After the cybersecurity incidents that affected the financial industry in Chile, the Superintendence of Banks and Financial Institutions (“SBIF”) modified Chapters 20-8 and 1-13 of the RAN (SBIF’s Updated Regulation Compilation) last August 31, with the purpose of having access to more and better information about incidents, and raising the security standards of the financial system.
Chapters 20-8 and 1-13 already included standards related to the management of cybersecurity by the institutions regulated by SBIF, which were established in January of this year. In this amendment, certain minimum cybersecurity guidelines were included, like the requirement to generate and maintain a base of incidents available to the Superintendence.
Modifications to Chapter 20-8 on Information on operational incidents
The modification to Chapter 20-8 involves a strengthening of the current obligation to report incidents to SBIF; the creation of a new obligation to communicate incidents to customers and to the industry; and the elimination of the current section No. 2 that until now regulated the base of cybersecurity incidents.
This is a brief analysis of these new elements:
- Communication of operational incidents to SBIF
The regulation specifies the types of operational incidents that must be communicated; and details its opportunity, content and communication mechanisms.
What to report. The institution must report the operational incidents that affect or jeopardize business continuity, the funds or resources of the entity or of its clients, the quality of the services or the image of the institution. The incidents that affect a group of clients that could impact the image and reputation of the entity must also be reported immediately, or after a certain event occurres1.
When to report. The first communication to SBIF, the occurrence of an operational incident, must be made within a maximum period of 30 minutes.
How to report. In relation to reporting the incident, the current single communication by email to SBIF is replaced by a more detailed obligation that includes two communications to the platform enabled by SBIF on its Extranet, one at the beginning of the incident and another at the time of its closure.
What to report. The modification details the matters that this communication must include2, requiring: (i) unique incident identifier number (assigned by SBIF); (ii) name of the reporting entity; (iii) description of the incident; (iv) time and date of the beginning of the incident; (v) possible or identified causes; (vi) affected products or services; (vii) type and name of supplier or third party involved (if applicable); (viii) type and estimated number of affected customers; (ix) dependencies and / or assets affected (if applicable); (x) adopted and ongoing measures; and (xi) other information.
Although these are the minimum requirements that must be included in the reporting of the incident, and in order to be able to meet the deadline, not having the required information “should not be an obstacle to reporting within the defined period”.
The closing communication of the incident must refer to the same matters required for the initial communication, only adding the, “date of closure of the incident”.
Applicability. Lastly, according to the transitional provisions in Circular No. 3,640 of SBIF of August 31, 2018 (“Circular 3,640”), sending information about operational incidents through the Extranet is effective as of October 16, 2018. In the meantime, they should continue to use e-mail enabled for that purpose.
- Communication of incidents to clients or users
There is a new obligation to report to the clients of the affected institutions, in regards to certain types of incidents.
What to report. The “type” of incident that triggers the obligation to report to clients is different than the incident that generates a reporting obligation to SBIF. In order for the institution to notify the user, the incident must, “affect the quality or continuity of the services to the clients, or if it is a matter of public knowledge“. Then, in the event of incidents that produce effects of a diverse nature, the institution may end up having to communicate both to SBIF and to its clients.
Circular 3640 states that notification to users must also be made when the incidents affect, “the security of the personal data of the clients“, which was not included in the updated text of chapter 20-8.
Although the original text of chapter 20-8 already contained, “leaks of bank or client information“, as a type of incident to report to SBIF –where the phrase in comment may be inferred- the express reference to the security of the personal data of the clients seems more appropriate, and also requires banks to notify customers affected by the incident in question. For purposes of legal certainty, it may be appropriate for SBIF to clarify this inconsistency.
When to report. The regulation establishes that the institution will be responsible for informing users in a “timely” manner. Finally, an additional obligation is established to update the available information until the moment in which the incident is overcome.
How to report. In practice, it will be relevant to understand if it is sufficient to fulfill this obligation to make a general notice to the public, or if it will be required that each user is notified individually; and if this communication can be made through the Internet or if it will have to be made through a physical medium, such as a letter to an address.
What to report. Users must be informed about the occurrence of the event, with updates of the available information until the moment in which the incident is overcome.
- Communication of incidents to the banking industry.
Under the amendment, the incidents associated with cybersecurity must be shared by the affected banks with the rest of the industry; with the purpose of warning them of cybersecurity threats and of reducing the likelihood of negative impacts spreading in the national financial system.
For this purpose, the banks must maintain an “incident alert system” in which at least the following elements must be reported, “as soon as possible”: (i) a description of the type of threats; (ii) the affected channels or services; and (iii) the characterization or identification of the malicious software used and the protection mechanisms that have been identified, when the information is available. The implemented system must allow the SBIF to access the shared information.
In accordance with the transitory provisions on Circular No. 3,640, banks must have enabled their information exchange system no later than November 5, 2018.
- Section 2 is deleted in regards to the database of cybersecurity incidents
The published modifications eliminate the obligation to maintain an incident database in the way that was drafted before these modifications. In this regard, under Circular N ° 3,640 the elements that are evaluated in the scope of operational risk are transferred to Chapter 1-13 of the RAN.
On the other hand, the minimum variables to be considered in the elaboration of an incident database will now be part of a file on the Information System Manual, which is under public consultation on the SBIF website until October 5, 2018.
Modifications to Chapter 1-13 on Classification of management and solvency
These modifications are added to those already established in Chapter 1-13 of the RAN in Letter C) of Section 3.2 of Title II on Operational Risk Management. However, as stated above, these aggregations are mainly due to elements that were previously considered in Chapter 20-8 of the RAN and that were introduced in January 2018.
The main novelty is that now the fact that the entity has a base of cybersecurity incident that includes the fields requested in the file of the Information System Manual of SBIF, shall be an element that reveals good risk management. This Manual is the one which we referred to earlier, under public consultation until October 5, 2018.
1 A non-exhaustive list of incidents that fall into this category is also included, including, among others, failures in the service of critical suppliers or technological problems that affect the security of the information.
2 Chapter 20-8 of the RAN originally required the following information: (i) name of the reporting entity; (ii) data of person in charge; (iii) date and time of the start of the event; (iv) explanation of the incident; (v) suppliers involved; and (vi) estimation of type and number of affected customers.