Here, we lay out 10 financial compliance regulations you need to know about, and what the implications of non-compliance could bring.
Operating within a highly regulated industry, financial services organisations must ensure they are complying with all the relevant regulations for their business.
Positive Technologies report that Q3 2023 saw twice as many unique cyber incidents than the same quarter in 2022, within the financial services sector. Data leaks and disruption of processes came out as the top attacks seen across the industry.
Banks, insurance companies, and other financial institutions must take steps to protect sensitive customer data, but this isn’t the only reason compliance standards exist. There is also the added factor that any instability within the financial sector can lead to wide scale disruption across the economy too.
There are plenty of regulations financial services companies will need to adhere to, in order to function effectively, and mitigate the cyber risks to their business, including:
PCI DSS was founded by the major credit card companies in order to ensure that all companies handling such data do so in a secure environment.
This regulation requires companies to secure cardholder data by implementing features such as strong access control measures and firewalls, to ensure they are protecting cardholder data. Non-compliance can result in fines, increased transaction costs, and suspension of card payment acceptance.
Financial companies in the US need to adhere to GLBA in order to protect sensitive financial information. Organisations must carry out risk assessments, implement comprehensive information security measures, and monitor their ecosystems for security risks. Without these essential processes, teams may find themselves facing regulatory penalties.
SOX has been in place in the US since 2002, aiming to protect investors by improving the accuracy and reliability of corporate disclosures. Key compliance factors include financial controls, data accuracy, and accountability through auditing. As SOX applies specifically to investors, if an organisation is found to be non-compliant, it can result in a loss of investor confidence, and even imprisonment for the executives responsible.
FFIEC applies to the security of financial institutions’ tech systems. Organisations must enforce multi-factor authentication (MFA), and have comprehensive incident response planning in place. Without these, companies can face an increased vulnerability to cyber attacks, as well as sanctions, and reputational damage.
As a response to the 2008 financial crisis, Dodd-Frank addresses various aspects of financial regulation in US businesses. Risk management and an increased transparency in financial transactions should be priorities for organisations who must comply. If businesses don’t comply, it could lead to legal action, and the potential for financial instability.
Another US regulation, BSA and AML regulations focus on detecting and preventing money laundering. To enforce this, due diligence and suspicious activity reporting are crucial, and non-compliance can lead to legal consequences, and an increased risk of financial crime.
Specific to financial institutions in New York, NYDFS Part 500 protects organisations and their businesses within the city. It requires companies to establish a cybersecurity program and implement policies for data governance, as well as incident response planning. There are legal consequences and reputational damage for those that are negligent.
This regulation aims to secure electronic payments within the EU, requiring organisations to enforce customer authentication for electronic payments, and implementation of secure communication channels. Non-compliance can lead to service disruptions and penalties for unauthorised transactions.
Singapore’s monetary authority imposes regulations in order to strengthen cybersecurity measures in financial institutions. Organisations must establish comprehensive cybersecurity procedures and ensure swift reporting of incidents to the MAS. If businesses are found to be non-compliant, they can be fined or face a suspension of their licenses.
The FTC Safeguards Rule puts a focus on protecting consumer information. Businesses must conduct regular risk assessments, and have dedicated individuals for safeguarding customer data. Without these in place, businesses can face reputational damage, penalties, and legal actions by affected consumers.
Compliance with these regulations is critical for financial institutions to maintain trust, protect sensitive data, and avoid legal and financial repercussions. Non-compliance can lead to severe consequences that impact both the institution and its stakeholders.
Financial cybersecurity compliance means abiding by the financial regulations set by authorities to secure the data within an organisation.
It can include data protection, securing transactions via encryption, planning for incident responses, and establishing compliance reporting to be able to audit your efforts.
Organisations working within the financial services sector must comply with strict regulations to ensure that sensitive data such as bank details, credit card numbers, or transaction histories, are not accessed by unauthorised users. Regulations are often put in place by authorities such as governments who are looking to ensure the integrity of financial systems and keep customers protected.
There are many risks associated with storing financial information. For instance, cyber attacks can lead to the loss of sensitive financial data, putting customers at risk of identity fraud, and financial losses. If attacks are carried out across an entire organisation, customers can lose the ability to access their finances, leading to instability in the market.
Cyber attacks can also compromise intellectual property and company plans such as upcoming acquisitions, leading organisations to lose a competitive advantage in the marketplace.
Due to the widespread effects a cyberattack can have, compliance regulations are particularly important in the financial sector, resulting in penalties, legal battles, and reputational damage that may be insurmountable.
Yes, where an organisation is geographically based will have an impact on the regulations they need to abide by. For instance, PCI DSS is a global standard that will need to be followed, whereas the Securities and Exchange Commission (SEC) in the US will have their own requirements for financial institutions based there.
Organisations will need to be aware of the regulations they must adhere to, and the implications if they are unable to comply.
The SEC is planning on introducing 25 new rules in 2024, while businesses adhering to PCI DSS will need to prepare for Version 4.0 by March 2024.
To stay informed about upcoming regulations, organisations can engage with industry associations, follow updates from relevant regulatory bodies, and consult compliance experts to prepare for any new regulatory requirements that may impact their operations.
As the financial sector handles sensitive data on a daily basis, they are required to be proactive when it comes to compliance, allowing them ample time to prepare for any upcoming regulatory changes.
Best practices for ensuring compliance include:
Without these practices in place, financial services organisations may not be able to fully comply with regulatory requirements, and may incur fines or penalties for non-compliance.
In our 2024 ‘The State of Data Security in Financial Services’ report, we dissect our own proprietary data to understand how financial services companies are navigating data security. You'll find:
Metomic helps businesses maintain compliance with financial regulations in a number of ways:
Financial organisations use Metomic to accurately identify and classify sensitive data, such as PII, across SaaS, cloud, and GenAI productivity tools - a critical component of compliance with data protection regulations.
Limiting the amount of access to sensitive data is key to minimising data exposure. Metomic helps teams implement access controls to ensure only authorised users can see confidential information.
With real-time monitoring and reporting capabilities, organisations can identify data sharing and user interactions within the company’s ecosystem.
Setting tailored data protection policies allows Metomic users to enforce custom rules throughout the organisation, aligning the company to the nuanced demands of the financial industry.
Metomic’s data security solution can enhance a financial services organisation’s compliance posture and help to build a resilient framework for protecting sensitive data.
Book a personalised demo today or get in touch with our security experts to see how Metomic could help your financial organisation keep your data safe.