institution’s customer information
systems maintained by the service
provider. It stated that this disclosure
would permit an institution to
expeditiously implement its response
program.
Several commenters on the proposed
Guidance agreed that a financial
institution’s contracts with its service
providers should require the service
provider to disclose fully to the
institution information related to any
breach in security resulting in an
unauthorized intrusion into the
institution’s customer information
systems maintained by the service
provider. However, many commenters
suggested modifications to this section.
The discussion of this aspect of a
financial institution’s contracts with its
service providers is in section II of the
final Guidance. It has been revised as
follows in response to the comments
received.
Timing of Service Provider Notification
The Agencies received a number of
comments regarding the timing of a
service provider’s notice to a financial
institution. One commenter suggested
requiring service providers to report
incidents of unauthorized access to
financial institutions within 24 hours
after discovery of the incident.
In response to comments on the
timing of a service provider’s notice to
a financial institution, the final
Guidance adds that a financial
institution’s contract with its service
provider should require the service
provider to take appropriate action to
address incidents of unauthorized
access to the institution’s customer
information, including by notifying the
institution as soon as possible of any
such incident, to enable the institution
to expeditiously implement its response
program
inal
Guidance adds that a financial
institution’s contract with its service
provider should require the service
provider to take appropriate action to
address incidents of unauthorized
access to the institution’s customer
information, including by notifying the
institution as soon as possible of any
such incident, to enable the institution
to expeditiously implement its response
program. The Agencies determined that
requiring notice within 24 hours of an
incident may not be practicable or
appropriate in every situation,
particularly where, for example, it takes
a service provider time to investigate a
breach in security. Therefore, the final
Guidance does not specify a number of
hours or days by which the service
provider must give notice to the
financial institution.
Existing Contracts With Service
Providers
Some commenters expressed concerns
that they would have to rewrite their
contracts with service providers to
require the disclosure described in this
provision. These commenters asked the
Agencies to grandfather existing
contracts and to apply this provision
only prospectively to new contracts.
Many commenters also suggested that
the final Guidance contain a transition
period to permit financial institutions to
modify their existing contracts.
The Agencies have decided not to
grandfather existing contracts or to add
a transition period to the final Guidance
because, as stated in the proposed
Guidance, this disclosure provision is
consistent with the obligations in the
Security Guidelines that relate to service
provider arrangements and with existing
guidance on this topic previously issued
by the Agencies.13 In order to ensure the
safeguarding of customer information,
financial institutions that use service
providers likely have already arranged
to receive notification from the service
providers when customer information is
accessed in an unauthorized manner
ty Guidelines that relate to service
provider arrangements and with existing
guidance on this topic previously issued
by the Agencies.13 In order to ensure the
safeguarding of customer information,
financial institutions that use service
providers likely have already arranged
to receive notification from the service
providers when customer information is
accessed in an unauthorized manner. In
light of the comments received,
however, the Agencies recognize that
there are institutions that have not
formally included such a disclosure
requirement in their contracts. Where
this is the case, the institution should
exercise its best efforts to add a
disclosure requirement to its contracts
and any new contracts should include
such a provision.
Thus, the final Guidance adopts the
discussion on service provider
arrangements largely as proposed. To
eliminate any ambiguity regarding the
application of this section to foreign-
based service providers, however, the
final Guidance now makes clear that a
covered financial institution 14 should
be capable of addressing incidents of
unauthorized access to customer
information in customer information
systems maintained by its domestic and
foreign service providers.15
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00015
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15740
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
16 12 CFR 21.11 (national banks, Federal branches
and agencies); 12 CFR 208.62 (State member banks);
12 CFR 211.5(k) (Edge and agreement corporations);
12 CFR 211.24(f) (uninsured State branches and
agencies of foreign banks); 12 CFR 225.4(f) (bank
holding companies and their nonbank subsidiaries);
12 CFR part 353 (State non-member banks); and 12
CFR 563.180 (savings associations).
17 For example, national banks must file SARs in
connection with computer intrusions and other
computer crimes
2 CFR 211.5(k) (Edge and agreement corporations);
12 CFR 211.24(f) (uninsured State branches and
agencies of foreign banks); 12 CFR 225.4(f) (bank
holding companies and their nonbank subsidiaries);
12 CFR part 353 (State non-member banks); and 12
CFR 563.180 (savings associations).
17 For example, national banks must file SARs in
connection with computer intrusions and other
computer crimes. See OCC Bulletin 2000–14,
‘‘Infrastructure Threats—Intrusion Risks’’ (May 15,
2000); OCC AL 97–9, ‘‘Reporting Computer Related
Crimes’’ (November 19, 1997) (general guidance
still applicable though instructions for new SAR
form published in 65 FR 1229, 1230 (January 7,
2000)). See also OCC AL 2001–4, Identity Theft and
Pretext Calling, April 30, 2001; Federal Reserve SR
01–11, Identity Theft and Pretext Calling, Apr. 26,
2001; SR 97–28, Guidance Concerning Reporting of
Computer Related Crimes by Financial Institutions,
Nov. 6, 1997; FDIC FIL 48–2000, Suspicious
Activity Reports, July 14, 2000; FIL 47–97,
Preparation of Suspicious Activity Reports, May 6,
1997; OTS CEO Memorandum 139, Identity Theft
and Pretext Calling, May 4, 2001; http://
www.ots.treas.gov/BSA (for the latest SAR form and
filing instructions required by OTS as of July 1,
2003).
Components of a Response Program
As described earlier, commenters
criticized the prescriptive nature of
proposed section II that described the
four components a response program
should contain. The proposed Guidance
instructed institutions to design
programs to respond to incidents of
unauthorized access to customer
information by: (1) Assessing the
situation; (2) notifying regulatory and
law enforcement agencies; (3)
containing and controlling the situation;
and (4) taking corrective measures. The
proposed Guidance contained detailed
information about each of these four
components
roposed Guidance
instructed institutions to design
programs to respond to incidents of
unauthorized access to customer
information by: (1) Assessing the
situation; (2) notifying regulatory and
law enforcement agencies; (3)
containing and controlling the situation;
and (4) taking corrective measures. The
proposed Guidance contained detailed
information about each of these four
components.
The introductory discussion in this
section of the final Guidance now makes
clear that, as a general matter, an
institution’s response program should
be risk-based. It applies this principle
by modifying the discussion of a
number of these components. The
Agencies determined that the detailed
instructions in these components of the
proposed Guidance, especially in the
‘‘Corrective Measures’’ section, would
not always be relevant or appropriate.
Therefore, the final Guidance describes,
through brief bulleted points, the
elements of a response program, giving
financial institutions greater discretion
to address incidents of unauthorized
access to or use of customer information
that could result in substantial harm or
inconvenience to a customer.
At a minimum, an institution’s
response program should contain
procedures for: (1) Assessing the nature
and scope of an incident, and
identifying what customer information
systems and types of customer
information have been accessed or
misused; (2) notifying its primary
Federal regulator as soon as possible
when the institution becomes aware of
an incident involving unauthorized
access to or use of sensitive customer
information, as defined later in the final
Guidance; (3) immediately notifying law
enforcement in situations involving
Federal criminal violations requiring
immediate attention; (4) taking
appropriate steps to contain and control
the incident to prevent further
unauthorized access to or use of
customer information, such as by
monitoring, freezing, or closing affected
accounts, while preserving records and
other evidence; an
inal
Guidance; (3) immediately notifying law
enforcement in situations involving
Federal criminal violations requiring
immediate attention; (4) taking
appropriate steps to contain and control
the incident to prevent further
unauthorized access to or use of
customer information, such as by
monitoring, freezing, or closing affected
accounts, while preserving records and
other evidence; and (5) notifying
customers when warranted.
Assess the Situation. The proposed
Guidance stated that an institution
should assess the nature and scope of
the incident and identify what customer
information systems and types of
customer information have been
accessed or misused.
Some commenters stated that the
Agencies should retain this provision in
the final Guidance. One commenter
suggested that an institution should
focus its entire response program
primarily on addressing unauthorized
access to sensitive customer
information.
The Agencies have concluded that a
financial institution’s response program
should begin with a risk assessment that
allows an institution to establish the
nature of any information improperly
accessed. This will allow the institution
to determine whether and how to
respond to an incident. Accordingly, the
Agencies have not changed this
provision.
Notify Regulatory and Law
Enforcement Agencies. The proposed
Guidance provided that an institution
should promptly notify its primary
Federal regulator when it becomes
aware of an incident involving
unauthorized access to or use of
customer information that could result
in substantial harm or inconvenience to
customers
ncident. Accordingly, the
Agencies have not changed this
provision.
Notify Regulatory and Law
Enforcement Agencies. The proposed
Guidance provided that an institution
should promptly notify its primary
Federal regulator when it becomes
aware of an incident involving
unauthorized access to or use of
customer information that could result
in substantial harm or inconvenience to
customers. In addition, the proposed
Guidance stated that an institution
should file a Suspicious Activity Report
(SAR), if required, in accordance with
the applicable SAR regulations 16 and
various Agency issuances.17 The
proposed Guidance stated that,
consistent with the Agencies’ SAR
regulations, in situations involving
Federal criminal violations requiring
immediate attention, the institution
immediately should notify, by
telephone, the appropriate law
enforcement authorities and its primary
regulator, in addition to filing a timely
SAR. For the sake of clarity, the final
Guidance discusses notice to regulators
and notice to law enforcement in two
separate bulleted items.
Standard for Notice to Regulators
The provision regarding notice to
regulators in the proposed Guidance
prompted numerous comments. Many
commenters suggested that the Agencies
adopt a narrow standard for notifying
regulators. These commenters were
concerned that notice to regulators,
provided under the circumstances
described in the proposed Guidance,
would be unduly burdensome for
institutions, service providers, and
regulators, alike.
Some of these commenters suggested
that the Agencies adopt the same
standard for notifying regulators and
customers. These commenters
recommended that notification occur
when an institution becomes aware of
an incident involving unauthorized
access to or use of ‘‘sensitive customer
information,’’ a defined term in the
proposed Guidance that specified a
subset of customer information deemed
by the Agencies as most likely to be
misused
cies adopt the same
standard for notifying regulators and
customers. These commenters
recommended that notification occur
when an institution becomes aware of
an incident involving unauthorized
access to or use of ‘‘sensitive customer
information,’’ a defined term in the
proposed Guidance that specified a
subset of customer information deemed
by the Agencies as most likely to be
misused.
Other commenters recommended that
the Agencies narrow this provision so
that a financial institution would inform
a regulator only in connection with an
incident that poses a significant risk of
substantial harm to a significant number
of its customers, or only in a situation
where substantial harm to customers
has occurred or is likely to occur,
instead of when it could occur.
Other commenters who advocated the
adoption of a narrower standard asked
the Agencies to take the position that
filing a SAR constitutes sufficient notice
and that notification of other regulatory
and law enforcement agencies is at the
sole discretion of the institution. One
commenter stated that it is difficult to
imagine any scenario that would trigger
the response program without requiring
a SAR filing. Some commenters asserted
that if the Agencies believe a lower
threshold is advisable for security
breaches, the Agencies should amend
the SAR regulations.
By contrast, some commenters
recommended that the standard for
notification of regulators remain broad.
One commenter advocated that any
event that triggers an internal
investigation by the institution should
require notice to the appropriate
regulator. Another commenter similarly
suggested that notification of all security
events to Federal regulators is critical,
not only those involving unauthorized
access to or use of customer information
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
investigation by the institution should
require notice to the appropriate
regulator. Another commenter similarly
suggested that notification of all security
events to Federal regulators is critical,
not only those involving unauthorized
access to or use of customer information
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15741
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
18 See footnote 16, supra.
19 See FFIEC Information Technology
Examination Handbook, Information Security
Booklet, Dec. 2002, pp. 68–74 available at: http://
www.ffiec.gov/ffiecinfobase/html_pages/
infosec_book_frame.htm.
that could result in substantial harm or
inconvenience to its customers.
