According to a 2022 report from the Canadian Cybersecurity Centre, more than 71% of Canadian businesses experienced at least one cyber incident where confidential data was targeted. These alarming statistics lay a backdrop for the necessity of RPAA regulations, which includes requirements on implementing an incident response framework for payment service providers that receive services related to a payment function from third-party service providers
It is crucial to have a strong incident response framework in place that can help your business navigate through a data and information ownership crisis.
Why RPAA came into the picture and why is it important?
The Retail Payment Activities Act (RPAA) is a new law that requires most Money Services Businesses (MSBs) to register with the Bank of Canada as Payment Service Providers (PSPs).
The finаlizeԁ regulаtions enасteԁ unԁer the Retаil Pаyment Aсtivities Aсt (RPAA) on November 22, 2023, рroviԁe PSPs with а сleаr раth to сomрliаnсe.
The RPAA, аlong with its finаlizeԁ Regulаtions, creates а framework for regulating payment service providers, which is overseen by the Bank of Cаnаԁа.
This provision includes new rules on money laundering requirements for MSBs under the Financial Reporting and Research Authority of Canada (FINTRAC).
Where the purpose of FINTRAC rules is to prevent payment agencies from being used to launder money, the purpose of RPAA is to ensure that payment agencies are properly run from a risk management perspective.
RPAA aims to provide confidence in the safety and reliability of PSP applications while protecting end users from specific risks.
Step 1 - What to consider before Creating an Incident Response Plan?
Conduct a Risk Assessment
The base of any incident response plan is a well-thought out risk assessment framework.
This involves determining which assets are key, where vulnerabilities exist and how probable threats should be examined and dealt with.
Here are some questions that should be asked when conducting a risk analysis of your business profile:
- Which data is of the highest value to the organization?
- Where are the business areas that have high risks?
- What will be the first step in case of a threat?
- How to deal with a crisis that happens on a big scale?
- When dealing with third parties, what measures are in place to prevent vulnerabilities for confidential data?
Develop Policies
Develop policies that outline the necessary actions that should be taken by your team members relating to incident management. These policies should be in line with general organizational, compliance processes, and regulations.
It is important to create an incident response plan that defines roles, responsibilities and procedures to follow during which type of incidents.
Also, you are supposed to make sure that the response policies and strategies have a nod of approval from the leadership team.
We always suggest making an all-encompassing blueprint that is comprehensive yet flexible enough to accommodate new regulatory requirements.
Step 2 - Establish an Effective Incident Response Team
Define Roles and Responsibilities
An effective incident response team (IRT) should comprise of members with diverse skills and expertise. Here are the key roles that you should consider:
- Incident Handler: The incident handler manages the entire incident response to ensure internal team coordination and timeliness.
- Tech Lead: The tech lead should assist in analyzing all pertinent technical information and threat detection/mitigation.
- Record Keepers: The record keepers play a critical role in recording everything that was done while responding to the incident for future reference and analysis.
- Data Analysts: The data analyst should help in studying data to grasp the impact of incidents and provide mitigation strategies for the future.
- HR Specialist: The HR specialist should help manage internal communication and staff issues if they arise.
- Communications Advisor - It is important to have a PR specialist or an advisor who can deal with external stakeholders.
Ultimately, the roles and responsibilities of personnel should be defined in order to appropriately and compliantly uphold the implementation and maintenance of the risk management framework.
Step 3 - Create a Communications Plan
Internal and External Communication
A proper and well-thought-out communication plan should be developed in detail for an Incident Management Process to function. It is also important to define how, when, and with whom such communication is required during the time of an incident.
Therefore, a POC (point of contact) for reporting incidents should be established, and all employees should know how to report suspected incidents.
The communication in case of such a crisis should go to internal stakeholders, like employees and management, as well as external stakeholders, including any clients, partners, or regulatory bodies.
Depending on the nature and the gravity of the incident, contacts with law enforcement and legal consultants may be necessary as well.
Step 4 - Educate your Employees
Training Programs
It is required for you to provide regular training to employees on the process of identifying and responding to incidents. You can design these training programs according to your organization's needs and the roles of employees. The points to be covered during a training session include:
- Recognising the signs of potential incidents.
