Cybersecurity compliance for regulated firms in Hawaii

Three parts

What a complete answer covers in Hawaii

In Hawaii, 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 Hawaii. 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 Hawaii mortgage licensing is overseen by the Hawaii Department of Commerce and Consumer Affairs, Division of Financial Institutions. Anyone in the business of servicing Hawaii residential mortgage loans, including master servicers, needs a Mortgage Servicer License from the Division of Financial Institutions through NMLS under HRS chapter 454M. Insured depository institutions and their operating subsidiaries are exempt, as are Hawaii-licensed trust companies, credit unions, insurance companies and financial services loan companies. Other licenses are overseen by other regulators and carry conditions of their own.
• What Hawaii law says about protecting data. Businesses holding Hawaii residents' personal information must take reasonable measures to protect it when disposing of it, including due-diligence contracts with records-destruction vendors (Haw. Rev. Stat. §487R-2). The chapter exempts financial institutions subject to GLBA (15 U.S.C. §§6801–6809), which are covered by federal safeguards duties instead.
• 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 Hawaii: Hawaii is one of the few states with a dedicated mortgage-servicer licensing statute, and its breach law adds a state-level step: a business that notifies more than 1,000 residents at one time must also notify Hawaii's Office of Consumer Protection and the nationwide consumer reporting agencies in writing, without unreasonable delay.

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.