The Agencies have concluded that the
standard for notification to regulators
should provide an early warning to
allow an institution’s regulator to assess
the effectiveness of an institution’s
response plan, and, where appropriate,
to direct that notice be given to
customers if the institution has not
already done so. Thus, the standard in
the final Guidance states that an
institution should notify its primary
Federal regulator as soon as possible
when the institution becomes aware of
an incident involving unauthorized
access to or use of ‘‘sensitive customer
information.’’
‘‘Sensitive customer information’’ is
defined in section III of the final
Guidance and means a customer’s name,
address, or telephone number, in
conjunction with the customer’s social
security number, driver’s license
number, account number, credit or debit
card number, or a personal
identification number or password that
would permit access to the customer’s
account. ‘‘Sensitive customer
information’’ also includes any
combination of components of customer
information that would allow someone
to log onto or access the customer’s
account, such as user name and
password or password and account
number
number, account number, credit or debit
card number, or a personal
identification number or password that
would permit access to the customer’s
account. ‘‘Sensitive customer
information’’ also includes any
combination of components of customer
information that would allow someone
to log onto or access the customer’s
account, such as user name and
password or password and account
number.
This standard is narrower than that in
the proposed Guidance because a
financial institution will need to notify
its regulator only if it becomes aware of
an incident involving ‘‘sensitive
customer information.’’ Therefore,
under the final Guidance, there will be
fewer occasions when a financial
institution should need to notify its
regulators. However, under this
standard, a financial institution will
need to notify its regulator at the time
that the institution initiates its
investigation to determine the
likelihood that the information has been
or will be misused, so that the regulator
will be able to take appropriate action,
if necessary.
Method of Providing Notice to
Regulators
Commenters on the proposed
Guidance also questioned how a
financial institution should provide
notice to its regulator. One commenter
suggested that the Agencies should
standardize the notice that financial
institutions provide to their regulators.
The commenter suggested that the
Agencies use these notices to track
institutions’ compliance with the
Security Guidelines, gather
comprehensive details regarding each
incident, and track other statistical data
regarding security. The statistical data
could include the number of security
incidents reported annually and the
number of times the incidents
warranted customer notice.
The Agencies do not wish to create
another SAR-like process that requires
the completion of detailed forms
the
Security Guidelines, gather
comprehensive details regarding each
incident, and track other statistical data
regarding security. The statistical data
could include the number of security
incidents reported annually and the
number of times the incidents
warranted customer notice.
The Agencies do not wish to create
another SAR-like process that requires
the completion of detailed forms.
Instead, the Agencies contemplate that a
financial institution will notify
regulators as quickly as possible, by
telephone, or in some other expeditious
manner when the institution becomes
aware of an incident involving
unauthorized access to or use of
sensitive customer information. The
Agencies believe that the extent to
which they will gather statistics on
security incidents and customer notice
is beyond the scope of the final
Guidance. Whether or not an Agency
will track the number of incidents
reported is left to the discretion of
individual Agencies.
Notice to Regulators by Service
Providers
Commenters on the proposed
Guidance questioned whether a
financial institution or its service
provider should give notice to a
regulator when a security incident
involves an unauthorized intrusion into
the institution’s customer information
systems maintained by the service
provider. One commenter noted that if
a security event occurs at a large service
provider, regulators could receive
thousands of notices from institutions
relating to the same event. The
commenter suggested that if a service
provider is examined by one of the
Agencies the most efficient means of
providing regulatory notice of such a
security event would be to allow the
servicer to notify its primary Agency
contact. The primary Agency contact
then could disseminate the information
to the other regulatory agencies as
appropriate.
The Agencies believe that it is the
responsibility of the financial institution
and not the service provider to notify
the institution’s regulator
ns of
providing regulatory notice of such a
security event would be to allow the
servicer to notify its primary Agency
contact. The primary Agency contact
then could disseminate the information
to the other regulatory agencies as
appropriate.
The Agencies believe that it is the
responsibility of the financial institution
and not the service provider to notify
the institution’s regulator. Therefore, the
final Guidance states that a financial
institution should notify its primary
Federal regulator as soon as possible
when the institution becomes aware of
an incident involving unauthorized
access to or use of sensitive customer
information. Nonetheless, a security
incident at a service provider could
have an impact on multiple financial
institutions that are supervised by
different Federal regulators. Therefore,
in the interest of efficiency and burden
reduction, the last paragraph in section
II of the final Guidance makes clear that
an institution may authorize or contract
with its service provider to notify the
institution’s regulator on the
institution’s behalf when a security
incident involves an unauthorized
intrusion into the institution’s customer
information systems maintained by the
service provider.
Notice to Law Enforcement
Some commenters took issue with the
provision in the proposed Guidance
regarding notification of law
enforcement by telephone. One
commenter asked the Agencies to clarify
how notification of law enforcement by
telephone would work since in many
cases it is unclear what telephone
number should be used. This
commenter maintained that size and
sophistication of law enforcement
authorities may differ from state to state
and this requirement may create
confusion and unwarranted action by
the law enforcement authority.
The final Guidance adopts this
provision as proposed
ation of law enforcement by
telephone would work since in many
cases it is unclear what telephone
number should be used. This
commenter maintained that size and
sophistication of law enforcement
authorities may differ from state to state
and this requirement may create
confusion and unwarranted action by
the law enforcement authority.
The final Guidance adopts this
provision as proposed. The Agencies
note that the provision stating that an
institution should notify law
enforcement by telephone in situations
involving Federal criminal violations
requiring immediate attention is
consistent with the Agencies’ existing
SAR regulations.18
Contain and Control the Situation.
The proposed Guidance stated that the
financial institution should take
measures to contain and control a
security incident to prevent further
unauthorized access to or use of
customer information while preserving
records and other evidence.19 It also
stated that, depending upon the
particular facts and circumstances of the
incident, measures in connection with
computer intrusions could include: (1)
Shutting down applications or third
party connections; (2) reconfiguring
firewalls in cases of unauthorized
electronic intrusion; (3) ensuring that all
known vulnerabilities in the financial
institution’s computer systems have
been addressed; (4) changing computer
access codes; (5) modifying physical
access controls; and (6) placing
additional controls on service provider
arrangements.
Few comments were received on this
section. One commenter suggested that
the Agencies adopt this section
unchanged in the final Guidance.
Another commenter had questions
about the meaning of the phrase
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00017
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
rols; and (6) placing
additional controls on service provider
arrangements.
Few comments were received on this
section. One commenter suggested that
the Agencies adopt this section
unchanged in the final Guidance.
Another commenter had questions
about the meaning of the phrase
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00017
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15742
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
20 http://www.bis.org/publ/bcbs35.htm.
21 http://www.iso.org/iso/en/prods-services/
popstds/informationsecurity.html.
‘‘known vulnerabilities.’’ Commenters
did, however, note the overlap between
proposed section II.C., and the
corrective measures in proposed section
II.D., described as ‘‘flagging accounts’’
and ‘‘securing accounts.’’
The Agencies agree that some sections
in the proposed Guidance overlapped.
Therefore, the Agencies modified this
section by incorporating concepts from
the proposed Corrective Measures
component, and removing the more
specific examples in this section,
including the terms that confused
commenters. This section in the final
Guidance gives an institution greater
discretion to determine the measures it
will take to contain and control a
security incident. It states that
institutions should take appropriate
steps to contain and control the incident
to prevent further unauthorized access
to or use of customer information, such
as by monitoring, freezing, or closing
affected accounts, while preserving
records and other evidence
n institution greater
discretion to determine the measures it
will take to contain and control a
security incident. It states that
institutions should take appropriate
steps to contain and control the incident
to prevent further unauthorized access
to or use of customer information, such
as by monitoring, freezing, or closing
affected accounts, while preserving
records and other evidence.
Preserving Evidence
One commenter stated that the final
Guidance should require financial
institutions, as part of the response
process, to have an effective computer
forensics capability in order to
investigate and mitigate computer
security incidents as discussed in
principle fourteen of the Basel
Committee’s ‘‘Risk Management for
Electronic Banking’’ 20 and the
International Organization for
Standardization’s ISO 17799.21
The Agencies note that the final
Guidance addresses not only computer
security incidents, but also all other
incidents of unauthorized access to
customer information. Thus, it is not
appropriate to include more detail about
steps an institution should take to
investigate and mitigate computer
security incidents. However, the
Agencies believe that institutions
should be mindful of industry standards
when investigating an incident.
Therefore, the final Guidance contains a
reference to forensics by generally
noting that an institution should take
appropriate steps to contain and control
an incident, while preserving records
and other evidence.
Corrective Measures. The proposed
Guidance stated that once a financial
institution understands the scope of the
incident and has taken steps to contain
and control the situation, it should take
measures to address and mitigate the
harm to individual customers
hat an institution should take
appropriate steps to contain and control
an incident, while preserving records
and other evidence.
Corrective Measures. The proposed
Guidance stated that once a financial
institution understands the scope of the
incident and has taken steps to contain
and control the situation, it should take
measures to address and mitigate the
harm to individual customers. It then
described three corrective measures that
a financial institution should include as
a part of its response program in order
to effectively address and mitigate harm
to individual customers: (1) Flagging
accounts; (2) securing accounts; and (3)
notifying customers. The Agencies
removed the first two corrective
measures for the reasons that follow.
Flagging and Securing Accounts. The
first corrective measure in the proposed
Guidance directed financial institutions
to ‘‘flag accounts.’’ It stated that an
institution should immediately begin
identifying and monitoring the accounts
of those customers whose information
may have been accessed or misused. It
also stated that an institution should
provide staff with instructions regarding
the recording and reporting of any
unusual activity, and if indicated given
the facts of a particular incident,
implement controls to prevent the
unauthorized withdrawal or transfer of
funds from customer accounts.
The second corrective measure
directed institutions to ‘‘secure
accounts.’’ The proposed Guidance
stated that when a checking, savings, or
other deposit account number, debit or
credit card account number, personal
identification number (PIN), password,
or other unique identifier has been
accessed or misused, the financial
institution should secure the account
and all other accounts and services that
can be accessed using the same account
number or name and password
combination. The proposed Guidance
stated that accounts should be secured
until such time as the financial
institution and the customer agree on a
course of action
assword,
or other unique identifier has been
accessed or misused, the financial
institution should secure the account
and all other accounts and services that
can be accessed using the same account
number or name and password
combination. The proposed Guidance
stated that accounts should be secured
until such time as the financial
institution and the customer agree on a
course of action.
Commenters were critical of these
proposed measures. Several commenters
asserted that the final Guidance should
not prescribe responses to security
incidents with this level of detail. Other
commenters recommended that if the
Agencies chose to retain references to
‘‘flagging’’ or ‘‘securing’’ accounts, they
should include the words ‘‘where
appropriate’’ in order to give
institutions the flexibility to choose the
most effective solutions to problems.
Commenters also stated that the
decision to flag accounts, the nature of
that flag, and the duration of the flag,
should be left to an individual financial
institution’s risk-based procedures
developed under the Security
Guidelines. These commenters asked
the Agencies to recognize that regular,
ongoing fraud prevention and detection
methods employed by an institution
may be sufficient.
Commenters representing small
institutions stated that they do not have
the technology or other resources to
monitor individual accounts. They
stated that the financial impact of
having to monitor accounts for unusual
activity would be enormous, as each
institution would have to purchase
expensive technology, hire more
personnel, or both. These commenters
asked the Agencies to provide
institutions with the flexibility to close
an account if the institution detects
unusual activity.
With respect to ‘‘securing accounts,’’
several commenters stated that if
‘‘secure’’ means close or freeze, either
action would be extreme and would
have significant adverse consequences
for customers
e technology, hire more
personnel, or both. These commenters
asked the Agencies to provide
institutions with the flexibility to close
an account if the institution detects
unusual activity.
