Cybersecurity compliance for regulated firms in Maryland

Three parts

What a complete answer covers in Maryland

In Maryland, 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 Maryland. 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 Maryland mortgage licensing is overseen by the Maryland Office of Financial Regulation (Office of the Commissioner of Financial Regulation), Maryland Department of Labor. Companies that service Maryland residential mortgage loans need a Mortgage Lender License from the Office of Financial Regulation through NMLS under the Maryland Mortgage Lender Law (Md. Code, Fin. Inst. §11-501 et seq.). Maryland treats servicing as part of the licensable mortgage lending business, covering firms that service loans for others or collect payments from borrowers for distribution. Banks and credit unions, and their subsidiaries and affiliates subject to regulatory examination, are exempt. Other licenses are overseen by other regulators and carry conditions of their own.
• What Maryland law says about protecting data. The Maryland Personal Information Protection Act requires businesses to implement and maintain reasonable security procedures and practices appropriate to the nature of the personal information they hold, and to bind third-party service providers to equivalent protections by contract (Md. Code, Com. Law §14-3503).
• 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 Maryland: Maryland, like New Jersey, requires notice to the regulator first: businesses must notify the Office of the Attorney General before notifying affected individuals, and consumer notices must go out within 45 days of discovering the breach (Md. Code, Com. Law §14-3504(b), (h)).

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.