Overview
Title
To include requirements relating to ransomware attack deterrence for a covered U.S. financial institution in the Consolidated Appropriations Act, 2021, and for other purposes.
ELI5 AI
In the "Ransomware and Financial Stability Act of 2024," the law says that if a big bank or money place gets in trouble from bad guys on the internet asking for money (like a digital bully), they can't give more than $100,000 without asking a special boss first and telling the authorities. This rule is like a safety shield to make sure they follow good rules and don't get in trouble as long as they follow the guidelines.
Summary AI
H.R. 7965, known as the “Ransomware and Financial Stability Act of 2024,” amends the Consolidated Appropriations Act, 2021, to incorporate measures aimed at deterring ransomware attacks against U.S. financial institutions. The bill mandates that any affected financial institution cannot pay over $100,000 in ransomware demands without authorization and must notify authorities before making such payments. It also provides a "safe harbor" to protect institutions from certain legal or supervisory actions if they follow the guidelines. Additionally, the bill outlines confidentiality rules for information shared during these processes and puts a 10-year sunset clause on these amendments.
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AnalysisAI
General Summary of the Bill
The "Ransomware and Financial Stability Act of 2024" aims to address the growing threat of ransomware attacks on U.S. financial institutions. By incorporating amendments into the Consolidated Appropriations Act, 2021, the bill establishes requirements and limitations on ransomware payments. It mandates that financial institutions notify federal authorities if they become victims of a ransomware attack and includes stipulations for payment authorization limits and procedures. The bill sets a clear framework to help deter ransomware attacks by creating a regulated environment for financial institutions and ensuring responsible reporting and compliance.
Summary of Significant Issues
One of the major points of contention is the $100,000 cap on ransomware payments unless authorized otherwise. This restriction might not take into account the varying demands made by cybercriminals, potentially leaving institutions exposed if more substantial payments are necessary to restore access to critical systems. There's also considerable debate over the subjective nature of the "good-faith efforts" clause, which lacks concrete guidelines and could lead to confusion in its application.
Additionally, the presidential authority to waive certain requirements could lead to uneven application of the law, as the criteria for granting such waivers are not well-defined. Confidentiality provisions, while aimed at protecting sensitive information, may limit transparency and accountability, raising concerns about public oversight.
The definition of what constitutes a "Covered U.S. Financial Institution" may favor certain types of institutions over others, potentially creating an imbalance in regulatory obligations. Furthermore, the stringent requirement for notification within two business days could be unrealistic, especially given the complex nature of cyberattacks.
Impact on the Public
The bill's intent to deter ransomware attacks by regulating payments and enhancing notification protocols could have broad implications for the public. By establishing a clear framework for financial institutions, it aims to reduce the likelihood and impact of such attacks on the stability of the financial system. This could enhance public confidence in financial institutions' ability to manage cybersecurity threats effectively.
However, the cap on payments and strict notification requirements may compromise institutions' operational flexibility, potentially leading to longer disruptions in services in the event of an attack.
Impact on Stakeholders
Financial Institutions: The bill could present significant regulatory requirements for financial institutions, particularly regarding compliance and reporting. While it aims to provide protection through a "safe harbor" provision, the restrictions on payment amounts could inhibit institutions' ability to make decisions in their best interest.
Federal Authorities: The requirements for financial institutions to notify federal authorities can enhance the government's ability to track and mitigate ransomware threats, potentially leading to better-coordinated responses.
Cybersecurity Providers: This bill may create business opportunities for cybersecurity firms specializing in ransomware prevention and response, as financial institutions seek to bolster their defenses in light of increased regulatory scrutiny.
The General Public: Consumers might notice improved security and reduced risks of financial service disruptions. However, if financial institutions face increased operational costs to comply with the bill, these costs might eventually trickle down to consumers.
In conclusion, the "Ransomware and Financial Stability Act of 2024" attempts to balance the need for strong cybersecurity measures with the operational realities of financial institutions. While its effectiveness in reducing ransomware threats remains to be seen, the bill certainly initiates a much-needed conversation about how to manage cybersecurity risks in the financial sector.
Financial Assessment
The Ransomware and Financial Stability Act of 2024 introduces specific financial constraints and procedures to manage ransomware payments by U.S. financial institutions. These measures focus on controlling the financial impact of ransomware attacks and ensure that institutions operate within defined legal parameters while handling such cyber threats.
Financial Limitations on Ransomware Payments
One notable aspect of the bill is the imposition of a $100,000 cap on any ransomware payment made by a covered financial institution. Payments exceeding this amount require a ransomware payment authorization. This monetary limitation aims to deter financial institutions from easily succumbing to ransom demands, thus reducing the incentive for cybercriminals to target them.
However, this financial constraint may pose challenges as identified in the issues section. The one-size-fits-all $100,000 limit may not adequately consider varying scales of ransom demands across different institutions, potentially leaving some organizations with unresolved security issues if larger payments are necessary to restore critical operations.
Notification and Authorization Procedures
The bill mandates that before a ransomware payment is made, the affected institution must submit a notification to the Director of the Financial Crimes Enforcement Network. This notification process, along with the requirement for a ransomware payment authorization for payments over $100,000, introduces procedural hurdles that are intended to ensure oversight and careful consideration before disbursement of funds.
This notification requirement, however, has raised concerns about the feasibility of adhering to strict timelines, especially in complex operational environments. The demand for authorization may slow down the response time, potentially exacerbating the impact of the ransomware attack.
