Donald E. HesterCISSP, CISA, CAP, PSP, MCT
Maze & Associates / San Diego City College www.LearnSecurity.org
Payment Card Industry Compliance for Local Governments
The Problem
Albert Gonzalez, 28
With accomplices, he was involved in data breaches of most of the major data breaches: Heartland, Hannaford Bros., 7-Eleven, T.J. Maxx, Marshalls, BJ’s Wholesale Club, OfficeMax, Barnes & Noble, Sports Authority, Dave & Busters, Boston Market, Forever 21, DSW and others.
Top 10 Data BreachesDate Organization Lost records
20-01-09 Heartland Payment Systems 130,000,000 17-01-07 TJX Companies Inc. 94,000,000 01-06-84 TRW, Sears Roebuck 90,000,000 05-10-09 National Archives and Records Administration 76,000,000 19-06-05 CardSystems, Visa, MasterCard, American Express 40,000,000 24-06-04 America Online 30,000,000 22-05-06 U.S. Department of Veterans Affairs 26,500,000 20-11-07 HM Revenue and Customs, TNT 25,000,000 06-10-08 T-Mobile, Deutsche Telekom 17,000,000 01-11-86 Canada Revenue Agency 16,000,000
Total: 544,500,000Current US Population: 303 million
Source:
http://www.youtube.com/watch?v=7W-k3R2N7Zk
Retail Solutions Providers Association video
Highest IT Priorities for 20081. Information Security Management2. IT Governance 3. Business Continuity Management and Disaster Recovery
Planning4. Privacy Management5. Business Process Improvement, Workflow and Process
Exceptions Alerts (new to list)6. Identity and Access Management7. Conforming to Assurance and Compliance Standards8. Business Intelligence (new to list)9. Mobile and Remote Computing10. Document, Forms, Content and Knowledge Management
Source: AICPA’s 19th Annual Top Technology Initiatives survey
1, 2, 4, 6, & 7, are all PCI related
Highest IT Priorities for 20091. Information Security Management2. Privacy Management3. Secure Data File Storage, Transmission and Exchange4. Business Process Improvement, Work Flow and Process
Exception Alerts5. Mobile and Remote Computing6. Training and Competency7. Identity and Access Management8. Improved Application and Data Integration9. Document, Forms, Content and Knowledge Management10. Electronic Data Retention Strategy
Source: AICPA’s 20th Annual Top Technology Initiatives survey
1, 2, 3, 6, 7, & 10, are all PCI related
Players• Acquirer (Merchant Bank)
– Bankcard association member that initiates and maintains relationships with merchants that accept payment cards
• Hosting Provider– Offer various services to merchants and
other service providers.• Merchant
– Provides goods and services for compensation
• Cardholder– Customer to whom a card is issued or
individual authorized to use the card
Card Brand
Acquirer
Hosting Provider
Merchant
Cardholder
Players
• Card Brand– Issue fines
• PCI Security Standards Council– Maintain standards for PCI– Administer ASV & QSA
• Qualified Security Assessors– Certified to provide annual audits
• Approved Scanning Vendor– Certified to provide quarterly
scans
PCI SSC
QSA
ASV
Various Standards
American Express, DSOP
Discover Network, DISC
Master Card, SDP
Visa, CISP JCB
PCI Council Standards
American Express, DSOP
Discover Network, DISC
Master Card, SDP
Visa, CISP
PCI Data Security Standard
What does the PCI Council do?
• Own and manage PCI DSS, including maintenance, revisions, interpretation and distribution
• Define common audit requirements to validate compliance
• Manage certification process for security assessors and network scanning vendors
• Establish minimum qualification requirements• Maintain and publish a list of certified assessors
and vendors
Website
https://www.pcisecuritystandards.org/
What are the Standards?
• PCI DSS: PCI Data Security Standard– Overall standard, applies to all
• PA DSS: Payment Application Data Security Standard– Supporting standard for payment
applications• PED: PIN Entry Device Security Standard
– Supporting standard for PIN entry devices
PCI DSS
The Payment Card Industry Data Security Standard 6 Objectives (Goals) 12 Sections (Requirements) 194 Controls
PCI DSS
Standard Lifecycle
PA DSS
• “PA-DSS is the Council-managed program formerly under the supervision of the Visa Inc. program known as the Payment Application Best Practices (PABP).
