{"id":75460,"date":"2024-02-08T17:27:11","date_gmt":"2024-02-08T09:27:11","guid":{"rendered":"https:\/\/version-2.com\/?p=75460"},"modified":"2024-02-02T17:31:52","modified_gmt":"2024-02-02T09:31:52","slug":"why-is-cybersecurity-compliance-challenging-for-financial-institutions","status":"publish","type":"post","link":"https:\/\/version-2.com\/zh\/2024\/02\/why-is-cybersecurity-compliance-challenging-for-financial-institutions\/","title":{"rendered":"Why is cybersecurity compliance challenging for financial institutions?"},"content":{"rendered":"\t\t
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Have you ever thought about what it would be like to open a bank?\u00a0<\/p>

Arguably, today it\u2019s easier than ever to start a new bank. The popularization of internet banks and online banking means you no longer need ATMs, hard currency, vaults, physical branches, tellers, or security guards.<\/p>

So why isn\u2019t everybody just doing it?<\/p>

It\u2019s the regulations.<\/p>

To run a bank, you\u2019ll need to navigate a multifaceted, regularly shifting environment where regulations, laws, and standards are complex, demanding, and sometimes contradictory. Right off the bat, this requires a non-trivial effort to understand the legal intricacies, nuances, and ramifications of compliance.<\/p>

Then, you\u2019ll need to spend time and money ensuring the right tools and processes are put in place to ensure compliance with all requirements.<\/p>

Let\u2019s examine the many cybersecurity compliance hurdles financial institutions face.<\/p>

Stringent cybersecurity regulations #<\/a><\/h2>

Imagine Huxley Credit Union is coming to a web browser near you. Here\u2019s what you must comply with for cybersecurity if you start a local credit union doing business only in the United States:<\/p>

This cornerstone regulation mandates financial institutions, including credit unions, to implement security measures to protect non-public personal information (NPPI) of members. The Federal Trade Commission (FTC) Safeguards Rule under GLBA sets specific security standards and incident reporting requirements.<\/div><\/div>

This anti-money laundering (AML) and cybercrime prevention law requires credit unions to establish AML programs, conduct customer due diligence, and monitor transactions for suspicious activity. Robust cybersecurity measures are vital for effective AML compliance.<\/div><\/div>

(Not to be confused with CISA, the DHS agency.) This law encourages the sharing of cybersecurity threat information between private sector entities and the federal government. While not a direct compliance requirement, credit unions may participate in information-sharing initiatives to enhance their cybersecurity posture.<\/div><\/div>

The NCUA issues regulations and guidance related to information security and cybersecurity for credit unions. Credit unions must follow NCUA guidelines to ensure the security of member information and avoid regulatory enforcement actions.<\/div><\/div>

Credit unions may be subject to state-specific data breach notification laws, which require prompt disclosure of security incidents involving personal information. Examples include Massachusetts\u2019s 201 CMR 17.00 or New York\u2019s 23 NYCRR 500. Failure to comply with these laws can lead to penalties imposed by state regulators.<\/div><\/div><\/div><\/div><\/section>

Industry standards and frameworks #<\/a><\/h3>

There are other frameworks for the industry that apply as well:<\/p>

If a credit union processes credit or debit card transactions, it must comply with PCI DSS requirements to secure cardholder data and payment systems. Non-compliance can lead to fines imposed by payment card networks.<\/div><\/div>

While not a regulation, the FFIEC CAT provides a framework for self-assessing cybersecurity preparedness. Credit unions using the CAT demonstrate proactive adherence to best practices.<\/div><\/div>

This is a voluntary framework for managing cybersecurity risks. Implementing relevant parts of the framework can improve a credit union’s overall cybersecurity posture.<\/div><\/div><\/div><\/div><\/section>

To recap, all the above are just for cybersecurity. There will be other regulations to consider for the rest of the business \u2014 each with their own requirements and standards to meet.<\/p>

Compliance is ongoing \u2014 and regulations change #<\/a><\/h2>

Setting up tools and systems to ensure compliance isn\u2019t a one-and-done event either.<\/p>

Compliance is a continuous process. And to make matters worse, regulations change \u2014 with the updated versions imposing new or altered requirements. For example:<\/p>