- Reporting procedures.
- Basic incident response action.
- Best practices on updating the risk management framework when needed
A well-trained workforce is one of the most effective ways to reduce incidents—decreasing the opportunity for breaches to occur and enhancing your security posture.
Step 5 - How can you craft your Incident Response Plan?
Be Prepared
- You need to clearly define the objectives, policies, and procedures of the incident response strategy.
- You should ensure that reliable backup processes are in place; so that your data and systems can be recovered in case of an outage.
- You should create a strategy for updating and patching software and hardware, vulnerability tracking, and mitigation against possible incidents.
- It is recommended that you exercise the incident response plan regularly, and improve it based on your results.
Always Observe
- It is extremely important to monitor the networks, systems and connected devices for possible attacks on an ongoing basis.
- Keep a record and study the incidents to recognize probable/common occurrences.
Create a Resolution
- Always try to acknowledge and mitigate threats immediately, to minimize the negative effects of any incident.
- Always remember to isolate affected systems; if necessary, turn off connectivity to stop the threat from going out of control and effecting other internal systems.
- While restoring systems from backups, run anti-malware scans to ensure that all threats are purged.
Understanding what went wrong
- We always recommend identifying the root cause of the incident.
- Record and keep evidence for post-incident analysis and future reference.
- Document lessons learned, pointing out what worked well and areas needing improvement.
You can update and enhance the incident response plan regarding preparedness for future incidents based on these findings.
What are the types of Incidents?
The Bank of Canada’s RPAA requires that a risk management framework is in place by all PSPs to reduce operational risk and potential exploitation that can negatively affect retail consumers. Understanding the types of internal and external forces that can pose risk to a PSPs’ stakeholders is helpful to adequately plan and manage risk around said forces.
Ransomware Attacks
In ransomware attacks, hackers often lock access to files or systems until a ransom is paid. However, it should be noted that ransom payment does not guarantee data recovery. The effective response includes isolating infected systems and performing software restores from clean backups, and appropriately reporting the incident following RPAA guidance.
Data Theft
Data theft involves unauthorized access and exfiltration of sensitive information by malicious actors, often through stolen credentials or advanced persistent threats (APTs). Data theft of a PSP can be problematic due to the sensitive nature of data that PSPs handle, including user information and financials. Effective responses to data theft include patching information system vulnerabilities and reporting the incident in line with RPAA guidance.
Active Exploitation
In active exploitation, hackers take advantage of unpatched vulnerabilities to gain control of systems. These attacks are troubling because they often go unnoticed until significant damage is done. PSPs have a duty to address these potential incidents before, during, and after they take place.
What are the Incident Reporting rules under RPAA?
You have a reporting obligation
PSPs are required to notify the Bank of Canada and affected parties in the event of an incident under the RPAA. Notifications must include:
- Detailed information about the incident and its impact.
- Measures taken in response.
- Contact information for further inquiries.
Overlapping Regulations
PSPs must navigate overlapping regulatory requirements from various entities, such as the Office of the Superintendent of Financial Institutions (OSFI). It should be a priority to ensure clarity and avoid redundant efforts to make sure that you are following effective compliance. For example, OSFI requires Federally Regulated Financial Institutions (FRFIs) to report incidents within 24 hours if they have potential consequences for other FRFIs or the Canadian financial system.
It is important to understand how RPAA obligations interact with these requirements to streamline compliance efforts and reduce administrative burdens.
It’s good to leverage technology
Use Automated Tools
It is recommended to integrate automation tools to better your incident response. This may include a Security Information and Event Management (SIEM) tool that provides real-time monitoring, threat detection, and automated alerts.
Use Incident Management Software
An incident management software is yet another beneficial investment. These platforms help track and document incidents effectively, facilitate communication among members, and even provide meaningful insights with analytics and reporting features.
What’s the way forward?
RPAA compliance requires a well-structured and operational approach to incident response management.
You can sail through any crisis easily if you focus on conducting comprehensive risk assessments, developing a competent and diverse incident response team, maintaining clear communication channels, and continuously improving response strategies.
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The content on this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind.
