Last updated at Thu, 17 Mar 2022 13:01:34 GMT

In past decades, attackers breaching systems and stealing sensitive information prompted a wave of regulations focused on consumer privacy and breach notification. The current surge in ransomware attacks is prompting a new wave of action from policymakers. Unlike the more abstract harms threatened by breaches of personal information, ransomware will grind systems to a halt, suspending business and government operations and potentially threatening health and safety. One indication of the shift in awareness of this form of cybercrime is that President Biden addressed the ransomware threat multiple times in 2021.

The increased stakes of the ransomware threat are pushing regulators to take a harder look at whether regulatory requirements for cybersecurity safeguards are effective or if new requirements are needed to help combat the threat. The federal agencies are also stepping up their coordination on information sharing and incident reporting, and the Administration is growing its collaboration with international partners and the private sector. Let’s look at a few recent and ongoing initiatives.

Cybersecurity requirements for critical infrastructure

In March 2021, Secretary of Homeland Security Mayorkas announced a series of initiatives to strengthen cybersecurity for critical infrastructure, citing ransomware as a national security threat driving the effort. Less than two months later, the Colonial Pipeline ransomware event disrupted the East Coast fuel supply.

Not long after the Colonial attack, the Transportation Security Administration (TSA) exercised its authority to impose security regulations on the pipeline sector. Through two separate rules, TSA required pipeline operators to establish incident response and recovery plans, implement mitigation measures to protect against ransomware attacks, and undergo annual cybersecurity audits and architecture reviews, among other things.

In December 2021, TSA also issued new security regulations for the aviation, freight rail, and passenger rail sectors. The regulations require (among other things) reporting ransomware incidents to CISA and maintaining an incident response plan to detect, mitigate, and recover from ransomware attacks.

Ransomware is a key motivating factor in the sudden tightening of cybersecurity requirements. Previously, the cybersecurity regulations for pipelines were voluntary, with an accommodative relationship between pipeline operators and their regulators. Policymakers are increasingly voicing concern that other critical infrastructure sectors are in a similar position. With basic societal needs at risk when ransomware successfully disrupts critical infrastructure operations, some lawmakers are signaling openness to creating additional cybersecurity regulations for critical sectors.

OFAC sanctions

The federal government is also using its sanctions authority to head off ransomware payments. According to a recent FinCEN report, the average amount of reported ransomware transactions was approximately $100 million per month in 2021. These payments encourage more ransom-based attacks and fund other criminal activities.

The Office of Foreign Assets Control (OFAC) issued guidance warning that paying ransoms to sanctioned persons and organizations is in violation of sanctions regulations. Liability for these violations, OFAC notes, applies even if the person did not know that the ransomware payment was sent to a sanctioned entity.

Critics of this approach warn that applying sanctions to specific attacker groups is ineffective as the groups can simply rebrand or partner with other criminal elements to take payments. They add that sanctions imposed on payments does nothing but further victimize those organizations or individuals being attacked and remove their choices for recovery or force them underground. Ransomware is already grossly under-reported, and critics of sanctions warn that sanctions will likely encourage a lack of transparency.

More recently, OFAC also issued virtual currency guidance — aimed at currency companies, miners, exchanges, and users — emphasizing that the facilitation of ransomware payments to sanctioned entities is illegal. The guidance also describes best practices for assessing the risk of violating sanctions during transactions. In addition, OFAC imposed sanctions on a Russia-based cryptocurrency exchange for allegedly facilitating financial transactions for ransomware actors — the first sanctions of this kind.

OFAC followed up with an advisory on sanctions guidance for the virtual currency industry and applied sanctions on a cryptocurrency firm that was not doing its due diligence in preventing the facilitation of payments to ransomware criminal gangs.

Ransomware reporting

Requirements to report ransomware payments and ransomware-related incidents to federal authorities is another area to watch. Incident reporting requirements are in place for federal agencies and contractors via a Biden Administration Executive Order, but Congress is taking steps to expand these requirements to other private-sector entities.

