EU Extends Sanctions to Hackers—Banks, Cyber Insurers Face Dilemma
The European Council extended a framework that penalizes cyber-attacks against EU or member countries for another year. The framework, part of the EU cyber diplomacy toolbox, aims to strengthen Europe's resilience against cyber threats.
The measures include travel restrictions and freezing assets of individuals or entities responsible for facilitation of cyberattacks. The sanctions currently apply to Russian, Chinese, and North Korean individuals and entities, although the framework is important for all organizations because parties beyond the cyber attackers can be penalized.
In a recent blog post, Steptoe & Johnson LLP warned companies facing ransomware payment requests to consider the framework. Despite attribution challenges, "payment to listed persons amount to a violation of sanctions regime." Financial institutions and insurance companies are similarly affected by facilitating payments or providing cyber coverage that includes ransom payments.
Indeed, in the start of what could be a trend, global insurer AXA said earlier this month that it would no longer issue cyber-insurance policies in France that reimburse customers for ransomware payments to criminal groups.
The EU framework is part of a regulatory trend towards increased scrutiny of ransomware payments. The Biden administration's Executive Order “sets the stage for an uptick in similar actions” in the US, said Alex Sharpe, principal at Sharpe Management Consulting.
While certainly "a step in the right direction,” the Executive Order does not go far enough, according to XPAN Law Partners managing partner Rebecca L. Rakoski. US domestic organizations face a "patchwork of guidelines and standards without clear guidance" from the Federal Government, she stated.
Considering the current lack of clear, substantial legislative and regulatory frameworks, legal ambiguities, and competing interests, the world finds itself at a crossroads. Until fundamental changes are made to legislative and regulatory frameworks, we remain at an “uncomfortable time,” said Sharpe.