Did you know that the financial sector experiences an alarming number of cyberattacks every year? As a result, cybersecurity regulations have become mandatory for financial institutions to ensure their security and meet regulatory compliance. Compliance with these regulations is not only crucial for protecting sensitive financial data but also for maintaining public trust and accountability.
In today’s fast-paced digital world, financial institutions must stay updated on changes to existing regulations and new information security standards. However, the lack of a reliable reference for all the regulations impacting the financial sector adds to the burden of compliance. To complicate matters further, distinguishing between mandatory regulations and optional ones is essential to minimize overlapping security controls and optimize compliance efforts.
In this article, we will delve into the top cybersecurity regulations impacting the financial sector, providing essential insights into their requirements, fines for non-compliance, and available resources to support compliance efforts. So, if you’re interested in understanding how cybersecurity regulations play a crucial role in meeting financial regulatory requirements, keep reading!
The European General Data Protection Regulation (EU-GDPR)
The EU-GDPR is a security framework designed to protect the personal data of EU citizens. Financial services collecting or processing personal data from EU residents, regardless of their physical location, must comply with the GDPR. The GDPR outlines separate security guidelines for data controllers and data processors.
Compliance with the GDPR is mandatory for financial institutions and can result in fines of up to €20 million or 4% of annual turnover for non-compliance. The GDPR applies to EU member states, including the United Kingdom.
Resources such as GDPR-specific security questionnaires can help track compliance for third-party vendors.
The United Kingdom General Data Protection Regulation (UK-GDPR)
The UK-GDPR is the United Kingdom’s own version of the EU-GDPR. It retains the EU-GDPR laws but includes modifications to accommodate domestic law in the UK. Compliance with the UK-GDPR is mandatory for businesses collecting or processing private data from individuals located in the United Kingdom.
The maximum fine for non-compliance with the UK-GDPR is £17.5 million or 4% of annual global turnover.
Resources such as the Data Protection Act 2018 and guides from the Information Commissioner’s Office can support businesses in achieving compliance with the UK-GDPR.
The Sarbanes-Oxley (SOX) Act
The Sarbanes-Oxley (SOX) Act, a United States federal law, was implemented to safeguard investors by combatting financial fraud. In addition to its focus on financial record accuracy, the SOX Act incorporates crucial cybersecurity components that address the prevalent cybersecurity risks faced by the financial sector.
SOX compliance is mandatory for all public companies, including those within the financial industry. To achieve compliance with SOX, organizations can adopt security controls outlined in the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
Noteworthy requirements for SOX compliance include conducting rigorous risk assessments, safeguarding critical assets, implementing regular audits, aligning cybersecurity initiatives, and ensuring uninterrupted business continuity. Failure to comply with SOX can result in severe penalties, such as delisting from public stock exchanges and the removal of officers.
Source Links
- https://www.upguard.com/blog/cybersecurity-regulations-financial-industry
- https://riskxchange.co/1007133/the-rol-of-cybersecurity-compliance/
- https://www.ekransystem.com/en/blog/banking-and-financial-cyber-security-compliance
Zoe McCarthy is a cybersecurity expert with a passion for demystifying complex topics in the digital realm. With over a decade of experience in the industry, she brings a wealth of knowledge to her writing, helping readers navigate the ever-evolving landscape of cybersecurity with clarity and confidence.