As financial crime evolves, so do the methods financial institutions use to detect and prevent it. Many implement anti-money laundering (AML) solutions that employ cloud computing technology — and for good reason. Handling AML in the cloud offers companies a range of formidable new capabilities in the fight against financial crime. At the same time, the software-as-a-service (SaaS) model allows for greater scalability, flexible pricing and increased efficiency.
However, implementing SaaS AML cloud solutions also means facing an array of new criminal threats to clients’ personal data and other sensitive information. To deal with those threats, governments around the world have introduced specific data-protection regulations that require firms to put robust security measures in place to protect their cloud-based AML solutions. Noncompliance not only puts firms at risk of becoming complicit with money laundering, but also makes them vulnerable to damaging cyberattacks and, ultimately, compliance fines and reputational damage.
If you’re implementing a cloud-based solution, or planning to, we’ve put together a list of the most important cloud security AML considerations.
What is AML cloud security?
Simply put, cloud security is necessary to protect financial institutions’ cloud-based AML solutions from criminals and other unforeseen data-loss incidents. Practically, this means implementing a range of measures that function to conceal personal information, withstand potential cyberattacks or unauthorized access, and maintain secure records in the cloud.
Cloud compliance security standards are closely connected to personal data protection laws, which vary by territory. The General Data Protection Regulation, for example, sets out the standards for the European Union: all firms operating within the bloc, or doing business with its member-state firms, must meet GDPR standards.
Similarly, ISO 27001 serves as a globally-recognized information security certification issued by the International Organization for Standardization. It consists of a framework of procedures and controls, taking in physical, technological and legal functions at every level of the information management infrastructure.
The cloud AML security measures that firms must implement vary by jurisdiction. The most common measures necessary to protect data in the cloud, and those required by regulators and authorities, include:
- Web Application Firewalls: Used to immediately alert security teams to suspicious activity when attempts are made to compromise cloud infrastructure or information.
- Encryption: Data is at its most vulnerable when being transferred between points. Encryption ensures that information remains disguised at every point, should it become compromised.
- Multi-Factor Authentication: Multiple forms of verification must be demonstrated in order to access data stored in the cloud.
- Access Management: Restricting cloud data access only to those employees who need it to perform their AML or business function.
- Single Tenancy: Storing customer data in such a way that it never comes in contact with other customers’ data within the cloud environment.
- Patching and Updates: Ensuring the latest version of cloud software is being used and that security patches are installed promptly.
Employee Training: Employees are integral to AML security, and firms should ensure they have the skills and ongoing training to meet their regulatory obligations.
Since the methodology around money laundering evolves quickly, it’s important that firms regularly evaluate their cloud security solution for its effectiveness. Practically, those evaluations might consist of:
- Scanning cloud environments for vulnerabilities on a weekly basis.
- Using skilled third parties to perform penetration testing on systems.
- Maintaining and conducting a rigorous internal audit program.
Aspects of cloud security certification also serve as effective testing mechanisms. ISO27001 certification, for example, is an ongoing process that tests the effectiveness of a firm’s cloud security AML solution against a range of threats whilst driving continual improvement of the management system.
While cloud security solutions reduce or eliminate a range of conventional threats, they are not immune to unexpected events, such as power outages or natural disasters, that can put servers out of action and affect personal data stored in the cloud. In these situations, it’s vital that firms incorporate disaster recovery and business continuity planning into their security solutions.
Ideally, that planning will involve developing, testing and divulging a disaster recovery plan for cloud systems that minimizes downtime and disruption for customers. Additionally, maintaining backups of stored cloud data is vital to business continuity: to maintain security, those backups should be encrypted and stored in strictly controlled environments, potentially in a different cloud.
Cloud security compliance is a crucial component of an AML solution, so we always give our clients complete clarity and transparency on the measures we put in place to safeguard them and their data. Our policies balance strict data protection requirements with global AML regulations, including encryption during transit and at rest and certification to ISO27001 standards and compliance with the GDPR and other pertinent privacy laws across all locations.
We understand that AML cloud security needs to be flexible enough to meet the challenges of a changing threat landscape. With that in mind, we’re ready to handle significant incoming legislation, such as the EU’s Fifth Anti-Money Laundering Directive (5AMLD), and ensure that, above all, your solution keeps personal data safe while meeting its regulatory objectives.
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Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.
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