With respect to ‘‘securing accounts,’’
several commenters stated that if
‘‘secure’’ means close or freeze, either
action would be extreme and would
have significant adverse consequences
for customers. Other commenters stated
that the requirement that the institution
and the customer ‘‘agree on a course of
action’’ is unrealistic, unworkable and
should be eliminated. Some
commenters explained that if a
customer is traveling and the financial
institution cannot contact the customer
to obtain the customer’s consent,
freezing or closing a customer’s account
could strand the customer with no
means of taking care of expenses. They
stated that, in the typical case, the
institution would monitor such an
account for suspicious transactions.
As described earlier, the Agencies are
adopting an approach in the final
Guidance that is more flexible and risk-
based than that in the proposed
Guidance. The final Guidance
incorporates the general concepts
described in the first two corrective
measures into the brief bullets
describing components of a response
program enumerated in section II.C.
Therefore, the first and second
corrective measures no longer appear in
the final Guidance.
Customer Notice and Assistance. The
third corrective measure in the
proposed Guidance was titled
‘‘Customer Notice and Assistance.’’ This
proposed measure stated that a financial
institution should notify and offer
assistance to customers whose
information was the subject of an
incident of unauthorized access or use
under the circumstances described in
section III of the proposed Guidance.
The proposed Guidance also described
which customers should be notified. In
addition, this corrective measure
contained provisions discussing
delivery and contents of the customer
notice
should notify and offer
assistance to customers whose
information was the subject of an
incident of unauthorized access or use
under the circumstances described in
section III of the proposed Guidance.
The proposed Guidance also described
which customers should be notified. In
addition, this corrective measure
contained provisions discussing
delivery and contents of the customer
notice.
The final Guidance now states that an
institution’s response program should
contain procedures for notifying
customers when warranted. For clarity’s
sake, the discussion of which customers
should be notified, and the delivery and
contents of customer notice, is now in
new section III, titled ‘‘Customer
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00018
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15743
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
Notice.’’ Comments and changes with
respect to the paragraphs that were
relocated are discussed under the
section titled ‘‘Customer Notice’’ that
follows.
Responsibility for Notice to Customers
Some commenters were confused by
the discussion in the proposed
Guidance stating that a financial
institution’s contract with its service
provider should require the service
provider to disclose fully to the
institution information related to any
breach in security resulting in an
unauthorized intrusion into the
institution’s customer information
systems maintained by the service
provider. Commenters stated that this
provision appears to create an obligation
for both financial institutions and their
service providers to provide notice of
security incidents to the institution’s
customers. These commenters
recommended that the service provider
notify its financial institution customer
so that the financial institution could
provide appropriate notice to its
customers. Thus, customers would
avoid receiving multiple notices relating
to a single security incident
l institutions and their
service providers to provide notice of
security incidents to the institution’s
customers. These commenters
recommended that the service provider
notify its financial institution customer
so that the financial institution could
provide appropriate notice to its
customers. Thus, customers would
avoid receiving multiple notices relating
to a single security incident.
Other commenters asserted that a
financial institution should not have to
notify its customers if an incident has
occurred because of the negligence of its
service provider. These commenters
recommended that in this situation, the
service provider should be responsible
for providing notice to the financial
institution’s customers.
As discussed above in connection
with notice to regulators, the Agencies
believe that it is the responsibility of the
institution, and not of the service
provider, to notify the institution’s
customers in connection with an
unauthorized intrusion into an
institution’s customer information
systems maintained by the service
provider. The responsibility to notify
customers remains with the institution
whether the incident is inadvertent or
due to the service provider’s negligence.
The Agencies note that the costs of
providing notice to the institution’s
customers as a result of negligence on
the part of the service provider may be
addressed in the financial institution’s
contract with its service provider.
The last paragraph in section II of the
final Guidance, therefore, states that it is
the responsibility of the financial
institution to notify the institution’s
customers. It also states that the
institution may authorize or contract
with its service provider to notify
customers on the institution’s behalf,
when a security incident involves an
unauthorized intrusion into the
institution’s customer information
systems maintained by the service
provider.
C
tes that it is
the responsibility of the financial
institution to notify the institution’s
customers. It also states that the
institution may authorize or contract
with its service provider to notify
customers on the institution’s behalf,
when a security incident involves an
unauthorized intrusion into the
institution’s customer information
systems maintained by the service
provider.
C. The ‘‘Customer Notice’’ Section
Section III of the proposed Guidance
described the standard for providing
notice to customers and defined the
term ‘‘sensitive customer information’’
used in that standard. This section also
gave examples of circumstances when a
financial institution should give notice
and when the Agencies do not expect a
financial institution to give notice. It
also discussed contents of the notice
and proper delivery.
Section III of the final Guidance
similarly describes the standard for
providing notice to customers and
defines both the terms ‘‘sensitive
customer information’’ and ‘‘affected
customers.’’ It also discusses the
contents of the notice and proper
delivery.
Standard for Providing Notice
A key feature of the proposed
Guidance was the description of when
a financial institution should provide
customer notice. The proposed
Guidance stated that an institution
should notify affected customers
whenever it becomes aware of
unauthorized access to ‘‘sensitive
customer information’’ unless the
institution, after an appropriate
investigation, reasonably concludes that
misuse of the information is unlikely to
occur and takes appropriate steps to
safeguard the interests of affected
customers, including by monitoring
affected customers’ accounts for
unusual or suspicious activity
ers
whenever it becomes aware of
unauthorized access to ‘‘sensitive
customer information’’ unless the
institution, after an appropriate
investigation, reasonably concludes that
misuse of the information is unlikely to
occur and takes appropriate steps to
safeguard the interests of affected
customers, including by monitoring
affected customers’ accounts for
unusual or suspicious activity.
The Agencies believed that this
proposed standard would strike a
balance between notification to
customers every time the mere
possibility of misuse of customer
information arises from unauthorized
access and a situation where the
financial institution knows with
certainty that information is being
misused. However, the Agencies
specifically requested comment on
whether this is the appropriate standard
and invited commenters to offer
alternative thresholds for customer
notification.
Some commenters stated that the
proposed standard was reasonable and
sufficiently flexible. However, many
commenters recommended that the
Agencies provide financial institutions
with greater discretion to determine
when a financial institution should
notify its customers. Some of these
commenters asserted that a financial
institution should not have to give
notice unless the institution believes it
‘‘to be reasonably likely,’’ or if
circumstances indicated ‘‘a significant
risk’’ that the information will be
misused.
Commenters maintained that because
the proposed standard states that a
financial institution should give notice
when fraud or identity theft is merely
possible, notification under these
circumstances would needlessly alarm
customers where little likelihood of
harm exists. Commenters claimed that,
eventually, frequent notices in non-
threatening situations would be
perceived by customers as routine and
commonplace, and therefore reduce
their effectiveness
a
financial institution should give notice
when fraud or identity theft is merely
possible, notification under these
circumstances would needlessly alarm
customers where little likelihood of
harm exists. Commenters claimed that,
eventually, frequent notices in non-
threatening situations would be
perceived by customers as routine and
commonplace, and therefore reduce
their effectiveness.
The Agencies believe that articulating
as part of the guidance a standard that
sets forth when notice to customers is
warranted is both helpful and
appropriate. However, the Agencies
agree with commenters and are
concerned that the proposed threshold
inappropriately required institutions to
prove a negative proposition, namely,
that misuse of the information accessed
is unlikely to occur. In addition, the
Agencies do not want customers of
financial institutions to receive notices
that would not be useful to them.
Therefore, the Agencies have revised the
standard for customer notification.
The final Guidance provides that
when an institution becomes aware of
an incident of unauthorized access to
sensitive customer information, the
institution should conduct a reasonable
investigation to determine promptly the
likelihood that the information has been
or will be misused. If the institution
determines that misuse of the
information has occurred or is
reasonably possible, it should notify
affected customers as soon as possible.
An investigation is an integral part of
the standard in the final Guidance. A
financial institution should not forego
conducting an investigation to avoid
reaching a conclusion regarding the
likelihood that customer information
has been or will be misused and cannot
unreasonably limit the scope of the
investigation. However, the Agencies
acknowledge that a full-scale
investigation may not be necessary in all
cases, such as where the facts readily
indicate that information will or will
not be misused
go
conducting an investigation to avoid
reaching a conclusion regarding the
likelihood that customer information
has been or will be misused and cannot
unreasonably limit the scope of the
investigation. However, the Agencies
acknowledge that a full-scale
investigation may not be necessary in all
cases, such as where the facts readily
indicate that information will or will
not be misused.
Monitoring for Suspicious Activity
The proposed Guidance stated that an
institution need not notify customers if
it reasonably concludes that misuse of
the information is unlikely to occur and
takes appropriate steps to safeguard the
interests of affected customers,
including by monitoring affected
customers’ accounts for unusual or
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00019
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15744
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
22 See CAL. CIV. CODE § 1798.82 (West 2005).
23 See CAL. CIV. CODE § 1798.82(c) (West 2005).
24 This includes circumstances when an
institution confirms that an oral request for delay
from law enforcement will be followed by a written
request.
suspicious activity. A number of
comments addressed the standard in the
proposed Guidance on monitoring
affected customers’ accounts for
unusual or suspicious activity.
Some commenters stated that the final
Guidance should grant institutions the
discretion to monitor the affected
customer accounts for a period of time
and to the extent warranted by the
particular circumstances. Some
commenters suggested that monitoring
occur during the investigation. One
commenter noted that an institution’s
investigation may reveal that monitoring
is unnecessary. One commenter noted
that monitoring the customer’s accounts
at the institution may not protect the
customer, because unauthorized access
to customer information may result in
identity theft beyond the accounts held
at the specific financial institution
toring
occur during the investigation. One
commenter noted that an institution’s
investigation may reveal that monitoring
is unnecessary. One commenter noted
that monitoring the customer’s accounts
at the institution may not protect the
customer, because unauthorized access
to customer information may result in
identity theft beyond the accounts held
at the specific financial institution.
The Agencies agree that under certain
circumstances, monitoring may be
unnecessary, for example when, on the
basis of a reasonable investigation, an
institution determines that information
was not misused. The Agencies also
agree that the monitoring requirement
may not protect the customer. Indeed,
an identity thief with unauthorized
access to certain sensitive customer
information likely will open accounts at
other financial institutions in the
customer’s name. Accordingly, the
Agencies conclude that monitoring
under the circumstances described in
the standard for notice would be
burdensome for financial institutions
without a commensurate benefit to
customers. For these reasons, the
Agencies have removed the reference to
monitoring in the final Guidance.
Timing of Notice
The proposed Guidance did not
include specific language on the timing
of notice to customers and the Agencies
received many comments on this issue.
Some commenters requested
clarification of the time frame for
customer notice. One commenter
recommended that the Agencies adopt
the approach in the proposed Guidance
because it did not set forth any
circumstances that may delay
notification of the affected customers.
Yet another commenter maintained that,
in light of a customer’s need to act
expeditiously against identity theft, an
outside limit of 48 hours after the
financial institution learns of the breach
is a reasonable and timely requirement
for notice to customers
oach in the proposed Guidance
because it did not set forth any
circumstances that may delay
notification of the affected customers.
Yet another commenter maintained that,
in light of a customer’s need to act
expeditiously against identity theft, an
outside limit of 48 hours after the
financial institution learns of the breach
is a reasonable and timely requirement
for notice to customers. Many
commenters, however, recommended
that the Agencies make clear that an
institution may take the time it
reasonably needs to conduct an
investigation to assess the risk resulting
from a security incident.
