Compliance for Financial Services
Compliance requirements create unique challenges for IT and cybersecurity in the financial industry. Regulated companies must understand which laws apply to them and how to achieve and maintain compliance.
Here’s everything you need to know about compliance for financial services, particularly in relation to IT and cybersecurity.
Key takeaways:
- Financial services companies must comply with several types of regulations depending on what kinds of services they offer, where they’re located, and whether they’re publicly traded.
- Financial institutions can outsource some compliance functions, but they remain accountable for their compliance standing.
- MFA, identity and access controls, and EDR/XDR/MDR are baseline security controls that every financial institution should have in place.
💡 EXCLUSIVE Resource:
Financial Services Compliance Checklist
What is financial services compliance?
Financial services compliance refers to the policies, processes, and controls that financial institutions implement to meet regulatory, legal, and industry requirements. These stipulations are designed to protect consumers and data while also preventing fraud. Consequently, this type of compliance spans regulatory adherence, risk management, cybersecurity, reporting, and ongoing oversight across all business operations.
For financial institutions, compliance typically includes:
- Adherence to financial regulations such as banking, securities, payments, and insurance laws
- Protection of customer data and privacy, including financial and personal information
- Anti-money laundering (AML) and know-your-customer (KYC) controls
- Cybersecurity and technology risk management
- Internal controls, governance, and documented policies and procedures
- Regular audits, regulatory exams, and reporting obligations
- Oversight of third-party vendors and service providers
- Employee training and enforcement of ethical standards
What compliance frameworks apply to financial services institutions?
Financial services compliance frameworks are regulatory and industry standards that govern how financial institutions manage risk, protect customer data, prevent fraud and financial crime, and maintain operational integrity. These frameworks apply based on an organization’s size, geography, services offered, and the type of data it handles, and they are enforced through audits, regulatory exams, and ongoing oversight.
Compliance frameworks that apply to financial services
Framework / Regulation | What It Covers | Who Must Comply |
GLBA (Gramm-Leach-Bliley Act) | Protection of customer nonpublic personal information (NPI); Safeguards Rule and Privacy Rule | Banks, credit unions, mortgage lenders, investment firms, and other financial institutions |
FFIEC Guidelines | IT, cybersecurity, business continuity, third-party risk, and operational resilience | U.S. banks, credit unions, and financial institutions regulated by FFIEC member agencies |
PCI DSS | Security controls for storing, processing, or transmitting payment card data | Any organization that accepts, processes, or stores credit or debit card data |
SOX (Sarbanes-Oxley Act) | Financial reporting accuracy, internal controls, and corporate governance | Publicly traded companies and their subsidiaries |
AML / BSA (Anti-Money Laundering / Bank Secrecy Act) | Detection, monitoring, and reporting of suspicious activity and financial crime | Banks, credit unions, money services businesses, fintechs, broker-dealers |
KYC / CIP Requirements | Customer identity verification and ongoing due diligence | Financial institutions offering accounts, lending, or transaction services |
Can financial services institutions outsource their compliance initiatives?
Yes, financial services institutions can outsource parts of their compliance initiatives, but they can’t outsource accountability. Regulators consistently hold the financial institution—not the vendor—responsible for meeting regulatory requirements. As a result, many institutions use a hybrid model in which specialized compliance activities are supported or operated by third parties, while governance, oversight, and final decision-making remain in-house.
Financial services compliance responsibilities: Outsourced vs. in-house
Compliance Area | Can It Be Outsourced? | Vendor Can Provide: | Customer Remains Responsible For: |
Regulatory Interpretation & Advisory | ◐ Partially | Consulting with broad industry perspective | Final interpretation, policy adoption, and risk acceptance decisions |
Compliance Program Design Support | ◐ Partially | Consulting with broad industry perspective | Program ownership and regulatory accountability |
Policy & Procedure Creation | ◐ Partially | Consulting with broad industry perspective | Approval, enforcement, and maintenance |
Risk Assessments & Gap Analyses | ✅ Yes | Execution of risk assessment and gap analysis | Risk ownership and remediation prioritization |
Cybersecurity & Technical Controls | ✅ Yes | Implementation and ongoing management of cybersecurity controls | Oversight, access approvals, and control validation |
Monitoring & Testing Activities | ✅ Yes | Ongoing cybersecurity monitoring and threat detection | Determination of adequacy and corrective actions |
Audit Preparation & Evidence Collection | ◐ Partially | Audit preparation process and activities | Direct interaction with regulators and audit responses |
Third-Party Risk Assessments | ✅ Yes | Execution of risk assessment | Vendor selection, contract approval, and ongoing oversight |
Compliance Training Delivery | ✅ Yes | Direct training of customer’s employees | Training requirements and enforcement |
Regulatory Filings & Attestations | ❌ No | N/A | Sign-off authority and legal responsibility |
Board & Executive Oversight | ❌ No | N/A | Governance, tone at the top, and accountability |
Is MFA (multi-factor authentication) mandatory for financial services institutions?