• The goal of PA-DSS is to help software vendors and others develop secure payment applications that do not store prohibited data, such as full magnetic stripe, CVV2 or PIN data, and ensure their payment applications support compliance with the PCI DSS.” – Payment Card Industry Security Standards Council
PCI PED
• “The PCI PED security alignment initiative is aimed at ensuring that the cardholder’s PIN, and any sensitive information such as resident keys, are protected consistently at a PIN acceptance device.
• The objective of the requirements is the provision of a single, consistent, and stringent standard for all PIN acceptance devices worldwide.”– Payment Card Industry Security Standards Council
Who must comply?
• With PCI DSS– Any organization the processes, stores or transmits
credit card information. • With PA DSS
– Payment application developers– Merchants will be required to use only compliant
applications by July 2010.• With PED
– Manufactures of PIN entry devices– Merchants will be required to use only compliant
hardware by July 2010.
PCI Compliance
• This includes: • Organizations who only use paper based
processing• Organizations who outsource the credit
card processing• Organizations that process credit cards in
house
Is PCI law?The PCI DSS was developed by the
payment card brands Compliancy is compulsory if a merchant
wishes to continue processing payment card transactions
However, some States have enacted legislation that has made PCI compliance the law
What if we are a small organization?
• “All merchants, whether small or large, need to be PCI compliant.
• The payment brands have collectively adopted PCI DSS as the requirement for organizations that process, store or transmit payment cardholder data.”– PCI SSC
Merchant Levels
• Each merchant is placed in levels based upon the number of transactions they process.
• These levels determine what evidence of compliance must be submitted.
• Merchants with a low number of transactions can complete self-assessment questionnaire.
• Merchants in the middle submit questionnaires and have external scans.
• At the highest level merchants must have a full independent audit and external scan.
Merchant Levels
Merchant levels are determined by the annual number of transactions not the dollar amount of the transactions.
Merchant Level E-commerce transactions All other transactionsLevel 1 Over 6 million annually Over 6 million annuallyLevel 2 1 to 6 million annually 1 to 6 million annuallyLevel 3 20,000 to 1 million annually N/ALevel 4 Up to 20,000 annually Up to 1 million annually
Merchant Levels: American Express
Merchant levels are determined by the annual number of transactions not the dollar amount of the transactions.
Merchant Level Definition
Level 1 2.5 million American Express Card transactions or more per year; or any Merchant that has had a data incident; or any Merchant that American
Express otherwise deems a Level 1Level 2 50,000 to 2.5 million American Express Card transactions per year
Level 3 Less than 50,000 American Express Card transactions per year
Validation Requirements
• The merchant level of the entities determines what the organization must do to validate their compliance with PCI DSS.
• Validation is required for Level 1, Level 2, and Level 3 merchants, and may be required for Level 4 merchants in the near future.
• Validation requirements are set by Acquirers and Card Brands not PCI SSC
Validation Requirements
Merchant Level QSA Audit Quarterly Network Scans
Self-Assessment Questionnaire
Level 1 Yes Yes -
Level 2 * Yes Yes
Level 3 - Yes Yes
Level 4 - Yes Yes
Separate and distinct from the mandate to comply with the PCI DSS is the validation of compliance whereby entities verify and demonstrate their compliance status.* Starting 12-31-2010 MasterCard will require Annual QSA Audits for Level 2 Merchants
Validation Requirements:American Express
Merchant Level QSA Audit Quarterly Network Scans
Self-Assessment Questionnaire
Level 1 Yes Yes -
Level 2 - Yes Yes
Level 3 - Yes *
* Level 3 Merchants need not submit Validation Documentation, but still must comply with all other provisions of the DSOP.
Who do you report to?
• Acquirers (Merchant Banks) are responsible for verifying compliance
• Some Acquirers (Merchant banks) are already requiring merchants at level 4 to comply– “Merchants that store payment account data
should contact the acquiring financial institutions with whom they have merchant agreements to determine whether they must validate compliance and the specific requirements for compliance validation.” - PCI SSC
Network Vulnerability Scans
• The PCI DSS requires that all merchants with externally-facing IP addresses perform external network scanning to achieve compliance.
