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Article (35): Technology Risk and Information Security

2/2024 Issued on 14/6/2024

 

1.In this Article (35), “Payment Token Service Provider” refers to a Licensee or a Registree, with the exception of Registered Foreign Payment Token Issuers.
2.Payment Token Service Providers are expected to take into account international best practices and standards when designing and implementing the technology and specific risk management systems and processes.
3.A Payment Token Service Provider shall establish an effective technology and cyber security risk management framework to ensure the adequacy of IT controls, cyber resilience, the quality and security, including the reliability, robustness, stability and availability, of its computer systems, and the safety and efficiency of the operations of Payment Token Services. The framework shall be fit for purpose and commensurate with the risks associated with the nature, size, complexity and types of business and operations, the technologies adopted and the overall risk management system of the Payment Token Service Provider. Consideration shall be given to adopting recognized international standards and practices when formulating such risk management framework.
4.A Payment Token Service Provider’s effective technology risk management framework shall comprise proper IT governance, a continuous technology risk management process and implementation of sound IT control practices.
5.Payment Token Service Provider shall apply and meet at a minimum the UAE Information Assurance Standards, as amended.
6.Licensed Payment Token Issuers must maintain policies and procedures on how to respond to ‘forking’ events or adverse governance actions affecting the Distributed Ledger Technology in which their Payment Tokens are issued, including by establishing a process to ensure that redemption rights are afforded in accordance with Article (21)6(c), and to prevent redemption by Persons who are not Tokenholders. Such policies and procedures must address each blockchain in which a Payment Token is issued.
7.Licensed Payment Token Issuers which hold any Payment Tokens which they have issued (on their own behalf) must maintain a safeguarding and security policy setting out the manner in which the security of those Payment Tokens shall be ensured.

 

IT Governance

8.A Payment Token Service Provider shall establish a proper IT governance framework. IT governance shall cover various aspects, including a clear structure of IT functions and the establishment of IT control policies. While there could be different constructs, the major functions shall include an effective IT function, a robust technology risk management function, and an independent technology audit function.
9.The Board, or a committee designated by the Board shall be responsible for ensuring that a sound and robust risk management framework is established and maintained to manage technology risks in a manner that is commensurate with the risks posed by the Payment Token Service Provider’s Payment Token Services.

 

Security Requirements

10.A Payment Token Service Provider must clearly define its security requirements in the early stage of system development or acquisition as part of the business requirements and these must be adequately built-in during the system development stage.
11.A Payment Token Service Provider that develops or provides an application programming interface (API) shall establish safeguards to manage the development and provision of the API to secure the interaction and exchange of data between various software applications.

 

Network and Infrastructure Management

12.A Payment Token Service Provider shall clearly assign overall responsibility for network management to individuals who are equipped with expertise to fulfil their duties. Network standards, design, diagrams and operating procedures shall be formally documented, kept up-to-date, communicated to all relevant network staff and reviewed periodically.
13.A Payment Token Service Provider shall establish a security administration function and a set of formal procedures for administering the allocation of access rights to system resources and application systems, and monitoring the use of system resources to detect any unusual or unauthorized activities.
14.

A Payment Token Service Provider shall exercise due care when controlling the use of and access to privileged and emergency IDs. The necessary control procedures include:

a)changing the default password;
b)implement strong password control, with minimum password length and history, password complexity as well as maximum validity period;
c)restricting the number of privileged users;
d)implementing strong controls over remote access by privileged users;
e)granting of authorities that are strictly necessary to privileged and emergency IDs;
f)formal approval by appropriate senior personnel prior to being released for usage;
g)logging, preserving and monitoring of the activities performed by privileged and emergency IDs (e.g. peer reviews of activity logs);
h)prohibiting sharing of privileged accounts;
i)proper safeguard of privileged and emergency IDs and passwords (e.g. kept in a sealed envelope and locked up inside the data centre); and
j)changing of privileged and emergency IDs’ passwords immediately upon return by the requesters.

 

Cyber Security Risk

15.A Payment Token Service Provider shall ensure that its cyber security risks are adequately managed through its technology risk management process. The Payment Token Service Provider shall also commit adequate skilled resources to ensure its capability to identify the risk, protect its critical services against the attack, contain the impact of cyber security incidents and restore the services.
16.A Payment Token Service Provider shall establish a cyber incident response and management plan to swiftly isolate and neutralize a cyber threat and to resume affected services as soon as possible. The plan shall describe procedures to respond to plausible cyber threat scenarios.
17.A Payment Token Service Provider shall regularly assess the necessity to perform penetration and cyber-attack simulation testing, based on a risk-based assessment of the likelihood of a cyber-attack and its impact (considering amongst other things the size and nature of its business). Coverage and scope of testing shall be based on the cyber security risk profile, cyber intelligence information available, covering not only networks (both external and internal) and application systems but also social engineering and emerging cyber threats. A Payment Token Service Provider shall also take appropriate actions to mitigate the issues, threats and vulnerabilities identified in penetration and cyber-attack simulation testing in a timely manner, based on the impact and risk exposure analysis. The Central Bank may request evidence of the risk-based assessment referred to in this paragraph, and may direct that further or alternative penetration and cyber-attack simulation testing measures be adopted.

 

Customer Authentication

18.A Payment Token Service Provider shall select and implement reliable and effective authentication techniques to validate the identity and authority of its Customers or Tokenholders. Multi-factor authentication shall be required.
19.End-to-end encryption shall be implemented for the transmission of Customer passwords so that they are not exposed at any intermediate nodes between the Customer mobile application or browser and the system where passwords are verified.

 

Login Attempts and Session Management

20.A Payment Token Service Provider shall implement effective controls to limit the number of login or authentication attempts (e.g. wrong password entries), implementing time-out controls and setting time limits for the validity of authentication. If one-time passwords are used for authentication purposes, a Payment Token Service Provider shall ensure that the validity period of such passwords is limited to the strict minimum necessary.
21.A Payment Token Service Provider shall have processes in place ensuring that all Payment Token Transfers occurring in the context of its Payment Token Services are logged with an appropriate audit trail.

 

Fraud Detection Systems

22.Payment Transaction monitoring mechanisms designed to prevent, detect and block fraudulent Payment Transactions must be operated by a Payment Token Service Provider, in a manner which is proportionate based on a risk-based assessment of the likelihood of fraudulent Payment Transactions and their impact (considering amongst other things the size and nature of its business). Suspicious or high-risk transactions must be subject to a specific screening, filtration and evaluation procedure. The Central Bank may request evidence of such risk-based assessment, and may direct that further or alternative monitoring mechanisms be adopted.

 

Security advice for Customers

23.A Payment Token Service Provider must provide easy-to-understand, prominent and regularly reviewed advice from time to time via effective methods and multiple channels to its Customers and Tokenholders on security precautionary measures.
24.A Payment Token Service Provider must manage the risk associated with fraudulent emails, websites and mobile applications, which are designed to trick customers into revealing sensitive user information such as login identifiers, passwords and one-time passwords.

 

Security incident reporting

25.Payment Token Service Providers shall report major security and operational incidents including downtimes to the Central Bank, either immediately or in such form and on such basis as the Central Bank may direct from time to time, or as set out in CBUAE Regulations.