Ransomware Payments Become an Even Riskier Choice Amidst the Ever-Growing Sanctions List

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In February 2022, Executive Order 14024 highlighted that Russia’s invasion of Ukraine threatened not only Ukraine but also the national security and foreign policy of the United States. Pursuant to this executive order, and in the face of national security concerns, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) has instituted extensive sanctions, including both economic and trade sanctions. Also, in response to the national security concerns, the Cybersecurity and Infrastructure Security Agency (CISA) issued a Shields Up notice, urging companies to bolster their cybersecurity to protect themselves against the threat of a cyberattack.

As the conflict between Russia and Ukraine continues, the threat of a cyberattack, specifically ransomware and NotPetya-style attacks, remains top of mind. However, as entities continue to bolster their cybersecurity and protect themselves against these attacks, they should be cognizant of the implications that OFAC sanctions may have in connection with such an attack.

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New York Department of Financial Services Announces $5 Million Penalty in Most Recent Cybersecurity Enforcement Action

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On June 23, 2022, the New York State Department of Financial Services (NYDFS) announced the entry of a Consent Order in connection with its most recent cybersecurity enforcement action, which included a $5 million monetary penalty against Carnival Cruise Line, Princess Cruise Lines, Holland America Line, Seabourn Cruise Line, and Costa Cruise Lines (“Carnival Companies”), for violations of NYDFS’s Cybersecurity Regulation, 23 NYCRR Part 500 (“Part 500”). In addition to the $5 million monetary penalty, the Carnival Companies also surrendered their insurance producer licenses and agreed to cease selling insurance to residents of New York.

According to the Consent Order, between 2019 and 2021, the Carnival Companies were the subject of four separate cybersecurity events, including ransomware and phishing attacks. All four of the cybersecurity events led to the exposure of nonpublic personal information (NPI) of both consumers and employees, including such information as names, addresses, birth dates, passport numbers, and in some instances, other sensitive information such as social security numbers and health information.

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HHS Ransomware Report Details Revival of Dangerous LOTL Cyberattack

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On May 5, 2022, the U.S. Department of Health and Human Services (HHS) issued a report entitled “Ransomware Trends in the HPH Sector” (HHS Report) that reviewed key cybersecurity threats and trends affecting the U.S. healthcare sector.

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A Cyber Hygiene Strategy: Cyber Insurance Endorsements

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In the insurance industry, an “endorsement” is used to amend an insurance policy. Endorsements can be used to add items to a policy, amend policy provisions, or update an insured’s coverage. Endorsements also can be used to provide directions to third parties with whom an insured can work if a claim is made under a policy.

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Congress Passes New Cyber Incident and Ransomware Payment Reporting Legislation

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The United States Congress recently passed legislation that includes new cybersecurity provisions requiring critical infrastructure providers to report cyber security incidents, including the payment of ransom, to the federal government. The bill, also known as the “Strengthening American Cybersecurity Act of 2022,” passed the Senate by unanimous vote on March 1. It then passed the House of Representatives and was signed into law by President Biden on March 15, 2022.

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Capping Cyber Casualties: Steps to Avoid Cyberattacks Flowing From Hostilities in Ukraine

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Recognizing that cyberattacks have already commenced and could spread beyond the Russian-Ukrainian battlefield, organizations can take several steps to protect themselves. They can recognize the risk. Then organizations can assess likely cyber threats and vulnerabilities, build resilience and take preventive actions, to avoid becoming another casualty in a conflict that already has too many.

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