• Acquirers (Merchant Banks) require the quarterly submission of scan reports
• Scans must be performed by a PCI Approved Scanning Vendor (ASV)
Network Vulnerability Scans
• These scans are automated, non-intrusive web scans.
• Internal Scans are also required by PCI DSS, however no submission is required for internal scans.
• See PCI SSC website for a list of Approved Scanning Vendors (ASV)
Self Assessment Questionnaire
• The Payment Card Industry Security Standards Council (PCS SSC) revised the original version of the Self Assessment Questionnaire (SAQ) in February 2008 in order to address the various scenarios that can exist at a merchant’s point of sale environment.
• As most Acquirer’s (Merchant Bank) require Self Assessment Questionnaires on merchant levels 2, 3 and 4, it is important to know which version of the SAQ your business may need to complete.
• There are five SAQ validation categories.
Self Assessment Questionnaire Merchants have different levels of SAQ,
depending upon the risk of the processing environment.
Merchants who outsource processing or have paper only processing have less questions to answer.
Merchants who process in house on custom application have to answer all the questions.
SAQ Validation Types
SAQ FAQ• Do merchants have to be compliant only
with the questions on the SAQ?– No merchants must comply with all of the PCI
DSS. – The questions on the SAQ only reflect the
controls with the highest risk based upon the merchants processing environment.
– Controls can be N/A depending upon the merchants environment.
SAQ FAQ• What if my Merchant Bank has not
required our organization to turn in our SAQ?– Contact your Merchant Banks and Acquirers– Complete the SAQ annually– Maintain a copy on file
SAQ FAQ
• How can my organization find assistance in completing the SAQ? – The Council encourages organizations to
seek professional guidance in achieving compliance and completing the Self-Assessment Questionnaire.
– You are free to use any security professional of your choosing
– PCI SSC recommends QSA
SAQ FAQ
• What is an Attestation of Compliance?– The Attestation is your certification that you
have performed the appropriate Self-Assessment and attest to your organization’s compliance status with the PCI DSS.
Cost?• What happens when there is a data
breach?– Depends if the merchant can reach safe
harbor.
What’s Safe Harbor?Incident
Evaluation
Safe Harbor
$$$$$$
If compromised take immediate action.“Merchants and service providers that have experienced a suspected or confirmed security breach must take immediate action to help prevent additional damage and adhere to Visa CISP requirements.”
What’s Safe Harbor?Incident
Evaluation
Safe Harbor
$$$$$$
If there is a data breach, the card brands will perform a forensic audit to determine if the organization was PCI DSS compliant at the time of the data breach.
What’s Safe Harbor?Incident
Evaluation
Safe Harbor
$$$$$$
If the organization is found to be out of compliance at the time of the breach they may be liable for the full cost of the breach including the cost of the forensics, losses of cardholders, losses to the banks, losses to the card brand and in some states fines will be assessed.
What’s Safe Harbor?Incident
Evaluation
Safe Harbor
$$$$$$
In addition, the organization will be moved to the highest merchant level and will be required to meet the most stringent evidence requirements and the credit card processing fees will increase.
What’s Safe Harbor?Incident
Evaluation
Safe Harbor
$$$$$$
To obtain safe harbor status a merchant must maintain full compliance at all times, including at the time of the breach as demonstrated during a forensic investigation.
Safe Harbor Notes:
• For a merchant to be considered compliant, any Service Providers that store, process or transmit credit card account data on behalf of the merchant must also be compliant.
• The submission of compliance validation documentation alone does not provide the merchant with safe harbor status.
Loss or theft of account information
• Members, service providers or merchants must immediately report the suspected or confirmed loss or theft of any material or records that contain Visa cardholder data.
• If a member knows or suspects a security breach with a merchant or service provider, the member must take immediate action to investigate the incident and limit the exposure of cardholder data.
• If a Visa member fails to immediately notify Visa Inc. Fraud Control of the suspected or confirmed loss or theft of any Visa transaction information, the member will be subject to a penalty of $100,000 per incident.