Multi-factor authentication (MFA) is widely expected—and in many cases effectively mandatory—for financial services institutions, even when not named as a single explicit requirement in every regulation. Regulators consistently view MFA as a baseline security control for protecting sensitive financial data, privileged access, and customer accounts. The absence of MFA is often cited as a control weakness during audits, exams, or post-incident reviews.
In the United States, major regulatory frameworks such as GLBA, FFIEC guidance, AML/BSA expectations, and SEC/FINRA cybersecurity rules all require financial institutions to implement “reasonable,” “appropriate,” or “strong” access controls. While these rules often stop short of saying “MFA is required,” regulatory examiners routinely interpret those standards as necessitating MFA—especially for administrator accounts, remote access, cloud systems, and access to nonpublic personal information (NPI). Institutions that rely solely on passwords are generally considered out of alignment with current regulatory expectations.
Globally, MFA is even more explicit. Frameworks such as GDPR, ISO/IEC 27001, PSD2 (Strong Customer Authentication), and many national banking regulations specifically call for multi-factor or strong authentication mechanisms. For financial institutions operating across borders—or serving customers digitally—MFA is effectively non-negotiable for both workforce access and customer-facing systems. Regulators increasingly treat MFA as a minimum safeguard rather than an advanced security feature.
How can financial institutions support remote teams with robust security?
Financial institutions can support remote teams with robust security by combining strong identity controls, secure access technologies, continuous monitoring, and clear governance. The goal is to enable flexibility and productivity for remote staff while meeting regulatory expectations for data protection, risk management, and operational resilience.
Here are the primary ways that financial institutions support secure remote work.
- Multi-factor authentication (MFA) for all remote access, especially for privileged users, cloud services, VPNs, and financial systems
- Secure remote access technologies, such as VPNs or ZTNA (Zero Trust Network Access), to protect connections into internal systems
- Endpoint security and device management, including MDR (managed detection and response), patch management, and enforced security baselines
- Identity and access management (IAM) with role-based access controls and least-privilege enforcement
- Data protection controls, such as encryption, data loss prevention (DLP), and sensitivity labeling for regulated data
- Cloud security controls for SaaS, IaaS, and collaboration tools used by remote employees
- Continuous monitoring and logging to detect suspicious activity, credential misuse, or insider threats
- Clear remote work policies and cybersecurity awareness training for employees, covering phishing, secure device usage, and incident reporting
- Third-party risk oversight, ensuring vendors and contractors meet security requirements while accessing systems remotely
How often should financial institutions perform compliance gap assessments?
Financial institutions should perform compliance gap assessments on a regular, risk‑based cadence, rather than treating them as one‑time exercises. In practice, regulators expect institutions to reassess compliance whenever there are material changes—such as new regulations, new technologies, mergers, new products, or significant incidents—and at defined intervals aligned with applicable regulatory frameworks. Annual assessments are the most common baseline, with more frequent reviews for high‑risk areas.
Typical compliance gap assessment cadence by framework
Regulatory Framework | What Regulators Expect | Typical Gap Assessment Cadence |
GLBA (Gramm‑Leach‑Bliley Act) | Ongoing evaluation of safeguards protecting customer data | Annually, and after major technology or business changes |
FFIEC Guidelines | Continuous risk management and examiner‑ready posture | Annually, with targeted gap reviews quarterly for high‑risk domains |
AML / BSA | Risk‑based assessment tied to customer, product, and transaction risk | Annually, plus updates when risk profiles materially change |
KYC / CIP | Ongoing customer risk evaluation and control effectiveness | Annually, and when onboarding processes or customer types change |
PCI DSS | Validation of cardholder data security controls | Annually (required), with continuous monitoring throughout the year |
SOX (Sarbanes‑Oxley) | Effectiveness of internal controls over financial reporting | Annually, aligned with financial audits |
SEC Regulations | Controls for investor protection, cybersecurity, and disclosures | Annually, with interim reviews as rules or guidance change |
FINRA Rules | Supervisory and compliance program effectiveness | Annually (required supervisory reviews) |
State Privacy Laws (e.g., CCPA/CPRA) | Ongoing privacy risk and data‑handling compliance | Annually, and whenever data collection or usage changes |
GDPR | Data protection risk management and accountability | Annually, with additional assessments for new processing activities |
NIST Cybersecurity Framework | Continuous cybersecurity risk management | Annually, with control reviews quarterly or continuously |
ISO/IEC 27001 | Information security management system (ISMS) effectiveness | Annually, with internal audits and periodic surveillance reviews |
What financial data is considered regulated or sensitive?