The Agencies have responded to these
various comments on the timing of
notice by providing that a financial
institution notify an affected customer
‘‘as soon as possible’’ after concluding
that misuse of the customer’s
information has occurred or is
reasonably possible. As the scope and
timing of a financial institution’s
investigation is dictated by the facts and
circumstances of a particular case, the
Agencies have not designated a specific
number of hours or days by which
financial institutions should provide
notice to customers. The Agencies
believe that doing so may inhibit an
institution’s ability to investigate
adequately a particular incident or may
result in notice that is not timely.
Delay for Law Enforcement
Investigation
The proposed Guidance did not
address delay of notice to customers
while a law enforcement investigation is
conducted. Many commenters
recommended permitting an institution
to delay notification to customers to
avoid compromising a law enforcement
investigation
vestigate
adequately a particular incident or may
result in notice that is not timely.
Delay for Law Enforcement
Investigation
The proposed Guidance did not
address delay of notice to customers
while a law enforcement investigation is
conducted. Many commenters
recommended permitting an institution
to delay notification to customers to
avoid compromising a law enforcement
investigation. These commenters noted
that the California Database Protection
Act of 2003 (CDPA) requires notification
of California residents whose
unencrypted personal information was,
or is reasonably believed to have been,
acquired by an unauthorized person.22
However, the CDPA permits a delay in
notification if a law enforcement agency
determines that the notification will
impede a criminal investigation.23
Another commenter suggested that an
institution should not have to obtain a
formal determination from a law
enforcement agency before it is able to
delay notice.
The Agencies agree that it is
appropriate to delay customer notice if
such notice will jeopardize a law
enforcement investigation. However, to
ensure that such a delay is necessary
and justifiable, the final Guidance states
that customer notice may be delayed if
an appropriate law enforcement agency
determines that notification will
interfere with a criminal investigation
and provides the institution with a
written request for the delay.24
The Agencies are concerned that a
delay of notification for a law
enforcement investigation could
interfere with the ability of customers to
protect themselves from identity theft
and other misuse of their sensitive
information. Thus, the final Guidance
also provides that a financial institution
should notify its customers as soon as
notification will no longer interfere with
the investigation and should maintain
contact with the law enforcement
agency that has requested a delay, in
order to learn, in a timely manner, when
customer notice will no longer interfere
with the investigation
eir sensitive
information. Thus, the final Guidance
also provides that a financial institution
should notify its customers as soon as
notification will no longer interfere with
the investigation and should maintain
contact with the law enforcement
agency that has requested a delay, in
order to learn, in a timely manner, when
customer notice will no longer interfere
with the investigation.
Sensitive Customer Information
Scope of Standard
The Agencies received many
comments on the limitation of notice in
the proposed Guidance to incidents
involving unauthorized access to
sensitive customer information. The
Agencies invited comment on whether
to modify the proposed standard for
notice to apply to other circumstances
that compel an institution to conclude
that unauthorized access to information,
other than sensitive customer
information, likely will result in
substantial harm or inconvenience to
the affected customers.
Most commenters recommended that
the standard remain as proposed rather
than covering other types of
information. One commenter suggested
that the Agencies continue to allow a
financial institution the discretion to
notify affected customers in any other
extraordinary circumstances that
compel it to conclude that unauthorized
access to information other than
sensitive customer information likely
will result in substantial harm or
inconvenience to those affected.
However, the commenter did not
provide any examples of such
extraordinary circumstances.
The Agencies continue to believe that
the rationale for limiting the standard to
sensitive customer information
expressed in the proposed Guidance is
correct. The proposed Guidance
explained that, under the Security
Guidelines, an institution must protect
against unauthorized access to or use of
customer information that could result
in substantial harm or inconvenience to
a customer
s.
The Agencies continue to believe that
the rationale for limiting the standard to
sensitive customer information
expressed in the proposed Guidance is
correct. The proposed Guidance
explained that, under the Security
Guidelines, an institution must protect
against unauthorized access to or use of
customer information that could result
in substantial harm or inconvenience to
a customer. Substantial harm or
inconvenience is most likely to result
from improper access to sensitive
customer information because this type
of information is most likely to be
misused, as in the commission of
identity theft.
The Agencies have not identified any
other circumstances that should prompt
customer notice and continue to believe
that it is not likely that a customer will
suffer substantial harm or
inconvenience from unauthorized
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00020
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15745
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
25 See CAL. CIV. CODE § 1798.82(a) (West 2005).
26 See Security Guidelines, I.C.2.c.
27 See § __.3(p)(3)(i).
28 Under California law requiring notice,
‘‘personal information’’ means an individual’s first
name or first initial and last name in combination
with any one or more of the following data
elements, when either the name or the data
elements are not encrypted: (1) Social security
number; (2) driver’s license number or California
Identification Card number; (3) account number,
credit or debit card number, in combination with
any required security code access code, or password
that would permit access to an individual’s
financial account. See CAL. CIV. CODE § 1798.82(e)
(West 2005).
access to other types of information.
Therefore, the standard in the final
Guidance continues to be limited to
unauthorized access to sensitive
customer information
) account number,
credit or debit card number, in combination with
any required security code access code, or password
that would permit access to an individual’s
financial account. See CAL. CIV. CODE § 1798.82(e)
(West 2005).
access to other types of information.
Therefore, the standard in the final
Guidance continues to be limited to
unauthorized access to sensitive
customer information. Of course, a
financial institution still may send
notices to customers in any additional
circumstances that it determines are
appropriate.
Definition of Sensitive Customer
Information
The Agencies received many
comments on the proposed definition of
‘‘sensitive customer information’’ in the
proposed Guidance. The first part of the
proposed definition stated that
‘‘sensitive customer information’’ is a
customer’s social security number,
personal identification number (PIN),
password or account number, in
conjunction with a personal identifier
such as the customer’s name, address, or
telephone number. In addition, the
second part of the proposed definition
stated that ‘‘sensitive customer
information’’ includes any combination
of components of customer information
that allow someone to log onto or access
another person’s account, such as user
name and password.
Some commenters agreed with this
definition of ‘‘sensitive customer
information.’’ They said that it was
sound, workable, and sufficiently
detailed. However, many commenters
proposed additions, exclusions, or
alternative definitions.
Additional Elements
Some commenters suggested that the
Agencies add various data elements to
the definition of sensitive customer
information, including a driver’s license
number or number of other government-
issued identification, mother’s maiden
name, and date of birth
able, and sufficiently
detailed. However, many commenters
proposed additions, exclusions, or
alternative definitions.
Additional Elements
Some commenters suggested that the
Agencies add various data elements to
the definition of sensitive customer
information, including a driver’s license
number or number of other government-
issued identification, mother’s maiden
name, and date of birth. One commenter
suggested inclusion of other information
that institutions maintain in their
customer information systems such as a
customer’s account balance, account
activity, purchase history, and
investment information. The commenter
noted that misuse of this information in
combination with a personal identifier
can just as easily result in substantial
harm or inconvenience to a customer.
The Agencies have added to the first
part of the definition several more
specific components, such as driver’s
license number and debit and credit
card numbers, because this information
is commonly sought by identity thieves.
However, the Agencies determined that
the second part of the definition would
cover the remaining suggestions. For
example, where date of birth or mother’s
maiden name are used as passwords,
under the final Guidance they will be
considered components of customer
information that allow someone to log
onto or access another person’s account.
Therefore, these specific elements have
not been added to the definition.
Exclusions
Commenters also asserted that the
proposed definition of sensitive
customer information was too broad and
proposed various exclusions. For
example, some commenters asked the
Agencies to exclude publicly available
information, and also suggested that the
final Guidance apply only to account
numbers for transaction accounts or
other accounts from which withdrawals
or transfers can be initiated
enters also asserted that the
proposed definition of sensitive
customer information was too broad and
proposed various exclusions. For
example, some commenters asked the
Agencies to exclude publicly available
information, and also suggested that the
final Guidance apply only to account
numbers for transaction accounts or
other accounts from which withdrawals
or transfers can be initiated. These
commenters explained that access to a
mortgage account number (which may
also be a public record) does not permit
withdrawal of additional funds or
otherwise damage the customer. Other
commenters requested that the Agencies
exclude encrypted information. Some of
these commenters noted that only
unencrypted information is covered by
the CDPA.25
The final Guidance does not adopt
any of the proposed exclusions. The
Agencies believe it would be
inappropriate to exclude publicly
available information from the
definition of sensitive customer
information, where publicly available
information is otherwise covered by the
definition of ‘‘customer information.’’ 26
So for instance, while a personal
identifier, i.e., name, address, or phone
number, may be publicly available, it is
sensitive customer information when
linked with particular nonpublic
information such as a credit card
account number. However, where the
definition of ‘‘customer information’’
does not cover publicly available
information, sensitive customer
information also would not cover
publicly available information. For
instance, where an individual’s name or
address is linked with a mortgage loan
account number that is in the public
record and, therefore, would not be
considered ‘‘customer information,’’ 27 it
also would not be considered ‘‘sensitive
customer information’’ for purposes of
the final Guidance
rmation, sensitive customer
information also would not cover
publicly available information. For
instance, where an individual’s name or
address is linked with a mortgage loan
account number that is in the public
record and, therefore, would not be
considered ‘‘customer information,’’ 27 it
also would not be considered ‘‘sensitive
customer information’’ for purposes of
the final Guidance.
In addition, access to a customer’s
personal information and account
number, regardless of whether it is an
account from which withdrawals or
transfers can be initiated, may permit an
identity thief to access other accounts
from which withdrawals can be made.
Thus, the Agencies have determined
that the definition of account number
should not be limited as suggested by
commenters. The Agencies also believe
that a blanket exclusion for all
encrypted information is not
appropriate, because there are many
levels of encryption, some of which do
not effectively protect customer
information.
Alternative Definitions
Most alternative definitions suggested
by commenters resembled the definition
of ‘‘personal information’’ under the
CDPA.28 Under the CDPA, ‘‘personal
information’’ includes a resident of
California’s name together with an
account number, or credit or debit card
number only if the information accessed
also includes any required security
code, access code, or password that
would permit access to an individual’s
financial account. Therefore, some
commenters asked that the final
Guidance clarify that a name and an
account number, together, is not
sensitive customer information unless
these elements are combined with other
information that permits access to a
customer’s financial account.
The Agencies concluded that it would
be helpful if financial institutions could
more easily compare and contrast the
definition of ‘‘personal information’’
under the CDPA with the definition of
‘‘sensitive information’’ under the Final
Guidance
t
sensitive customer information unless
these elements are combined with other
information that permits access to a
customer’s financial account.
The Agencies concluded that it would
be helpful if financial institutions could
more easily compare and contrast the
definition of ‘‘personal information’’
under the CDPA with the definition of
‘‘sensitive information’’ under the Final
Guidance. Therefore, the elements in
the definition of sensitive information
in the final Guidance are re-ordered and
the Agencies added the elements
discussed earlier.
The final Guidance states that
sensitive customer information means a
customer’s name, address, or telephone
number, in conjunction with the
customer’s social security number,
driver’s license number, account
number, credit or debit card number, or
a personal identification number or
password that would permit access to
the customer’s account. The final
Guidance also states that sensitive
customer information includes any
combination of components of customer
information that would allow someone
to log onto or access the customer’s
account, such as user name and
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00021
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15746
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
29 See, e.g., Griff Witte, Bogus Charges,
Unknowingly Paid: FTC Accuses 2 of Raiding
90,000 Bank Accounts in Card Fraud, Washington
Post, May 29, 2004, at E1 (list of names with
associated checking account numbers used by
bogus company to debit bank accounts without
customer authorization).
30 The Agencies note that system logs may permit
an institution to determine precisely which
customers’ data has been improperly accessed. See,
e.g., FFIEC Information Technology Handbook,
Information Security Booklet, page 64 available at
http://www.ffiec.gov/ffiecinfobase/html_pages/
infosec_book_frame.htm.
password or a password and account
number
ccounts without
customer authorization).
