Cybersecurity compliance for regulated firms in New Jersey

Three parts

What a complete answer covers in New Jersey

In New Jersey, 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 New Jersey. 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 New Jersey mortgage licensing is overseen by the New Jersey Department of Banking and Insurance. Companies servicing New Jersey residential mortgage loans, including firms that only hold the servicing rights and engage a subservicer for the day-to-day work, need a Mortgage Servicer License from the Department of Banking and Insurance through NMLS under the Mortgage Servicers Licensing Act (N.J.S.A. 17:16F-27 et seq.), unless an exemption applies, such as those for federally insured banks and credit unions. Other licenses are overseen by other regulators and carry conditions of their own.
• What New Jersey law says about protecting data. State law requires destroying customer records containing personal information once they are no longer needed (N.J.S.A. 56:8-162), and the Attorney General has used the Consumer Fraud Act against inadequate or misrepresented data-security practices.
• 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 New Jersey: New Jersey's breach law requires an incident to be reported to the Division of State Police before affected customers are notified. Incident-response plans written for other states often reverse that order.

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.