Written by:
Anne Gotay Financial Services is one of the most powerful industries in both the United States and worldwide. They control the world’s money and much of the world’s most sensitive data. From personal identity information to banking account and financial transaction data, individuals and organizations’ most detailed records lie stored in their systems. All of which are valuable on the dark web. Because of this, Financial Services companies are over 300 times more likely to be attacked.
With so much sensitive data on the line and data breaches on the rise, many government and regulatory agencies have imposed very stringent requirements on financial services institutions. These cover everything from how data is handled to what information can be collected and shared. Failure to meet these regulations can lead to significant fines or even jail time.
Fortunately, the control sets required by one regulatory agency often overlap with the controls needed by others. This allows financial institutions to implement solutions that help them meet the requirements of multiple compliance regulations at once.
This article explores the key regulations that apply to the financial sector and explains how an organization can meet them.
Financial Data Protection Matters
There are numerous regulations that financial service organizations need to comply with, and this varies by where they do business and who their customers are. Even though many of these compliance regulations listed will be for US-based companies, the fact is, they operate in a global economy. Just because an organization is US-based doesn’t mean they can ignore European rules such as GDPR or Australian Consumer Data Rights. When a business has overseas customers or does business in those countries, the additional compliance mandates also apply.
SOX Protecting Investors & Preventing Fraud
The Sarbanes-Oxley Act of 2002 (SOX) emerged in response to numerous high-profile corporate fraud cases that rocked the financial sector. Designed to regulate publicly traded organizations, it specifically targets banks and insurance companies. It focuses on the overall integrity and security of financial reporting and data handling.
SOX security standards require internal controls be documented, tested, and utilized consistently for financial reporting, which requires protecting the data integrity of the accounting information that goes into these reports. All changes to financial information must be tracked and accounted for to maintain SOX compliance.
GLBA Protecting Consumers’ Privacy
The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Modernization Act, focused on the need for financial institutions to protect customer information. GLBA specifically targeted sensitive personal data such as social security numbers, credit history, and account numbers. It has provisions and safeguards to protect this data and customers’ personally identifiable information such as addresses and phone numbers.
With GLBA privacy rules, the requirements for safeguarding an organization’s data extend throughout the business and not solely on the information security team. All staff is responsible for handling data security. Organizations support this by implementing encryption and least privilege access controls to protect customer data privacy and limit those who have access to it.
Organizations that fail to comply with GLBA face significant financial penalties from the Federal Trade Commission (FTC). The penalties for GLBA do not stop at the business. They can also extend to individuals, and those people are personally responsible if they ignore or willfully bypass security controls. These penalties are not purely financial, as they can also include potential jail time.
PCI-DSS Risk Management for Credit Card Data
PCI DSS is the global Payment Card Industry Data Security Standard, and its rules apply to any organization that utilizes credit card data in any fashion. It mandates numerous controls specific to the safe handling and secure storage of cardholder data. It focuses on maintaining the confidentiality of this data and guaranteeing the integrity of all transactions that occur.
The PCI-DSS framework is a very comprehensive framework that scales according to the business and the amount of data that it handles. These controls are often verified by audit to validate that the prescribed controls are not only in place but that they are consistently being followed. Failure to meet these standards can result in businesses no longer accepting or handling payment card transactions, limiting customers to cash-only transactions.
GDPR Protecting Consumers
The General Data Protection Regulation (GDPR), created in 2016, focuses on protecting the personal data of EU citizens. Despite being an EU-specific regulation, it applies to companies outside of the EU if they handle data of European citizens or residents. It places the burden of data protection on the business and has specific rules allowing customers visibility and control over how their personal data is stored and handled.
To maintain GDPR compliance, organizations must know how the data they collect is managed throughout its lifecycle. This includes having appropriate privacy controls in place restricting who has access to this data. For GDPR compliance, the organization needs to track all access to personal data collected and verify how it was utilized and by whom.
Failure to meet GDPR requirements can be quite costly as it is not a fixed fine. The fines are scoped based on the level of compliance failure and whether it was accidental or due to negligence. These fines can be up to 2% of an organization’s global revenue or 10 million euros, whichever is greater.
Consumer Data Rights
Similar in concept to GDPR, the Australian Consumer Data Rights (CDR) regulations focus on giving Australians greater control of their data. It also requires organizations to have an in-depth tracking of how customer data is stored and shared. Much like with GDPR, consumers can control how their information is shared with third parties.
Failure to meet CDR is essential for both individuals and organizations. Individuals under CDR can face personal fines up to $500k. Business fines can be $10 million or 10% of an organization’s annual turnover, depending on which is greater.
Data Security in Financial Services Ensures Compliance
Failure to meet compliance mandates in the financial services sector can be extremely costly for an organization. Encryption is a crucial component for meeting these requirements. Most of these regulations require maintaining strict confidentiality, while business needs require active data sharing and visibility for analytics. Sotero is the only solution that can meet both of those needs.
While many security solutions may provide encryption or access control services, Sotero bundles it all into a cohesive package. With an end-to-end encryption solution, Sotero is the only solution that can keep data encrypted throughout its lifecycle, even while it is being analyzed or queried. This not only meets but exceeds many of the compliance requirements of the financial services industry.
For more information on how Sotero can help your organization meet compliance requirements, schedule a demo today.