30 The Agencies note that system logs may permit
an institution to determine precisely which
customers’ data has been improperly accessed. See,
e.g., FFIEC Information Technology Handbook,
Information Security Booklet, page 64 available at
http://www.ffiec.gov/ffiecinfobase/html_pages/
infosec_book_frame.htm.
password or a password and account
number.
The Agencies decline to adopt the
CDPA standard for several reasons.
First, for example, under the CDPA,
personal information includes a
person’s name in combination with
other data elements. By contrast, the
final Guidance treats address and
telephone number in the same manner
as a customer’s name, because reverse
directories may permit an address or
telephone number to be traced back to
an individual customer.
In addition, under the CDPA,
‘‘personal information’’ includes name
together with an account number, or
credit or debit card number only if the
information accessed also includes any
required security code, access code, or
password that would permit access to
an individual’s financial account. The
Agencies note that a name and account
number, alone, is sufficient to create
fraudulent checks, or to direct the
unauthorized debit of a customer’s
account even without an access code.29
Further, a name and credit card number
may permit unauthorized access to a
customer’s account. Therefore, the final
Guidance continues to define a
customer’s name and account number,
or credit or debit card number as
sensitive customer information.
Affected Customers. The Agencies
received many comments on the
discussion of notice to ‘‘affected
customers’’ in the proposed Guidance.
Section II.D.3. of the proposed Guidance
provided that if the institution could
determine from its logs or other data
precisely which customers’ information
was accessed or misused, it could
restrict its notification to those
individuals
mer information.
Affected Customers. The Agencies
received many comments on the
discussion of notice to ‘‘affected
customers’’ in the proposed Guidance.
Section II.D.3. of the proposed Guidance
provided that if the institution could
determine from its logs or other data
precisely which customers’ information
was accessed or misused, it could
restrict its notification to those
individuals. However, if the institution
could not identify precisely which
customers were affected, it should
notify each customer in any group likely
to have been affected, such as each
customer whose information was stored
in the group of files in question.
Commenters were concerned that this
provision in the proposed Guidance was
overly broad. These commenters stated
that providing notice to all customers in
groups likely to be affected would result
in many notices that are not helpful.
The commenters suggested that the final
Guidance narrow the standard for
notifying customers to only those
customers whose information has been
or is likely to be misused.
The discussion of ‘‘affected
customers’’ has been relocated and is
separately set forth following the
definition of ‘‘sensitive customer
information,’’ in the final Guidance. The
discussion of ‘‘affected customers’’ in
the final Guidance states that if a
financial institution, based upon its
investigation, can determine from its
logs or other data precisely which
customers’ information has been
improperly accessed,30 it may notify
only those customers with respect to
whom the institution determines that
misuse of their information has
occurred or is reasonably possible.
However, the final Guidance further
notes that there may be situations where
the institution determines that a group
of files has been accessed improperly,
but is unable to identify which specific
customers’ information has been
accessed
ay notify
only those customers with respect to
whom the institution determines that
misuse of their information has
occurred or is reasonably possible.
However, the final Guidance further
notes that there may be situations where
the institution determines that a group
of files has been accessed improperly,
but is unable to identify which specific
customers’ information has been
accessed. If the circumstances of the
unauthorized access lead the institution
to determine that misuse of the
information contained in the group of
files is reasonably possible, it should
notify all customers in the group. In this
way, the Agencies have reduced the
number of notices that should be sent.
Examples. The proposed Guidance
described several examples of when a
financial institution should give notice
and when the Agencies do not expect a
financial institution to give notice.
The Agencies received a number of
comments on the examples. Some
commenters thought the examples were
helpful and suggested that the Agencies
add more. Other commenters criticized
the examples as too broad. Many
commenters suggested numerous ways
to modify and clarify the examples.
Since the examples in the proposed
Guidance led to interpretive questions,
rather than interpretive clarity, the
Agencies concluded that it is not
particularly helpful to offer examples of
when notice is and is not expected. In
addition, the Agencies believe that the
standard for notice itself has been
clarified and examples are no longer
necessary. Therefore, there are no
examples in the final Guidance.
Content of Customer Notice. The
Agencies received many comments on
the discussion of the content of
customer notice located in section
II.D.3.b. of the proposed Guidance. The
proposed Guidance stated that a notice
should describe the incident in general
terms and the customer’s information
that was the subject of unauthorized
access or use
e, there are no
examples in the final Guidance.
Content of Customer Notice. The
Agencies received many comments on
the discussion of the content of
customer notice located in section
II.D.3.b. of the proposed Guidance. The
proposed Guidance stated that a notice
should describe the incident in general
terms and the customer’s information
that was the subject of unauthorized
access or use. It stated that the notice
should also include a number that
customers can call for further
information and assistance, remind
customers of the need to remain vigilant
over the next 12 to 24 months, and
recommend that customers promptly
report incidents of suspected identity
theft. The proposed Guidance described
several ‘‘key elements’’ that a notice
should contain. It also provided a
number of ‘‘optional elements’’ namely,
examples of additional assistance that
institutions have offered.
Some commenters agreed that the
proposed Guidance sufficiently
addressed most of the key elements
necessary for an effective notice.
However, many commenters requested
greater discretion to determine the
content of the notices that financial
institutions provide to customers.
Commenters suggested that the
Agencies make clear that the various
items suggested for inclusion in any
customer notice are suggestions, and
that not every item is mandatory in
every notice.
Some commenters took issue with the
enumerated items in the proposed
Guidance identified as key elements
that a notice should contain. For
example, many commenters asserted
that customers should not necessarily be
encouraged to place fraud alerts with
credit bureaus in every circumstance.
Some of these commenters noted that
not all situations will warrant having a
fraud alert posted to the customer’s
credit file, especially if the financial
institution took appropriate action to
render the information accessed
worthless
or
example, many commenters asserted
that customers should not necessarily be
encouraged to place fraud alerts with
credit bureaus in every circumstance.
Some of these commenters noted that
not all situations will warrant having a
fraud alert posted to the customer’s
credit file, especially if the financial
institution took appropriate action to
render the information accessed
worthless. According to these
commenters, the consequences of a
fraud alert, such as increased obstacles
to obtaining credit, may outweigh any
benefit. Some commenters also noted
that a proliferation of fraud alerts not
related to actual fraud would dilute the
effectiveness of the alerts.
Other commenters criticized the
optional elements in the proposed
Guidance. For instance, some
commenters stated that a notice should
not inform the customer about
subscription services that provide
notification to the customer when there
is a request for the customer’s credit
report, or offer to subscribe the customer
to this service, free of charge, for a
period of time. These commenters
asserted that customer notices should
not be converted into a marketing
opportunity for subscription services
provided by consumer credit bureaus.
They stated that offering the service
could mislead the customer into
believing that these expensive services
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
me. These commenters
asserted that customer notices should
not be converted into a marketing
opportunity for subscription services
provided by consumer credit bureaus.
They stated that offering the service
could mislead the customer into
believing that these expensive services
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15747
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
are essential. If the service is offered free
of charge, an institution’s choice of
service could be interpreted as an
endorsement for a specific company and
its product.
As a result of the Fair and Accurate
Credit Transactions Act of 2003, Pub. L.
108–159, 117 Stat. 1985–86 (the FACT
Act), many of the descriptions of ‘‘key
elements’’ and ‘‘optional elements’’ in
the proposed Guidance, and comments
on these elements, have been
superceded. For example, the frequency
and circumstances under which a
customer may obtain a credit report
free-of-charge have changed.
The final Guidance continues to
specify that a notice should describe the
incident in general terms and the
customer’s information that was the
subject of unauthorized access or use. It
also continues to state that the notice
should include a number that customers
can call for further information and
assistance, remind customers of the
need to remain vigilant over the next 12
to 24 months, and recommend that
customers promptly report incidents of
suspected identity theft. In addition, the
final Guidance also states that the notice
should generally describe what the
institution has done to protect the
customers’ information from further
unauthorized access
for further information and
assistance, remind customers of the
need to remain vigilant over the next 12
to 24 months, and recommend that
customers promptly report incidents of
suspected identity theft. In addition, the
final Guidance also states that the notice
should generally describe what the
institution has done to protect the
customers’ information from further
unauthorized access.
However, the final Guidance no
longer distinguishes between certain
other ‘‘key’’ items that the notice should
contain and those that are ‘‘optional.’’
The Agencies added greater flexibility to
this section to accommodate any new
protections afforded to consumers that
flow from the FACT Act. Instead of
distinguishing between items that the
notice should contain and those that are
optional, an institution may now select
those items that are appropriate under
the circumstances, and that are
compatible with the FACT Act. Of
course, institutions may incorporate
additional information that is not
mentioned in the final Guidance, where
appropriate.
Coordination With Credit Reporting
Agencies
A trade association representing
credit reporting agencies commented
that its members are extremely
concerned about their ability to comply
with all of the duties (triggered under
the FACT Act) that result from notices
financial institutions send to their
customers. This commenter strongly
recommended that until a financial
institution has contacted each
nationwide consumer reporting agency
to coordinate the timing, content, and
staging of notices as well as the
placement of fraud alerts, as necessary,
a financial institution should refrain
from issuing notices suggesting that
customers contact nationwide consumer
reporting agencies.
The commenter also stated that a
financial institution that includes such
suggestions in a notice to its customers
should work with the credit reporting
agencies to purchase the services the
financial institution believes are
necessary to protect its customers
nancial institution should refrain
from issuing notices suggesting that
customers contact nationwide consumer
reporting agencies.
The commenter also stated that a
financial institution that includes such
suggestions in a notice to its customers
should work with the credit reporting
agencies to purchase the services the
financial institution believes are
necessary to protect its customers. The
commenter stated that the costs of
serving the millions of consumers it
projects would receive notices under the
proposed Guidance cannot be borne by
the nationwide consumer reporting
agencies.
The commenter also noted that the
State of California has provided clear
guidance in connection with its law
requiring notice and also suggested that
coordination with consumer reporting
agencies is vital to ensure that a
consumer can in fact request a file
disclosure in a timely manner. This
commenter stated that similar guidance
at the federal level is essential.
The Agencies believe that the final
Guidance addresses this commenter’s
concerns in several ways. First, for the
reasons described earlier, the standard
for customer notice in the final
Guidance likely will result in financial
institutions sending fewer notices than
under the proposed Guidance. Second,
the final Guidance no longer advises
financial institutions to send notices
suggesting that consumers contact the
nationwide credit reporting agencies in
every case. Institutions can use their
discretion to determine whether such
information should be included in a
notice.
It is clear, however, that customer
notice may prompt more consumer
contacts with credit reporting agencies,
as predicted by the commenter.
Therefore, the final Guidance
encourages a financial institution that
includes in its notice contact
information for nationwide consumer
reporting agencies to notify the
consumer reporting agencies in
advance, prior to sending large numbers
of such notices
lear, however, that customer
notice may prompt more consumer
contacts with credit reporting agencies,
as predicted by the commenter.
Therefore, the final Guidance
encourages a financial institution that
includes in its notice contact
information for nationwide consumer
reporting agencies to notify the
consumer reporting agencies in
advance, prior to sending large numbers
of such notices. In this way, the
reporting agencies will be on notice that
they may have to accommodate
additional requests for the placement of
fraud alerts, where necessary.
Model Notice
Some commenters stated that if
mandatory elements are included in the
final Guidance, the Agencies should
develop a model notice that
incorporates all the mandated elements
yet allows financial institutions to
incorporate additional information
where appropriate.
Given the flexibility that financial
institutions now have to craft a notice
tailored to the circumstances of a
particular incident, the Agencies believe
that any single model notice will be of
little use. Therefore, the final Guidance
does not contain a model notice.
