Security is a top priority for any financial organization, big or small. With the rise of online banking, credit card use, and other digital transactions, cybersecurity is as imperative as keeping your physical vaults locked. Due to the large amount of data passing through financial institutions, the US government has made it mandatory of banks and financial organizations to meet a certain standard in IT security.
So how can banks and financial organizations achieve IT compliance? Each financial institution should be familiar with IT regulations, implement the policies and processes required, and invest in strengthening their cybersecurity measures.
IT Regulations For US Banks and Financial Organizations
Data is often referred to as the “new gold” because it’s especially valuable in the world we live in today. The financial sector is especially rich with highly sensitive data, such as financial records and personally identifiable information. However, this also means that financial institutions are frequently targeted by cybercriminals.
Banks, loan services, brokerage firms, investment and credit unions frequently suffer data breaches from cybercriminals who can monetize their data or use it for financial fraud. In order to protect financial institutions and prevent their clients from becoming victims, local and international regulatory bodies establish IT requirements that financial organizations should comply with.
In the US, three important federal IT regulations include the Gramm-Leach-Bliley Act, the Sarbanes-Oxley Act, and the Payment Card Industry Data Security Standard.
- Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act (GLBA) is a US law that regulates how financial institutions handle customers’ private data. From the collection, safekeeping, and use of private financial information, companies are required to establish strict access policies and inform customers on how their data is managed.
The Safeguards Rule of the GLBA requires that any financial institution must adopt measures to protect customer data, while the Privacy Rule requires them to allow customers to opt out of sharing their information with certain third parties. The GLBA is also expected to incorporate additions that will require financial institutions to encrypt all customer data, use multifactor authentication for data access, and implement access controls against unauthorized users.
- Sarbanes-Oxley Act
The Sarbanes-Oxley Act (SOX) recommends practices that can prevent organizations from processing fraudulent financial transactions. The SOX act is applicable to all public companies registered under the US Securities and Exchange Commission, and it outlines how to securely store and manage corporate-facing electronic financial records.
Aside from determining which financial records should be stored, for how long, and how they should be protected, the SOX act also requires firms to monitor, log, and audit certain activities. SOX-related audits check on elements of IT security such as routine data backups and managing access controls.
- Payment Card Industry Data Security Standard
The Payment Card Industry Data Security Standard (PCI DSS) focuses specifically on organizations that store, process, or transmit cardholder data. Based on the PCI DSS, financial institutions are required to implement administrative controls that track account activity and limit cardholder data access to as few employees as possible.
Like the SOX and the GLBA, the PCI DSS also requires tracking all user access logins on computers and systems that store sensitive data. The reasoning is simple: To protect customer data, each financial organization is responsible for policing the activity related to its access. Recommendations are also in place for two-factor or multifactor authentication to help verify authorized user identity.
As with any guideline or standard, compliance alone does not protect an organization from any legal liability in case a data breach occurs. However, adherence to these regulations can mitigate any cybersecurity risk and reassure customers that their data is being well-protected.
Checklist: Policies and Processes For Achieving Compliance
In order to implement IT compliance fully, a financial institution will need to revamp their culture so that tighter, safer controls are adopted from top to bottom.
Standardizing procedures, investing on cybersecurity training, and setting up data breach response protocols are some of the ways a bank or a financial organization can adhere to government regulations. Other IT policies and processes each institution should implement include:
- Logging and Data Collection: It’s critical for any bank or financial institution to log and review all security event formation, identify specific log sources, and analyze any potential threats in network activity.
- Encryption: Encryption is an added layer of security that will make it difficult for cybercriminals to steal and use data for fraud.
- Firewalls and Web Gateways: Any financial institution must deploy and maintain a firewall or an antivirus system to protect user data. Firewalls are responsible for preventing intrusions into the institution’s network.
- Intrusion Detection: Intrusion Detection Systems (IDS) detect and prevent intrusions into the network, working alongside firewalls to ward off attacks from cybercriminals. While firewalls work to keep attacks outside, the IDS is in charge of monitoring those who make it past the firewall for evidence of malicious intent.
- Vendor Management: Financial institutions engaging with third party vendors are responsible for the necessary due diligence before and after onboarding these vendors. It’s especially important because cybercriminals tend to exploit weaknesses in a third party’s security system to gain access into the larger organization they serve.
- Security Awareness Training: The staff in charge of processing and storing data are required to undergo an annual security awareness training. Aside from instructing staff on how to manage data, the security training must also include regular evaluations on employee proactiveness towards data protection. Regular penetration testing and disaster recovery testing are crucial in ensuring your protocols actually work during cybersecurity emergencies. Read our guide on writing an IT disaster recovery plan to draft a foolproof plan for your organization.
- Incident Reporting and Responding: Financial institutions should establish and uphold a policy for reporting and responding to data breach incidents. Aside from letting their users know that a data breach has occurred, the organization must let them know what measures are being exhausted to ensure user data remains safe.
- Timely Security Updates: Government regulations require financial organizations to use updated security controls and apply patches to correct any weaknesses in IT security. Regular, timely updates prevent cybercriminals from exploiting any problems with the system.
Take No Risks With Abacus IT Solutions
As a managed IT service provider, Abacus can equip your business with customized, effective cybersecurity solutions. With our expertise and experience, we can help you implement the various security processes necessary to comply with government regulations. Talk to us and get your cybersecurity up and running today.