Finra Compliant Cloud Storage

Introduction

As a financial services company, it is crucial that you comply with FINRA regulations for recordkeeping. This includes storing records in a compliant manner, with proper access controls, encryption, and disaster recovery provisions. Selecting the right cloud storage provider is key to maintaining FINRA compliance.

Choosing a Compliant Cloud Provider

When evaluating cloud storage providers for FINRA compliance, look for the following features:

Encryption

Data must be encrypted both in transit and at rest, using industry standard encryption like AES-256 or above. The cloud provider should not have access to your encryption keys.

Access Controls

Granular access controls and permissions allow only authorized users to access records. Activity logging provides an audit trail. Multi-factor authentication adds an extra layer of security.

Geo-redundancy

Data should be stored in multiple geographic regions to prevent data loss in case of failure or disaster.

BC/DR Provisions

The provider should have robust business continuity and disaster recovery plans, with guaranteed uptime and rapid recovery time objectives.

Compliance Certifications

Look for cloud providers that comply with SOC 2, ISO 27001, HIPAA, and other relevant standards. They should undergo regular external audits to validate compliance.

Storing Records in the Cloud

When using compliant cloud storage, ensure records are properly categorized and tagged according to policies. Set retention periods to comply with FINRA’s 6 year retention rule. Test backup and restore procedures regularly.

Access controls should restrict record alteration. Enable immutable storage or WORM (write once, read many) to prevent record tampering or deletion within the retention period.

Conclusion

Maintaining FINRA compliance with cloud storage boils down to working with trusted providers, configuring security controls, and proactively validating compliance. Partnering with the right cloud provider makes it possible to remain compliant while benefiting from the cost, scalability and availability advantages of the cloud. With the proper due diligence, cloud storage can become an asset in your FINRA compliance program.

FINRA Compliance Considerations

When evaluating cloud storage providers for FINRA compliance, there are a few additional considerations to keep in mind:

Data Ownership

Ensure your firm maintains ownership and control of data stored in the cloud. Cloud providers should not have rights to sell, mine or monetize your data.

Data Location

Know where your data is stored at all times, and restrict storage to authorized geographic regions. Avoid storing sensitive data in public cloud services.

Separation of Data

Data from different clients and business lines should be properly segregated in the cloud. Logical separation ensures sensitive data is not comingled.

Responsiveness

Your provider should be responsive to any FINRA requests for records or audits. Ensure you can efficiently search, retrieve and deliver data when required.

Contract Terms

Review cloud contracts to ensure proper liability, confidentiality, termination rights and other provisions are included to manage risk.

Adapting Policies for the Cloud

Existing recordkeeping policies may need to be adapted for the cloud:

Retention Policies

Update retention rules to account for cloud-specific capabilities like immutable storage and extended retention periods.

Legacy Policies

Revise policies originally intended for on-premises IT that don’t translate well to the cloud.

New Policies

Introduce new policies around data classification, cloud access, and other risk areas that address your cloud implementation.

Training

Educate staff on policy changes and how they impact day-to-day processes when using cloud storage.

Maintaining Compliance

Ongoing due diligence is required to maintain FINRA compliance in the cloud:

Regular Audits

Conduct internal and third-party audits of your cloud environment to validate controls are working as intended.

Testing

Test backup restoration, access controls and other compliance procedures regularly to ensure they function properly.

Cloud Changes

Keep updated on new cloud services, features and configurations that may impact your compliance posture.

Regulatory Changes

Frequently review FINRA regulations for new guidance on cloud compliance and modify your policies accordingly.

Staying abreast of new developments and continuously validating your cloud environment will help sustain FINRA compliance over time.