Other Changes Regarding the Content of
a Notice
The general discussion of the content
of a notice in the final Guidance states
that financial institutions should give
the customer notice in a ‘‘clear and
conspicuous manner.’’ In addition, the
final Guidance adopts a commenter’s
suggestion that financial institutions
should generally describe what the
institution has done to protect a
customer’s information from further
unauthorized access so that a customer
can make decisions regarding the
institution’s customer service. This
addition allows a customer to take
measures to protect his or her accounts
that are not redundant or in conflict
with the institution’s actions.
The final Guidance also states that
notice should include a telephone
number that customers can call for
further information and assistance
uthorized access so that a customer
can make decisions regarding the
institution’s customer service. This
addition allows a customer to take
measures to protect his or her accounts
that are not redundant or in conflict
with the institution’s actions.
The final Guidance also states that
notice should include a telephone
number that customers can call for
further information and assistance. The
Agencies added a new footnote to this
text, which explains that the institution
should ensure that it has reasonable
policies and procedures in place,
including trained personnel, to respond
appropriately to customer inquiries and
requests for assistance.
Delivery of Customer Notice. The
Agencies received numerous
suggestions regarding the delivery of
customer notice located in section
II.D.3.a. of the proposed Guidance. The
proposed Guidance stated that customer
notice should be timely, clear, and
conspicuous, and delivered in any
manner that will ensure that the
customer is likely to receive it. The
proposed Guidance provided several
examples of proper delivery and stated
that an institution may choose to
contact all customers affected by
telephone or by mail, or for those
customers who conduct transactions
electronically, using electronic notice.
One commenter representing a large
bank trade association agreed that this
was a correct standard. However, many
other commenters recommended that if
it costs an institution more than
$250,000 to provide notice to customers,
if the affected class of persons to be
notified exceeds 500,000, or if an
incident warrants large distributions of
notices, the final Guidance should
permit various forms of mass
distribution of information, such as by
postings on an Internet Web page and in
national or regional media outlets.
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
lass of persons to be
notified exceeds 500,000, or if an
incident warrants large distributions of
notices, the final Guidance should
permit various forms of mass
distribution of information, such as by
postings on an Internet Web page and in
national or regional media outlets.
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15748
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
31 See CAL. CIV. CODE § 1798.82(g)(3) (West
2005).
32 Under the E-Sign Act, if a statute, regulation,
or other rule of law requires that information be
provided or made available to a consumer in
writing, certain consent procedures apply. See 15
U.S.C. 7001(c).
33 47 CFR 64.1200.
34 The Agencies note, however, that the TCPA
and its implementing regulations generally exempt
calls made to any person with whom the caller has
an established business relationship at the time the
call is made. See, e.g., 47 CFR 64.1200(a)(1)(iv).
Thus, the TCPA would not appear to prohibit a
financial institution’s telephone calls to its own
customers. In addition, the FCC’s regulations state
that the phrase for ‘‘emergency purposes’’ means
calls made necessary in any situation affecting the
health and safety of consumers. 47 CFR
64.1200(f)(2). See also FCC Report and Order
adopting rules and regulations implementing the
TCPA, October 16, 1992, available at http://
www.fcc.gov/cgb/donotcall/, paragraph 51 (calls
from utilities to notify customers of service outages,
and to warn customers of discontinuance of service
are included within the exemption for
emergencies). Financial institutions will give
customer notice under the final Guidance for a
public safety purpose, namely, to permit their
customers to protect themselves where their
sensitive information is likely to be misused, for
example, to facilitate identity theft
customers of service outages,
and to warn customers of discontinuance of service
are included within the exemption for
emergencies). Financial institutions will give
customer notice under the final Guidance for a
public safety purpose, namely, to permit their
customers to protect themselves where their
sensitive information is likely to be misused, for
example, to facilitate identity theft. Therefore, the
Agencies believe that the exemption for emergency
purposes likely would include customer notice that
is provided by telephone using an artificial or
prerecorded voice message call.
Commenters explained that the CDPA
contains such a provision.31
One commenter suggested that a
financial institution should only
provide notice in response to inquiries.
By contrast, other commenters stated
that the final Guidance should make
clear that general notice on a Web site
is inadequate and that financial
institutions should provide individual
notice to customers.
The Agencies determined that the
provision in the proposed Guidance that
notice be delivered in a ‘‘timely, clear,
and conspicuous’’ manner already
appears elsewhere in the Guidance and
does not relate to manner of delivery.
This phrase appears elsewhere in the
final Guidance and is unnecessary here.
The Agencies have decided not to
include a provision in the final
Guidance that permits notice through a
posting on the Web or through the
media in order to provide notice to a
specific number of customers or where
the cost of notice to individual
customers would exceed a specific
dollar amount. The Agencies believe
that the thresholds suggested by
commenters would not be appropriate
in every case, especially in connection
with incidents involving smaller
institutions.
Therefore, the final Guidance states
that customer notice should be
delivered in any manner that is
designed to ensure that a customer can
reasonably be expected to receive it
ould exceed a specific
dollar amount. The Agencies believe
that the thresholds suggested by
commenters would not be appropriate
in every case, especially in connection
with incidents involving smaller
institutions.
Therefore, the final Guidance states
that customer notice should be
delivered in any manner that is
designed to ensure that a customer can
reasonably be expected to receive it.
This standard places the responsibility
on the financial institution to select a
method to deliver notice that is
designed to ensure that a customer is
likely to receive notice.
The final Guidance also provides
examples of proper delivery noting that
an institution may choose to contact all
customers affected by telephone or by
mail, or by electronic mail for those
customers for whom it has a valid e-
mail address and who have agreed to
receive electronic communications from
the institution.
Some commenters questioned the
effect of other laws on the proposed
Guidance. A few commenters noted that
electronic notice should conform to the
requirements of the Electronic
Signatures in Global and National
Commerce Act (E-Sign Act), 15 U.S.C.
7001 et seq.
The final Guidance does not discuss
a financial institution’s obligations
under the E-Sign Act. The Agencies note
that the final Guidance specifically
contemplates that a financial institution
may give notice electronically or by
telephone. There is no requirement that
notice be provided in writing.
Therefore, the final Guidance does not
trigger any consent requirements under
the E-Sign Act.32
Still other commenters requested
clarification that a telephone call made
to a customer for purposes of complying
with the final Guidance is for
‘‘emergency purposes’’ under the
Telephone Consumer Protection Act, 47
U.S.C. 227 (TCPA)
There is no requirement that
notice be provided in writing.
Therefore, the final Guidance does not
trigger any consent requirements under
the E-Sign Act.32
Still other commenters requested
clarification that a telephone call made
to a customer for purposes of complying
with the final Guidance is for
‘‘emergency purposes’’ under the
Telephone Consumer Protection Act, 47
U.S.C. 227 (TCPA). These commenters
noted that this is important because
under the TCPA and its implementing
regulation,33 it is unlawful to initiate a
telephone call to any residential phone
line using an artificial or prerecorded
voice to deliver a message, without the
prior express consent of the called
party, unless such call is for ‘‘emergency
purposes.’’
The final Guidance does not address
the TCPA, because the TCPA is
interpreted by the Federal
Communications Commission (FCC),
and the FCC has not yet taken a position
on this issue.34
V. Effective Date
Many commenters noted that the
proposed Guidance did not contain a
delayed effective date. They suggested
that the Agencies include a transition
period to allow adequate time for
financial institutions to implement the
final Guidance.
The final Guidance is an
interpretation of existing provisions in
section 501(b) of the GLBA and the
Security Guidelines. A delayed effective
date is not required under the APA, 12
U.S.C. 553(d)(2), or the Riegle
Community Development and
Regulatory Improvement Act of 1994, 12
U.S.C. 4802, which requires a delayed
effective date for new regulations,
because the final Guidance is a
statement of policy.
Given the comments received, the
Agencies recognize that not every
financial institution currently has a
response program that is consistent with
the final Guidance. The Agencies expect
these institutions to implement the final
Guidance as soon as possible
4, 12
U.S.C. 4802, which requires a delayed
effective date for new regulations,
because the final Guidance is a
statement of policy.
Given the comments received, the
Agencies recognize that not every
financial institution currently has a
response program that is consistent with
the final Guidance. The Agencies expect
these institutions to implement the final
Guidance as soon as possible. However,
we appreciate that some institutions
may need additional time to develop
new compliance procedures, modify
systems, and train staff in order to
implement an adequate response
program. The Agencies will take into
account the good faith efforts made by
each institution to develop a response
program that is consistent with the final
Guidance, together with all other
relevant circumstances, when
examining the adequacy of an
institution’s information security
program.
VI. OTS Conforming and Technical
Change
OTS is making a conforming,
technical change to its Security
Procedures Rule at 12 CFR 568.5. That
regulation currently provides that
savings associations and subsidiaries
that are not functionally regulated must
comply with the Security Guidelines in
Appendix B to part 570. OTS is adding
a sentence to make clear that
Supplement A to Appendix B is
intended as interpretive guidance only.
With regard to this rule change, OTS
finds that there is good cause to
dispense with prior notice and comment
and with the 30-day delay of effective
date mandated by the Administrative
Procedure Act. 5 U.S.C. 553. OTS
believes that these procedures are
unnecessary and contrary to the public
interest because the revision merely
makes conforming and technical
changes to an existing provision. A
conforming and technical change is
necessary to make clear that
Supplement A to Appendix B to part
570 is intended as interpretive guidance
only. Because the amendment in the
rule is not substantive, it will not affect
savings associations
es are
unnecessary and contrary to the public
interest because the revision merely
makes conforming and technical
changes to an existing provision. A
conforming and technical change is
necessary to make clear that
Supplement A to Appendix B to part
570 is intended as interpretive guidance
only. Because the amendment in the
rule is not substantive, it will not affect
savings associations.
With regard to this rule change, OTS
further finds that the Riegle Community
Development and Regulatory
Improvement Act of 1994 does not
apply because the revision imposes no
additional requirements and makes only
a technical and conforming change to an
existing regulation.
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00024
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15749
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
VII. Impact of Guidance
The Agencies invited comment on the
potential burden associated with the
customer notice provisions for financial
institutions implementing the proposed
Guidance. The Agencies also asked for
information about the anticipated
burden that may arise from the
questions posed by customers who
receive the notices. In addition, the
proposed Guidance asked whether the
Agencies should consider how the
burden may vary depending upon the
size and complexity of a financial
institution. The Agencies also asked for
information about the amount of
burden, if any, the proposed Guidance
would impose on service providers.
Although many commenters
representing financial institutions stated
that they already have a response
program in place, they also noted that
the Agencies had underestimated the
burden that would be imposed on
financial institutions and their
customers by the proposed Guidance.
Some commenters stated that the
proposed Guidance would require
greater time, expenditure, and
documentation for audit and
compliance purposes
enting financial institutions stated
that they already have a response
program in place, they also noted that
the Agencies had underestimated the
burden that would be imposed on
financial institutions and their
customers by the proposed Guidance.
Some commenters stated that the
proposed Guidance would require
greater time, expenditure, and
documentation for audit and
compliance purposes. Other
commenters stated that the costs of
providing notice and requiring a
sufficient number of appropriately
trained employees to be available to
answer customer inquiries and provide
assistance could be substantial.
Yet other commenters stated that the
Agencies failed to adequately consider
the burden to customers who begin to
receive numerous notices of
‘‘unauthorized access’’ to their data.
They stated that the stress to customers
of having to change account numbers,
change passwords, and monitor their
credit reports would be enormous and
could be unnecessary because the
standard in the proposed Guidance
would require notice when information
subject to unauthorized access might be,
but would not necessarily be, misused.
Some commenters maintained that
the proposed Guidance would be
especially burdensome for small
community banks, which one
commenter asserted are the lowest risk
targets. These commenters stated that
the most burdensome elements of the
proposed Guidance would be creating a
general policy, establishing procedures
and training staff. They added that
developing and implementing new
procedures for determining when,
where and how to provide notice and
procedures for monitoring accounts
would also be burdensome. One
commenter recommended that the
agencies exempt institutions with assets
of under $500 million from having to
comply with the Guidance
be creating a
general policy, establishing procedures
and training staff. They added that
developing and implementing new
procedures for determining when,
where and how to provide notice and
procedures for monitoring accounts
would also be burdensome. One
commenter recommended that the
agencies exempt institutions with assets
of under $500 million from having to
comply with the Guidance.