Safe Harbor and Legal Liabilities
The legislation offers a "safe harbor" provision, which protects financial institutions from certain legal actions related to the payment of ransoms, provided they follow the outlined guidelines including obtaining necessary authorizations. This provision is crucial as it offers legal protection to institutions acting in compliance with the law, thus encouraging adherence to the processes established in the bill.
However, the subjective nature of "good-faith efforts" in notifying and assessing ransomware situations may lead to inconsistencies in application. Without clear guidelines, what constitutes "good faith" could vary considerably, leaving room for disputes or misuse.
Confidentiality and Information Sharing
The bill enforces strict confidentiality measures concerning the information shared with federal law enforcement agencies. While this ensures sensitive financial operations and security-related data are protected, it could also limit transparency. This closed handling of information might conflict with the public's right to know about significant institutional vulnerabilities, impacting accountability.
In summary, the financial elements of the Ransomware and Financial Stability Act of 2024 introduce structured approaches to handling financial threats from ransomware while aiming to protect financial stability. However, the execution of these financial regulations raises several issues, notably concerning the feasibility and practicality of the imposed financial limits and procedural demands.
Issues
The section on 'Ransomware attack deterrence' imposes a maximum limit of $100,000 on ransomware payments (Section 2, subsection (d)(1)(A)(ii)). This regulation might not adequately consider the diverse demands made by ransomware attacks on financial institutions, potentially leaving them vulnerable if higher ransom payments are necessary to restore operations.
The 'good-faith efforts' clause (Section 2, subsection (d)(4)(B)) is subjective and lacks clear guidelines. This could lead to disagreements or misuse by financial institutions interpreting 'good-faith' differently, which might result in insufficient reporting or compliance issues.
The power given to the President to waive requirements (Section 2, subsection (d)(3)) lacks specific criteria or limitations for when or how this should be exercised. This could result in arbitrary decision-making, impacting the uniform application of the law.
The confidentiality provisions (Section 2, subsection (d)(5)) might limit transparency and could be seen as too restrictive. This has the potential risk of preventing significant information from being available to the public, raising concerns about accountability and oversight.
Definitions such as 'Covered U.S. Financial Institution' (Section 2, subsection (d)(6)(A)) potentially favor certain institutions like financial market utilities and exchanges, creating a disparity in how the law applies across various financial institutions. This might lead to an unequal regulatory burden.
The requirement for financial institutions to notify within 'not later than 2 business days' regarding ransomware payment authorizations (Section 2, subsection (d)(4)(E)) is potentially too restrictive and doesn't consider possible complexities or operational challenges that could delay reporting.
Requiring information sharing with federal law enforcement (Section 2, subsection (d)(2)(A)) raises possible privacy concerns. This requirement may conflict with existing data protection laws and individual rights, presenting potential legal challenges.
The role and power of the Secretary of the Treasury in issuing guidance on notifications (Section 2, subsection (d)(2)(B)(i)) are extensive and lack sufficient oversight, potentially leading to regulatory overreach.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The section gives a short title for the Act, stating that it may be called the “Ransomware and Financial Stability Act of 2024.”
2. Ransomware attack deterrence Read Opens in new tab
Summary AI
The section outlines requirements for U.S. financial institutions facing ransomware attacks, including limits on ransomware payments and mandatory notifications to federal authorities. It provides a "safe harbor" for institutions that comply with these rules, defines relevant terms, and specifies confidentiality protections, while the act and its amendments will apply to covered institutions starting 30 days after specific rules are published or within one year of the act's enactment, whichever is sooner, and will be repealed 10 years later.
Money References
- (a) In general.—Section 108 of title I of division Q of the Consolidated Appropriations Act, 2021 (Public Law 116–260; 135 Stat. 2173; 12 U.S.C. 1811 note) is amended— (1) in the subsection heading, by striking “report”; (2) by redesignating subsections (d) and (e) as subsections (e) and (f), respectively; (3) by inserting the following after subsection (c): “(d) Ransomware attack deterrence.— “(1) REQUIREMENTS.— “(A) IN GENERAL.—A covered U.S. financial institution subject to a ransomware attack may not make a ransomware payment in response to such ransomware attack— “(i) before submitting the notification described in paragraph (2); and “(ii) in an amount greater than $100,000, unless the payment is subject to a ransomware payment authorization.
- “(i) any financial market utility that the Financial Stability Oversight Council has designated as systemically important under section 804 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; “(ii) any exchange registered under section 6 of the Securities Exchange Act of 1934 that facilitates trading in any national market system security, as defined in section 242.600 of title 17, Code of Federal Regulations (or any successor regulation), and which exchange during at least four of the preceding six calendar months had— “(I) with respect to all national market system securities that are not options, 10 percent or more of the average daily dollar volume reported by applicable transaction reporting plans; or “(II) with respect to all listed options, 15 percent or more of the average daily dollar volume reported by applicable national market system plans for reporting transactions in listed options; and “(iii) any technology service provider in the Significant Service Provider Program of the Financial Institutions Examination Council that provides core processing services that is determined by the Council to be a significant technology service provider. “(B) MALICIOUS SOFTWARE.—The term ‘malicious software’ means software that, when deployed, results in the loss of access to data or the loss of functionality of an information and communications system or network of a U.S. financial institution.