SEBI Modifies Cybersecurity, Cyber Resilience Framework for KRAs

Capital markets regulator SEBI on Monday changed the cybersecurity and the cyber resilience framework of KYC Registration Agencies (KRAs) and mandated them to conduct a comprehensive cyber audit at least twice in a financial year. Along with the cyber audit report, all KRAs have been instructed to submit a statement from the MD and CEO certifying compliance by them with all of SEBI’s cybersecurity-related guidelines and notices issued periodically, according to a circular.

Under the revised framework, KRAs are required to identify and classify critical assets based on their sensitivity and criticality to business operations, services and data management.

Critical assets should include business-critical systems, internet-facing applications/systems, systems containing sensitive data, sensitive personal data, sensitive financial data, personally identifiable information data, among others. All ancillary systems used to access or communicate with critical systems, whether for operations or maintenance, must also be classified as critical systems.

In addition, the KRAs board will be required to approve the list of critical systems.

“To this end, KRA must maintain an up-to-date inventory of its hardware and systems, software and information assets (internal and external), details of its network resources, connections to its network and data flows,” SEBI said.

According to SEBI, KRAs must conduct regular Vulnerability Assessments and Penetration Tests (VAPT) that includes all infrastructure components and critical assets such as servers, network systems, security devices and other IT systems to detect security vulnerabilities in the IT environment and an in-depth evaluation of the security posture of the system through simulations of real attacks on your systems and networks.

In addition, the regulator said that KRAs must conduct VAPT at least once in a financial year.

However, for KRAs whose systems have been identified as a “protected system” by the National Critical Information Infrastructure Protection Center (NCIIPC), SEBI said, VAPT must be performed at least twice in a fiscal year.

Furthermore, all KRAs are required to engage only CERT-In integrated organisations to conduct VAPT.

The final report on the VAPT must be submitted to SEBI after the approval of the technology standing committee of the respective KRA, within a month from the end of the VAPT activity.

“Any gaps/vulnerabilities detected must be remedied immediately and the closure compliance of the findings identified during VAPT will be sent to SEBI within 3 months after VAPT’s final report is submitted to Sebi,” the regulator said.

In addition, KRAs must also perform vulnerability scans and penetration tests prior to the roll-out of a new system that is a critical system or part of an existing critical system.

The new framework will come into force with immediate effect, SEBI said, adding that all KRAs must communicate the status of the implementation of the circular to the regulator within 10 days.