Finally, a trade association
commenter stated that the notice
requirements in the proposed Guidance
would impose a large burden on the
nationwide consumer reporting
agencies, over which they have no
control and no means of recouping
costs.
The Agencies have addressed the
burdens identified by commenters as
follows. First, the Agencies eliminated
many of the more prescriptive elements
of the response program described in
the proposed Guidance. The final
Guidance states that an institution’s
response program should be risk-based.
It lists a number of components that the
program should contain.
The final Guidance does not detail the
steps that an institution should take to
contain and control a security incident
to prevent further unauthorized access
to or use of customer information. It also
does not state that an institution should
secure all accounts that can be accessed
using the same account number or name
and password combination until such
time as the institution and the customer
can agree on a course of action. Instead,
the final Guidance leaves such measures
to the discretion of the institution and
gives examples of the steps that an
institution should consider, such as
monitoring, freezing, or closing affected
accounts. Thus, under the final
Guidance a small institution may
choose to close an affected account in
place of monitoring the account, an
element of the proposed Guidance that
smaller institutions identified as
potentially very costly
the discretion of the institution and
gives examples of the steps that an
institution should consider, such as
monitoring, freezing, or closing affected
accounts. Thus, under the final
Guidance a small institution may
choose to close an affected account in
place of monitoring the account, an
element of the proposed Guidance that
smaller institutions identified as
potentially very costly.
Though the final Guidance still states
that notification to regulators should be
a part of an institution’s response
program, it states that notice should
only be given when the institution
becomes aware of an incident of
unauthorized access to or use of
‘‘sensitive’’ customer information. This
standard should result in fewer
instances of notice to the regulators than
under the proposed Guidance. The final
Guidance also makes clear that when
the security incident involves a service
provider, the institution may authorize
the service provider to notify the
institution’s regulator.
The standard of notice to customers
also has been modified to be less
burdensome to institutions and their
customers. The Agencies believe that
under this new standard, customers will
be less likely to be alarmed needlessly,
and institutions will no longer be asked
to prove a negative ‘‘namely, that
misuse of information is unlikely to
occur. In addition, the Agencies also
have provided institutions with greater
discretion to determine what should be
contained in a notice to customers.
The Agencies do not believe that there
is a basis for exempting small
institutions from the Guidance. For
example, many small institutions
outsource functions to large service
providers that have been the target of
those seeking to misuse customer
information
Agencies also
have provided institutions with greater
discretion to determine what should be
contained in a notice to customers.
The Agencies do not believe that there
is a basis for exempting small
institutions from the Guidance. For
example, many small institutions
outsource functions to large service
providers that have been the target of
those seeking to misuse customer
information. Therefore, the Agencies
believe that all institutions should
prepare customer response programs
including customer notification
procedures that can be used in the event
the institution determines that misuse of
its information about a customer has
occurred or is reasonably possible.
However, as noted above, the Agencies
recognize that within the framework of
the Guidance, an institution’s program
will vary depending on the size and
complexity of the institution and the
nature and scope of its activities.
Finally, to address comments relating
to the potential burden on the
nationwide consumer reporting
agencies, as noted previously, the
Guidance no longer suggests that
customer notice always include advice
to contact the nationwide consumer
reporting agencies. The Agencies
recognize that not all security breaches
warrant such contacts. For example, we
recognize that it may not always be in
the best interest of a consumer to have
a fraud alert placed in the consumer’s
file because the fraud alert may have an
adverse impact on the consumer’s
ability to obtain credit.
VIII. Regulatory Analysis
A. Paperwork Reduction Act
Burden Estimates for the OCC, FDIC,
and OTS
Certain provisions of the final
Guidance contain ‘‘collection of
information’’ requirements as defined in
the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (PRA). An
agency may not conduct or sponsor, and
a respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number
DIC,
and OTS
Certain provisions of the final
Guidance contain ‘‘collection of
information’’ requirements as defined in
the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (PRA). An
agency may not conduct or sponsor, and
a respondent is not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number.
The Agencies requested comment on
a proposed information collection as
part of the notice requesting comment
on the proposed Guidance. An analysis
of the comments related to paperwork
burden and commenters’
recommendations is provided below.
The OCC, FDIC, and OTS submitted
their proposed information collections
to OMB for review and approval and the
collections have been approved.
OCC: 1557–0227
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00025
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15750
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
FDIC: 3064–0145
OTS: 1550–0110
The Agencies have reconsidered the
burden estimates published in the
Proposed Guidance in light of the
comments received asserting that the
paperwork burden associated with the
information collection were
underestimated, and in light of
measures taken by the Agencies to
reduce burden in this final Guidance.
The Agencies agreed to increase the
estimate for the time it will take an
institution to develop notices and
determine which customers should be
notified. However, revisions
incorporated into the final Guidance
will result in the issuance of fewer
notices than was originally estimated. A
discussion of the comments received
follows the revised estimates.
New Estimates:
OCC
Number of Respondents: 2,200.
Estimated Time per Response:
Developing Notices: 24 hours × 2,200
= 52,800 hours.
Notifying Customers: 29 hours × 36 =
1,044 hours.
Total Estimated Annual Burden =
53,844 hours.
FDIC
Number of Respondents: 5,200
issuance of fewer
notices than was originally estimated. A
discussion of the comments received
follows the revised estimates.
New Estimates:
OCC
Number of Respondents: 2,200.
Estimated Time per Response:
Developing Notices: 24 hours × 2,200
= 52,800 hours.
Notifying Customers: 29 hours × 36 =
1,044 hours.
Total Estimated Annual Burden =
53,844 hours.
FDIC
Number of Respondents: 5,200.
Estimated Time per Response:
Developing Notices: 24 hours × 5,200
= 124,800 hours.
Notifying Customers: 29 hours × 91 =
2,639 hours.
Total Estimated Annual Burden =
127,439 hours.
OTS
Number of Respondents: 880.
Estimated Time per Response:
Developing Notices: 24 hours × 880 =
21,120 hours.
Notifying Customers: 29 hours × 15 =
435 hours.
Total Estimated Annual Burden =
21,555 hours.
Burden Estimate for the Board:
While this represents a statement of
policy, certain provisions of the final
Guidance encourage ‘‘collection of
information.’’ See 44 U.S.C. 3501 et seq.
In the spirit of the PRA, the Board
requested comment on the burden
associated with a proposed information
collection as part of the notice
requesting comment on the proposed
Guidance. The Board has approved this
final information collection under its
delegated authority from OMB.
FRB [To Be Assigned]
Number of Respondents: 6,692.
Estimated Time per Response:
Developing Notices: 24 hours × 6,692
= 160,608 hours.
Notifying Customers: 29 hours × 110
= 3,190 hours.
Total Estimated Annual Burden =
163,798 hours.
Discussion of Comments:
The information collection in the
proposed Guidance stated that financial
institutions should: (1) Develop notices
to customers; and (2) determine which
customers should receive the notices
and send the notices to customers. The
Agencies received various comments
regarding the Agencies’ burden
estimates, including the estimated time
per response and the number of
recordkeepers involved
:
The information collection in the
proposed Guidance stated that financial
institutions should: (1) Develop notices
to customers; and (2) determine which
customers should receive the notices
and send the notices to customers. The
Agencies received various comments
regarding the Agencies’ burden
estimates, including the estimated time
per response and the number of
recordkeepers involved.
Some commenters stated that the
burden estimates of twenty hours to
develop and produce notices and three
days to determine which customers
should receive notice in the proposed
Guidance were too low. These
commenters stated that the Guidance
should include language indicating that
an institution be given as much time as
necessary to determine the scope of an
incident and examine which customers
may be affected. One of these
commenters stated that ten business
days, as recommended by the California
Department of Consumer Affairs Office
of Privacy Protection, should provide an
institution with a known safe harbor to
complete the steps described lest
regulated entities be subject to
inconsistent notification deadlines from
the same incident.
These commenters misunderstood the
meaning of PRA burden estimates. PRA
burden estimates are judgments by
Agencies regarding the length of time
that it would take institutions to comply
with information collection
requirements. These estimates do not
impose a deadline upon institutions to
complete a requirement within a
specific period of time.
The final Guidance states that an
institution should notify customers ‘‘as
soon as possible’’ after an investigation
leads it to conclude that misuse of
customer information has occurred or is
reasonably possible. It also states that
notification may be delayed at the
written request of law enforcement.
The cost of disclosing information is
considered part of the burden of an
information collection. 5 CFR
1320.3(b)(1)(ix)
nstitution should notify customers ‘‘as
soon as possible’’ after an investigation
leads it to conclude that misuse of
customer information has occurred or is
reasonably possible. It also states that
notification may be delayed at the
written request of law enforcement.
The cost of disclosing information is
considered part of the burden of an
information collection. 5 CFR
1320.3(b)(1)(ix). Many commenters
stated that the Agencies had
underestimated the cost associated with
disclosing security incidents to
customers pursuant to the proposed
Guidance. However, these commenters
did not distinguish between the usual
and customary costs of doing business
and the costs of the disclosures
associated with the information
collection in the proposed Guidance.
For example, one commenter stated
that the Agencies’ estimates did not
include $0.60 per customer for a one-
page letter, envelope, and first class
postage; the customer service time,
handling the enormous number of calls
from customers who receive notice; or
the costs associated with closing or
reopening accounts, printing new
checks or embossing new cards. This
commenter stated that printing and
mailing costs, alone, for one notice to its
customer database, at current postal
rates, would be at least $500,000.
Some of the costs mentioned in this
comment are non-labor costs associated
with providing disclosures. The
Agencies assumed that non-labor costs
associated with the disclosures would
be negligible, because institutions
already have in place well-developed
systems for providing disclosures to
their customers. This comment and any
other comments received regarding the
Agencies’ assumptions about non-labor
costs will be taken into account in any
future estimate of the burden for this
collection.
Other costs mentioned in this
comment, such as the cost of customer
service time, printing checks, and
embossing cards, are costs that the
institution would incur regardless of the
implementation of the final Guidance
any
other comments received regarding the
Agencies’ assumptions about non-labor
costs will be taken into account in any
future estimate of the burden for this
collection.
Other costs mentioned in this
comment, such as the cost of customer
service time, printing checks, and
embossing cards, are costs that the
institution would incur regardless of the
implementation of the final Guidance.
These costs are not associated with an
information collection, and, therefore,
have not been factored into the
Agencies’ cost estimates.
In addition, the estimates in this
comment are based on the assumption
that notice should always be provided
by mail. However, the final Guidance
states that financial institutions should
deliver customer notice in any manner
designed to ensure that a customer can
reasonably be expected to receive it,
such as by telephone, mail, or
electronically for those customers for
whom it has a valid e-mail address and
who have agreed to receive
communications electronically. The
Agencies assume that given this
flexibility, financial institutions may not
necessarily choose to mail notices in
every case, but may choose less
expensive methods of delivery that
ensure customers will reasonably be
expected to receive notice.
Another commenter concerned about
the burdens imposed on consumer
reporting agencies provided an example
of a security breach involving a single
company from which identifying
information about 500,000 military
families was stolen. Among other
things, the company’s notice to its
customers advised them to contact the
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
rdens imposed on consumer
reporting agencies provided an example
of a security breach involving a single
company from which identifying
information about 500,000 military
families was stolen. Among other
things, the company’s notice to its
customers advised them to contact the
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15751
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
1 This Guidance is being jointly issued by the
Board of Governors of the Federal Reserve System
(Board), the Federal Deposit Insurance Corporation
(FDIC), the Office of the Comptroller of the
Currency (OCC), and the Office of Thrift
Supervision (OTS).
