While many U.S. companies beef up their cybersecurity measures, studies show little attention is being paid to requiring their business partners to do the same.
As a result, it becomes easier for hackers to simply slip in through the third-party-vendor back door. The New York State Department of Financial Services (NYDFS) recently released the results of a cybersecurity survey of 40 banking organizations, including many of the largest institutions it regulates. The report Update on Cyber Security in the Banking Sector: Third Party Service Providers, reveals that banks are not conducting sufficient due diligence regarding the privacy and data security measures adopted by third-parties vendors that have access to the banks’ sensitive financial data.
As the NYDFS report highlights, third-party vendors, ranging from check/payment processors to legal counsel to HVAC technicians, often have access to bank technology systems, which can provide a potential point of entry for hackers. However, many of the financial institutions surveyed are simply taking the word of their business partners that they have the proper cybersecurity protections in place.
Below are several of the NYDFS survey’s key findings:
Nearly 1 in 3 of the banks surveyed do not require their third-party vendors to notify them in the event of cybersecurity breach.
Less than half of the banks surveyed perform any on-site assessments of their third-party vendors.
Approximately 1 in 5 banks surveyed don’t require third-party vendors to represent that they have established minimum information security requirements.
Nearly half of the banks do not require a warranty of the integrity of the third-party vendor’s data or products (e.g., that the data and products are free of viruses).
In light of its findings, the NYDFS plans to move forward on banking regulations intended to strengthen the cybersecurity standards for third-party vendors. Superintendent Lawsky said: “A bank’s cyber security is often only as good as the cyber security of its vendors. Unfortunately, those third-party firms can provide a backdoor entrance to hackers who are seeking to steal sensitive bank customer data. We will move forward quickly, together with the banks we regulate, to address this urgent matter.”
The agency is also in the process of conducting a similar survey regarding the cybersecurity of third-party vendors who service the insurance companies it oversees.
What Every Real Estate Investor Should Know Before Buying a Rental Property
Before buying a New Jersey rental property, an investor should verify realistic operating numbers, the property’s legal and regulatory status, lead-based paint and flood compliance, the existing leases and tenant protections, and the right ownership structure. A rental property is more than a piece of real estate; it is an operating business subject to legal, […]
Can You Change an Irrevocable Trust in New Jersey?
In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]
How Intellectual Property Valuation Will Impact Business Transactions
Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]
Data Center, Dark Fiber, and Lit Services Agreements in New Jersey: Key Terms and Legal Pitfalls
For New Jersey data center owners and operators, a service agreement may look routine when it is signed. The network is functioning, the vendor is meeting its installation schedule, and the parties have agreed on pricing and performance specifications. The provisions that seem most important at that stage are often the technical ones. That changes […]
Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate
The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand
Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
