Cybersecurity compliance for regulated firms in Kansas

Three parts

What a complete answer covers in Kansas

In Kansas, 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 Kansas. 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 Kansas mortgage licensing is overseen by the Kansas Office of the State Bank Commissioner, Consumer and Mortgage Lending Division. Kansas defines 'mortgage business' to include servicing Kansas residential mortgage loans, and even holding the rights to them. Servicers therefore need a Mortgage Company license from the Office of the State Bank Commissioner through NMLS under the Kansas Mortgage Business Act (K.S.A. 9-2201 et seq.), unless exempt under K.S.A. 9-2202. Other licenses are overseen by other regulators and carry conditions of their own.
• What Kansas law says about protecting data. Kansas requires any holder of personal information to implement and maintain reasonable procedures and practices to protect it from unauthorized access or use, and to destroy records so the information is unreadable when no longer retained (K.S.A. 50-6,139b).
• 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 Kansas: Kansas licensing reaches further than most. Because 'mortgage business' includes holding the rights to mortgage loans, an investor that owns Kansas servicing rights and engages a subservicer for the day-to-day work may still need its own OSBC license (K.S.A. 9-2201).

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.