2 12 CFR part 30, app. B (OCC); 12 CFR part 208,
app. D–2 and part 225, app. F (Board); 12 CFR part
364, app. B (FDIC); and 12 CFR part 570, app. B
(OTS). The ‘‘Interagency Guidelines Establishing
Information Security Standards’’ were formerly
known as ‘‘The Interagency Guidelines Establishing
Standards for Safeguarding Customer Information.’’
3 See Security Guidelines, III.B.
4 See Security Guidelines, III.C.
5 See Security Guidelines, III.C.
6 See Security Guidelines, II.B. and III.D. Further,
the Agencies note that, in addition to contractual
obligations to a financial institution, a service
provider may be required to implement its own
comprehensive information security program in
accordance with the Safeguards Rule promulgated
by the Federal Trade Commission (‘‘FTC’’), 12 CFR
part 314.
7 The FTC estimates that nearly 10 million
Americans discovered they were victims of some
form of identity theft in 2002. See The Federal
Trade Commission, Identity Theft Survey Report,
(September 2003), available at http://www.ftc.gov/
os/2003/09/synovatereport.pdf.
nationwide consumer reporting
agencies
afeguards Rule promulgated
by the Federal Trade Commission (‘‘FTC’’), 12 CFR
part 314.
7 The FTC estimates that nearly 10 million
Americans discovered they were victims of some
form of identity theft in 2002. See The Federal
Trade Commission, Identity Theft Survey Report,
(September 2003), available at http://www.ftc.gov/
os/2003/09/synovatereport.pdf.
nationwide consumer reporting
agencies. The commenter stated that the
nationwide consumer reporting agencies
spent approximately $1.5 million per
company, handling approximately
365,000 inquiries from the company’s
customers.
The final Guidance contains a number
of changes that will diminish the costs
identified by these commenters. First,
the standard for notification in the final
Guidance likely will result in fewer
notices. In addition, the final Guidance
no longer states that all notices should
advise customers to contact the
nationwide consumer reporting
agencies. Therefore, the Agencies’
estimates do not factor in the costs to
the reporting agencies.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act applies
only to rules for which an agency
publishes a general notice of proposed
rulemaking pursuant to 5 U.S.C. 553(b).
See 5 U.S.C. 601(2). As previously
noted, a general notice of proposed
rulemaking was not published because
this final Guidance is a general
statement of policy. Thus, the
Regulatory Flexibility Act does not
apply to the final Guidance.
With respect to OTS’s revision to its
regulation at 12 CFR 568.5, as noted
above, OTS has concluded that there is
good cause to dispense with prior notice
and comment. Accordingly, OTS has
further concluded that the Regulatory
Flexibility Act does not apply to this
final rule.
C. Executive Order 12866
The OCC and OTS have determined
that this final Guidance is not a
significant regulatory action under
Executive Order 12866
regulation at 12 CFR 568.5, as noted
above, OTS has concluded that there is
good cause to dispense with prior notice
and comment. Accordingly, OTS has
further concluded that the Regulatory
Flexibility Act does not apply to this
final rule.
C. Executive Order 12866
The OCC and OTS have determined
that this final Guidance is not a
significant regulatory action under
Executive Order 12866. With respect to
OTS’s revision to its regulation at 12
CFR 568.5, OTS has further determined
that this final rule is not a significant
regulatory action under Executive Order
12866.
D. Unfunded Mandates Reform Act of
1995
The OCC and OTS have determined
that this final Guidance is not a
regulatory action that would require an
assessment under the Unfunded
Mandates Reform Act of 1995 (UMRA),
2 U.S.C. 1531. The final Guidance is a
general statement of policy and,
therefore, the OCC and OTS have
determined that the UMRA does not
apply.
With respect to OTS’s revision to its
regulation at 12 CFR 568.5, as noted
above, OTS has concluded that there is
good cause to dispense with prior notice
and comment. Accordingly, OTS has
concluded that the UMRA does not
require an unfunded mandates analysis.
Text of Common Final Guidance
The text of the Agencies’ common
final Guidance reads as follows:
Supplement A to Appendix _ to Part _—
Interagency Guidance on Response
Programs for Unauthorized Access to
Customer Information and Customer Notice
I. Background
This Guidance 1 interprets section 501(b) of
the Gramm-Leach-Bliley Act (‘‘GLBA’’) and
the Interagency Guidelines Establishing
Information Security Standards (the
‘‘Security Guidelines’’)2 and describes
response programs, including customer
notification procedures, that a financial
institution should develop and implement to
address unauthorized access to or use of
customer information that could result in
substantial harm or inconvenience to a
customer
Act (‘‘GLBA’’) and
the Interagency Guidelines Establishing
Information Security Standards (the
‘‘Security Guidelines’’)2 and describes
response programs, including customer
notification procedures, that a financial
institution should develop and implement to
address unauthorized access to or use of
customer information that could result in
substantial harm or inconvenience to a
customer. The scope of, and definitions of
terms used in, this Guidance are identical to
those of the Security Guidelines. For
example, the term ‘‘customer information’’ is
the same term used in the Security
Guidelines, and means any record containing
nonpublic personal information about a
customer, whether in paper, electronic, or
other form, maintained by or on behalf of the
institution.
A. Interagency Security Guidelines
Section 501(b) of the GLBA required the
Agencies to establish appropriate standards
for financial institutions subject to their
jurisdiction that include administrative,
technical, and physical safeguards, to protect
the security and confidentiality of customer
information. Accordingly, the Agencies
issued Security Guidelines requiring every
financial institution to have an information
security program designed to:
1. Ensure the security and confidentiality
of customer information;
2. Protect against any anticipated threats or
hazards to the security or integrity of such
information; and
3. Protect against unauthorized access to or
use of such information that could result in
substantial harm or inconvenience to any
customer.
B. Risk Assessment and Controls
1. The Security Guidelines direct every
financial institution to assess the following
risks, among others, when developing its
information security program:
a. Reasonably foreseeable internal and
external threats that could result in
unauthorized disclosure, misuse, alteration,
or destruction of customer information or
customer information systems;
b
mer.
B. Risk Assessment and Controls
1. The Security Guidelines direct every
financial institution to assess the following
risks, among others, when developing its
information security program:
a. Reasonably foreseeable internal and
external threats that could result in
unauthorized disclosure, misuse, alteration,
or destruction of customer information or
customer information systems;
b. The likelihood and potential damage of
threats, taking into consideration the
sensitivity of customer information; and
c. The sufficiency of policies, procedures,
customer information systems, and other
arrangements in place to control risks.3
2. Following the assessment of these risks,
the Security Guidelines require a financial
institution to design a program to address the
identified risks. The particular security
measures an institution should adopt will
depend upon the risks presented by the
complexity and scope of its business. At a
minimum, the financial institution is
required to consider the specific security
measures enumerated in the Security
Guidelines,4 and adopt those that are
appropriate for the institution, including:
a. Access controls on customer information
systems, including controls to authenticate
and permit access only to authorized
individuals and controls to prevent
employees from providing customer
information to unauthorized individuals who
may seek to obtain this information through
fraudulent means;
b. Background checks for employees with
responsibilities for access to customer
information; and
c. Response programs that specify actions
to be taken when the financial institution
suspects or detects that unauthorized
individuals have gained access to customer
information systems, including appropriate
reports to regulatory and law enforcement
agencies.5
C
on through
fraudulent means;
b. Background checks for employees with
responsibilities for access to customer
information; and
c. Response programs that specify actions
to be taken when the financial institution
suspects or detects that unauthorized
individuals have gained access to customer
information systems, including appropriate
reports to regulatory and law enforcement
agencies.5
C. Service Providers
The Security Guidelines direct every
financial institution to require its service
providers by contract to implement
appropriate measures designed to protect
against unauthorized access to or use of
customer information that could result in
substantial harm or inconvenience to any
customer.6
II. Response Program
Millions of Americans, throughout the
country, have been victims of identity theft.7
Identity thieves misuse personal information
they obtain from a number of sources,
including financial institutions, to perpetrate
identity theft. Therefore, financial
institutions should take preventative
measures to safeguard customer information
against attempts to gain unauthorized access
to the information. For example, financial
VerDate jul<14>2003
16:55 Mar 28, 2005
Jkt 205001
PO 00000
Frm 00027
Fmt 4700
Sfmt 4700
E:\FR\FM\29MRR1.SGM
29MRR1
15752
Federal Register / Vol. 70, No. 59 / Tuesday, March 29, 2005 / Rules and Regulations
8 Institutions should also conduct background
checks of employees to ensure that the institution
does not violate 12 U.S.C. 1829, which prohibits an
institution from hiring an individual convicted of
certain criminal offenses or who is subject to a
prohibition order under 12 U.S.C. 1818(e)(6).
9 Under the Guidelines, an institution’s customer
information systems consist of all of the methods
used to access, collect, store, use, transmit, protect,
or dispose of customer information, including the
systems maintained by its service providers. See
Security Guidelines, I.C.2.d (I.C.2.c for OTS)
rtain criminal offenses or who is subject to a
prohibition order under 12 U.S.C. 1818(e)(6).
9 Under the Guidelines, an institution’s customer
information systems consist of all of the methods
used to access, collect, store, use, transmit, protect,
or dispose of customer information, including the
systems maintained by its service providers. See
Security Guidelines, I.C.2.d (I.C.2.c for OTS).
10 See FFIEC Information Technology
Examination Handbook, Information Security
Booklet, Dec. 2002 available at http://
www.ffiec.gov/ffiecinfobase/html_pages/
infosec_book_frame.htm. Federal Reserve SR 97–32,
Sound Practice Guidance for Information Security
for Networks, Dec. 4, 1997; OCC Bulletin 2000–14,
‘‘Infrastructure Threats—Intrusion Risks’’ (May 15,
2000), for additional guidance on preventing,
detecting, and responding to intrusions into
financial institution computer systems.
11 See Federal Reserve SR Ltr. 00–04, Outsourcing
of Information and Transaction Processing, Feb. 9,
2000; OCC Bulletin 2001–47, ‘‘Third-Party
Relationships Risk Management Principles,’’ Nov.
1, 2001; FDIC FIL 68–99, Risk Assessment Tools
and Practices for Information System Security, July
7, 1999; OTS Thrift Bulletin 82a, Third Party
Arrangements, Sept. 1, 2004.
12 An institution’s obligation to file a SAR is set
out in the Agencies’ SAR regulations and Agency
guidance. See 12 CFR 21.11 (national banks,
Federal branches and agencies); 12 CFR 208.62
(State member banks); 12 CFR 211.5(k) (Edge and
agreement corporations); 12 CFR 211.24(f)
(uninsured State branches and agencies of foreign
banks); 12 CFR 225.4(f) (bank holding companies
and their nonbank subsidiaries); 12 CFR part 353
(State non-member banks); and 12 CFR 563.180
(savings associations). National banks must file
SARs in connection with computer intrusions and
other computer crimes
ember banks); 12 CFR 211.5(k) (Edge and
agreement corporations); 12 CFR 211.24(f)
(uninsured State branches and agencies of foreign
banks); 12 CFR 225.4(f) (bank holding companies
and their nonbank subsidiaries); 12 CFR part 353
(State non-member banks); and 12 CFR 563.180
(savings associations). National banks must file
SARs in connection with computer intrusions and
other computer crimes. See OCC Bulletin 2000–14,
‘‘Infrastructure Threats—Intrusion Risks’’ (May 15,
2000); Advisory Letter 97–9, ‘‘Reporting Computer
Related Crimes’’ (November 19, 1997) (general
guidance still applicable though instructions for
new SAR form published in 65 FR 1229, 1230
(January 7, 2000)). See also Federal Reserve SR 01–
11, Identity Theft and Pretext Calling, Apr. 26,
2001; SR 97–28, Guidance
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.