The Need For Regulatory Compliance
Regulatory compliance is a dull subject. Yet, if your financial institution or business ignores or isn’t aware of it –it could cause problems.
Regulatory compliance ensures organizations follow state and federal law, as well as federal standards and procedures. That may sound simple enough, but considering the variety of mandated regulations like HIPAA, SOX and PCI DSS, falling out of compliance happens fairly frequently. If that happens, you’re looking at possible audits, federal fines, even public scrutiny and negative attention that comes with an investigation. In a time where social media shapes perception, a company cannot risk losing business because of their reputation.
The reality is, not maintaining regulatory compliance only takes you towards significant revenue loss for your organization, or even worse.
Penalties for violating SOX compliance standards, for example, and can lead to millions of dollars fines, removal from listings on the public stock exchange and even years in prison. That is why compliance is often the focus of an organization’s security system.
Regulatory Compliance Isn’t Easy But…
While there are different types of compliance regulations for different industries, the three largest are HIPPA, SOX and PCI DSS. Your particular organization might need to comply with one or all three. Whatever the case may be, it’s important to familiarize yourself with the specifics of the regulations that apply to you. That being said, it’s possible to think you are taking the necessary measures to ensure compliance and still be in violation of one or more regulations. This happens unintentionally or unknowingly.
Some of the reasons for this might be because you’re referencing outdated material, updated or new wording of rules replaces old and misunderstandings on how these laws are interpreted by the various enforcement agencies.
Furthermore, these regulations are constantly changing and keeping track of all the minute alterations can take time and energy better used on other business related goals.
Cloud computing for banking and investment services involves a lot of data. Even processing data has to go through regulatory benchmarks. These benchmarks are called Data localization laws. Cloud compliance just means that a cloud service provider is meeting regulatory standards required for their clients.
Data localization is important to understand financial cloud compliance. It should not be confused with data sovereignty. Data localization laws require personal data to be handled in a specific territory instead of a cloud provider. Laws in different countries often differ regarding this. Here are some financial tech support requirements you need to verify with any potential cloud provider.
SOX requires the following to be bench-marked, audited and monitored regularly, specifically sections 302, 404, and 409:
• Information Access
• Internal controls
• Database activity
• Account activity
• User activity
• Network Activity
• Login activity
The Gramm-Leach-Bliley (GLB) Act requires companies legally defined as “financial institutions” to ensure the security and confidentiality of sensitive client information. Therefore, IT security is an essential requirement everyone in the financial services industry. Given the nature of the data a financial organization possesses, there are serious repercussions for shirking this responsibility.
Make sure the right controls are installed to avoid data breaches and you have the tools ready to alleviate any issues if they occur. Investing in services that monitor and protect your financial database is essential to complying with regulation.
Always keep backup systems to protect your sensitive data. Both data centers and on-site IT infrastructure are subject to the same SOX compliance requirements. Finance IT solutions is not only about support but security as well.
This regards both electronic and physical systems put in place to stop unauthorized users from viewing sensitive financial information. Part of this is adopting effective security measures like implementing multi-factored authentication, keeping servers or data centers in secure locations.
What Can You Do?
Considering you are in the best position to look after your businesses’ affairs, you should familiarize yourself with the most recent regulatory compliance information. Knowing as much as possible about the nuances of regulatory mandates prepares you to understand compliance regulations. Moreover, you can leverage this information to stay updated on any changes and plan accordingly.
You should then adopt IT solutions for finance that are in complete compliance with industry standards. That means finding cloud financial support with expert knowledge on regulation and compliance.
You should try to find an organization that creates a customized infrastructure that serves your specific requirements. Additionally, it should take into consideration all the standards mentioned previously: HIPAA, SOX and PCI DSS.
For more information on compliance standards and compatible IT solutions visit our website or call us at (305) 551-2009 and we’ll answer any questions or inquires you might have.