Regulated or sensitive financial data includes any information that can identify an individual or organization, enable unauthorized financial transactions, impact market integrity, or expose an institution to a privacy breach, fraud, or regulatory risk. Financial regulations require this data to be protected through strong access controls, encryption, monitoring, and governance due to potential harm when compromised.
Common types of regulated or sensitive financial data
- Nonpublic Personal Information (NPI): Names, addresses, Social Security numbers, dates of birth, and other personally identifiable information tied to financial records
- Customer financial data: Bank account numbers, routing numbers, balances, transaction histories, loan and credit details
- Payment card data: Credit and debit card numbers, expiration dates, CVV codes, and magnetic stripe or chip data
- Authentication credentials: Usernames, passwords, MFA tokens, API keys, and cryptographic keys
- Financial account access data: Online banking credentials and session information
- Credit and underwriting data: Credit reports, credit scores, income data, risk ratings, and lending decisions
- Investment and trading data: Portfolio holdings, trade details, market positions, and investor account information
- Corporate financial data: Financial statements, earnings data, forecasts, and internal financial controls
- AML and fraud-related data: Suspicious activity reports (SARs), transaction monitoring results, watchlist screening data
- Employee financial data: Payroll information, benefits data, and employee banking details
- Regulated communications and records: Audit logs, compliance reports, examiner correspondence, and required retention records
How do financial institutions protect customer data from breaches and insider threats?
Financial institutions protect customer data from breaches and insider threats by using layered security controls that combine prevention, detection, and response. Regulators expect a defense‑in‑depth approach that limits access to sensitive data, monitors user activity, detects suspicious behavior early, and ensures rapid containment if an incident occurs—whether the risk comes from external attackers or trusted insiders.
Common security controls used to protect financial data
Type of Security Control | What It Provides |
Identity & Access Management (IAM) | Ensures only authorized users can access systems and data through role‑based access and least‑privilege enforcement |
Multi‑Factor Authentication (MFA) | Reduces credential theft risk by requiring an additional authentication factor beyond passwords |
Privileged Access Management (PAM) | Controls, monitors, and audits access to high‑risk administrator and elevated accounts |
Encryption (at rest & in transit) | Protects data from unauthorized access even if systems or traffic are compromised |
Network Security Controls | Firewalls, intrusion prevention, segmentation, and Zero Trust networking to limit lateral movement |
Endpoint Detection & Response (EDR/XDR) | Detects malicious activity or misuse on employee and server devices |
Data Loss Prevention (DLP) | Prevents sensitive data from being copied, shared, or exfiltrated improperly |
Logging & Continuous Monitoring | Creates audit trails and flags unusual behavior, insider misuse, or policy violations |
User Behavior Analytics (UEBA) | Identifies anomalous user actions that could indicate insider threats or compromised accounts |
Security Awareness Training | Reduces human risk by training employees to recognize phishing, social engineering, and misuse |
Third‑Party Access Controls | Limits and monitors vendor and contractor access to sensitive systems |
Incident Response & Forensics | Enables rapid containment, investigation, and regulatory reporting after a suspected breach |
The takeaway: Get the compliance help you need
Compliance is challenging for financial institutions, but it’s achievable with the right resources. Here at Corsica Technologies, our cybersecurity experts can advise on security-related compliance, help draft policy, conduct assessments, implement controls, and provide managed cybersecurity over the long term. If you need assistance in achieving and maintaining compliance, contact us today. Let’s take the next step on your compliance journey.
Related posts
Ross Filipek is Corsica Technologies’ CISO. He has more than 20 years’ experience in the
managed cyber security services industry as both an engineer and a consultant. In addition to leading Corsica’s efforts to manage cyber risk, he provides vCISO consulting services for many of Corsica’s clients. Ross has achieved recognition as a Cisco Certified Internetwork Expert (CCIE #18994; Security track) and an ISC2 Certified Information Systems Security Professional (CISSP). He has also earned an MBA degree from the University of Notre Dame.
Ready to take your next step?
Contact us today to get the outside perspective you need for the next step on your journey.
