Cybersecurity compliance for regulated firms in Arizona

Three parts

What a complete answer covers in Arizona

In Arizona, different licenses are overseen by different regulators. Where a rule below applies to one kind of firm, the text says so.

• The federal minimum. The FTC Safeguards Rule (16 CFR 314) treats a wide range of nonbank businesses as financial institutions, including mortgage lenders and servicers, consumer finance companies, tax preparers, collection firms, title and settlement agents, money services businesses, and dealers that arrange financing. A firm within its reach must keep a written security program, appoint a qualified individual to run it, and report to its board each year. Insurance producers and investment advisers fall outside the FTC's jurisdiction and answer to their own regulators, and banks and credit unions answer to their prudential regulators under the interagency information-security guidelines. Which side of that line a firm falls on depends on what it does and who supervises it.
• What a license adds in Arizona. Conditions attach to whatever a firm is licensed or registered to do, and they differ widely from one type of license to another. Mortgage is the area where most of our work lies, and in Arizona mortgage licensing is overseen by the Arizona Department of Insurance and Financial Institutions. Arizona licenses mortgage bankers and mortgage brokers through NMLS (A.R.S. §6-943, §6-903) but has no residential mortgage-servicer license. The license triggers are making or negotiating loans, and the mortgage banker statute assumes that licensees may also service, sizing the surety bond partly on loans 'contracted to service for others.' Other licenses are overseen by other regulators and carry conditions of their own.
• What Arizona law says about protecting data. Arizona has no general reasonable-safeguards statute for businesses. Its main data-handling rule is a disposal law requiring records that contain personal identifying information to be redacted or destroyed before they are discarded (A.R.S. §44-7601), with GLBA-regulated businesses excluded in favor of the federal disposal rules.
• Your counterparties' requirements. Investors, warehouse lenders, carriers, underwriters and institutional clients send questionnaires of their own, and their reviews decide whether a relationship continues. Add the laws of each state where your customers live, and that is the list a firm has to answer. Our assessment begins by producing it, matched to your firm and with each source cited.

Also relevant in Arizona: Arizona sends notice of large breaches to two agencies. If more than 1,000 residents are affected, written notice must go to both the Attorney General and the Arizona Department of Homeland Security, and to the three largest credit bureaus, within the same 45-day period that applies to customer notice.

General information, not legal advice. Which of these requirements reach your firm depends on its circumstances. The assessment answers that question and names the source of each finding.