• Members are subject to fines, up to $500,000 per incident, for any merchant or service provider that is compromised and not compliant at the time of the incident. – Visa CISP program
FinesMerchants may be subject to fines by the card associations if deemed non-compliant. For your convenience fine schedules for Visa and MasterCard are outlined below.
http://www.firstnationalmerchants.com/ms/html/en/pci_compliance/pci_data_secur_stand.html
Donald E. HesterCISSP, CISA, CAP, PSP, MCT
Maze & Associates / San Diego City College www.LearnSecurity.org
Payment Card Industry Compliance for Local Governments
WORKING TOWARD PCI COMPLIANCE
A Prioritized Approach
Action Items
• Document how your organization stores, processes or transmits credit card information
• Determine your merchant level• Determine your validation requirements
– Contact your merchant banks and acquirers• Determine your SAQ validation type• Find an ASV for compliance network vulnerability
scans– Perform at least quarterly scans
• Annually fill out your SAQ– turn in or keep on file
Gather Information• List all Merchant Banks, Gateways and Acquirers• List all Payment Applications• List all PEDs used (Point of Interaction)• List all outsourced processors, ASPs and third
party processors• List all physical locations that PAN is processed,
stored or transmitted– Paper, Receipts, Imprints, Carbon Copies
• List all electronic storage of PAN– Electronic Image Files: Fax, Scan Archive, Laser
Fiche or Audio Recordings: Voicemail, Customer Service Call Monitoring recordings
– Include PAN stored on backup media
Next Steps
• List the number of all credit card transactions for all Merchant Banks and Acquirers
• Determine your merchant level• Determine if any payment applications
store credit card numbers• Determine SAQ validation types
Document Compliance
• Determine if all PEDs are PCI compliant• Determine if all payment applications are
PCI compliant• Determine if all 3rd party processors and 3rd
parties are PCI compliant• Obtain documentation from each• Annually renew documentation from 3rd
parties • Annually check payment application and
PED list
Action Items• Contact the vendor, make sure payment
applications are PA DSS complaint or will be.
• Contact your PIN device supplier, make sure you have compliant PIN Entry Devices.
https://www.pcisecuritystandards.org/security_standards/ped/pedapprovallist.htmlhttps://www.pcisecuritystandards.org/security_standards/vpa/
Validation Requirements
• External Scans by an ASV, at least quarterly
• Annually fill out SAQ (even if bank has not requested one)
• If level 1 or 2 you will need an audit from a QSA
Document Data Flow
• With a network diagram document the flow of credit card information (transmission)
• Locate any places the information might be stored along the data path (storage)
PCI DSS
• Use the prioritized approach to implement the most important controls first.
PCI DSS
• Start implementing the data security standard starting with policies
• Start with high level polices– “The City shall not store PAN (Credit Card
Numbers) electronically or physically. Employees shall be trained on PCI standard annually. Background checks will be performed on all staff with access to credit card information.”
PII Policy
• If you already have a policy for handling confidential information or personally identifiable information add credit card information to confidential information or PII.
FILLING OUT THE SAQ
SAQ A
SAQ A
SAQ A
All of PCI DSS
Items under section 12
• For Example– 12.5.1 Establish, document, and distribute
security policies and procedures– 12.6.1 Educate employees upon hire and at least
annually (for example, by letters, posters, memos, meetings, and promotions)
– 12.8.1 Verify that the contract contains provisions requiring adherence to the PCI DSS requirements
– 12.3.6 Acceptable network locations for the technologies
WHAT WE’VE SEEN
Common Findings
• Clients think they are compliant– Because they do quarterly networks scans– Because they filled out the SAQ– Because they have too few transactions
• Reality– Validation is not compliance– Compliance is an ongoing process– PCI DSS is required for all merchants,
regardless of the number of transactions
Common Findings• Payment card information on paper• No network segmentation• Logging Access• Shared Passwords• Verifying compliance of outsourced
processing• No one is assigned responsibility• Not aware of PAN storage in
application
PCI Pitfalls• PCI will not make an
organization’s network or data secure
• PCI DSS focuses on one type of data: payment card transactions
• The organization runs the risk of focusing on one class of data to the detriment of everything else
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