Both the House of Representatives and the Senate have advanced legislation that would require businesses to report ransomware payments within 24 hours. The report would need to include the method of payment, instructions for making the payment, and other details to help federal investigators follow the payment flows and identify ransomware trends over time. The legislation would also require owners and operators of critical infrastructure to report substantial cybersecurity incidents (including a disruptive ransomware attack) within 72 hours. Interestingly, the legislation’s definition of “ransomware” encompasses all extortion-based attacks (such as the threat of DDoS), not just malware that locks system operations until a ransom is paid.

Although the House and Senate legislation cleared several hurdles, it did not pass Congress in 2021. However, we expect a renewed push for incident reporting, or other legislation to address ransomware, in 2022 and beyond.

Update - Mar. 17, 2022: The Cyber Incident Reporting For Critical Infrastructure Act has been enacted and is now law. For more details, check out our blog post.

A more collaborative, whole-of-government approach

The Biden Administration characterized ransomware as an economic and national security concern relatively early on and has detailed numerous federal efforts to counter it. We have also seen a marked increase in both international government and law enforcement cooperation, and public-private collaboration to identify, prosecute, and disrupt ransomware criminals, and address their safe harbors. In addition to the above, recent efforts have included:

  • In April 2021, the Department of Justice (DOJ) created a Digital Extortion Task Force, and in June elevated ransomware to be a priority on par with terrorism.
  • In June 2021, the US government attended the G7 Summit and discussed ransomware, making a commitment “to work together to urgently address the escalating shared threat from criminal ransomware networks.” They went on to “call on all states to urgently identify and disrupt ransomware criminal networks operating from within their borders, and hold those networks accountable for their actions.”
  • Also in June 2021, ransomware was discussed during the EU-US Justice and Home Affairs Ministerial Meeting, with commitments made to work together to combat “ransomware including through law enforcement action, raising public awareness on how to protect networks as well as the risk of paying the criminals responsible, and to encourage those states that turn a blind eye to this crime to arrest and extradite or effectively prosecute criminals on their territory.”
  • In August 2021, the Cybersecurity and Infrastructure Security Agency (CISA) announced the formation of the Joint Cyber Defense Collaborative (JCDC) to “integrate unique cyber capabilities across multiple federal agencies, many state and local governments, and countless private sector entities.”
  • In August 2021, the White House announced the voluntary Industrial Control System Cybersecurity Initiative to strengthen the resilience of critical infrastructure against ransomware.
  • In September 2021, NIST issued a ransomware risk management profile for its Cybersecurity Framework.
  • In October 2021, the White House hosted a Counter Ransomware Initiative Meeting, bringing together governments from 30 nations around the world “to discuss the escalating global security threat from ransomware” and identify potential solutions.
  • Also in October 2021, a group of international law enforcement agencies and private sector experts collaborated to force ransomware group REvil offline.
  • In November 2021, the US Department of Justice announced the arrest of three ransomware actors, charges against a fourth, and the “seizure of $6.1 million in funds traceable to alleged ransom payments.” It attributed these successes to “the culmination of close collaboration with our international, US government, and especially our private-sector partners.”
  • Collaboration by multiple federal agencies to produce the StopRansomware site, which provides basic resources on what ransomware is, how to reduce risks, and how to report an incident or request assistance.
  • Ongoing work of senior policymakers such as Deputy Attorney General Lisa Monaco, as well as federal agencies such as CISA and the FBI, to keep up a steady flow of timely alerts about the threat of ransomware and the need for public and private-sector collaboration to fight it.

Ransomware brings security center-stage

For years, it was arguable that most policymakers did not “get” the need for cybersecurity. Now the landscape has changed significantly, with ransomware and nation-state competition driving the renewed sense of urgency. Given the seriousness, persistence, and widespread nature of the ransomware threat, Rapid7 supports new measures to detect and mitigate these attacks. These trends do not seem likely to abate soon, and we expect regulatory activity and information sharing on cybersecurity to be driven by ransomware for some time to come.

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