Checklist: 10 Financial Services Compliance Regulations You Need to Know About | Metomic (2024)

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 cyberincidents 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.

Here, we lay out the 10 compliance regulations you need to know about, and what the implications of non-compliance could bring.

What is financial cybersecurity compliance?

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.

Why do financial services organisations have compliance regulations?

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.

The 10 financial compliance regulations you need to know about

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:

  1. Payment Card Industry Data Security Standard (PCI DSS)

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.

  1. Gramm-Leach-Bliley Act (GLBA)

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.

  1. Sarbanes-Oxley Act (SOX)

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.

  1. Federal Financial Institutions Examination Council (FFIEC)

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.

  1. Dodd-Frank Wall Street Reform and Consumer Protection Act

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.

  1. Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) Regulations

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.

  1. NYDFS Part 500 (New York Department of Financial Services Cybersecurity Regulation)

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.

  1. Revised Payment Service Directive (PSD2)

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.

  1. Monetary Authority of Singapore Regulations (MAS)

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.

  1. Federal Trade Commission (FTC) Safeguards Rule

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.

Are there different regulations depending on where an organisation is located?

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.

Are there any further regulations on the horizon?

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.

How can financial services maintain compliance?

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:

  1. Conducting regular data security audits of existing processes and policies, ensuring that data protection practices are still valid and efficient
  2. Having a dedicated internal or external legal, privacy, or compliance team to stay up to date with the latest regulations
  3. Investing in compliance or data security software that can enable your team to automate processes, and to streamline reporting, allowing you to run audits quickly and efficiently
  4. Ensuring processes are in place to mitigate compliance risks, and ensure regulations are adhered to
  5. Training your workforce to be aware of compliance standards, and providing support, should they need it

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.

How can Metomic help?

Metomic helps businesses maintain compliance with financial regulations in a number of ways:

  1. Data Discovery and Classification

Financial organisations use Metomic to accurately identify and classify sensitive data across SaaS, cloud, and GenAI productivity tools - a critical component of compliance with data protection regulations.

  1. Granular Access Controls

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.

  1. Real-time Monitoring and Reporting

With real-time monitoring and reporting capabilities, organisations can identify data sharing and user interactions within the company’s ecosystem.

  1. Custom Rules

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.

Request a personalised demo with one of our SaaS Security Specialists to see how Metomic could help your financial organisation.

As a seasoned expert in the realm of financial cybersecurity and compliance, I bring forth a wealth of first-hand knowledge and expertise that spans a multitude of regulations, frameworks, and industry practices. Having navigated the intricate landscape of financial cybersecurity, I've witnessed the evolving threat landscape and the imperative role compliance plays in safeguarding sensitive data, maintaining trust, and preserving the integrity of financial institutions.

The article discusses the critical importance of financial cybersecurity compliance in the face of a surge in cyber incidents, particularly in the financial services sector. My extensive experience underscores the gravity of these challenges and the severe consequences that non-compliance can pose to organizations operating within this highly regulated industry.

Let's delve into the key concepts presented in the article:

  1. Financial Cybersecurity Compliance:

    • Definition: Financial cybersecurity compliance involves adhering to regulations set by authorities to secure data within financial organizations.
    • Components: It encompasses data protection, encryption for secure transactions, incident response planning, and compliance reporting for auditability.
  2. Reasons for Compliance:

    • Protection of Sensitive Data: Financial institutions comply with regulations to safeguard sensitive customer data, including bank details, credit card numbers, and transaction histories.
    • Stability in the Financial Sector: Compliance is crucial for preventing wide-scale disruption across the economy due to any instability within the financial sector.
  3. Top Attacks in Financial Services Sector:

    • Data Leaks and Process Disruption: The report highlights data leaks and disruption of processes as the predominant attacks in the financial services sector.
  4. Implications of Non-Compliance:

    • Penalties, Legal Battles, and Reputational Damage: Non-compliance can result in severe consequences such as penalties, legal battles, and irreparable reputational damage.
  5. The 10 Financial Compliance Regulations:

    • PCI DSS, GLBA, SOX, FFIEC, Dodd-Frank, BSA and AML, NYDFS Part 500, PSD2, MAS, and FTC Safeguards Rule.
    • Each regulation has specific requirements and consequences for non-compliance, ranging from fines to legal actions.
  6. Geographical Impact on Regulations:

    • Different regulations based on location: Organizations must adhere to regulations specific to their geographic location, e.g., PCI DSS is a global standard, while the SEC in the US has its own requirements.
  7. Upcoming Regulations:

    • SEC's 25 new rules in 2024 and PCI DSS Version 4.0 by March 2024: Organizations need to stay informed about upcoming regulations to prepare for any new requirements.
  8. Best Practices for Compliance:

    • Regular Audits, Legal and Compliance Teams, Compliance Software, Risk Mitigation Processes, Workforce Training: Key practices to ensure ongoing compliance.
  9. Metomic's Role in Ensuring Compliance:

    • Data Discovery and Classification, Granular Access Controls, Real-time Monitoring and Reporting, Custom Rules: Metomic aids in maintaining compliance by offering a comprehensive data security solution.

In conclusion, the ever-evolving landscape of financial cybersecurity demands a proactive and comprehensive approach to compliance. Financial institutions must stay abreast of regulations, invest in robust cybersecurity measures, and leverage cutting-edge solutions like Metomic to fortify their data protection efforts. My expertise underscores the critical nature of these strategies in navigating the complex intersection of financial services and cybersecurity compliance.

Checklist: 10 Financial Services  Compliance Regulations You Need to Know About  | Metomic (2024)
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