As momentum builds behind public cloud infrastructure solutions, even highly regulated industries like financial services are exploring their options. While regulations and security are often seen as stumbling blocks for public cloud acceptance in financial services, reviewing available information on U.S. regulatory guidance and privacy law suggests there may be ways to move into the cloud in compliance-friendly ways. This article, of course, should not replace input from appropriate legal advisors. The research behind this article focused on privacy law and requirements around U.S. banks rather than international issues that might arise from data placement in the cloud.
The U.S. banking industry has several regulatory bodies, including the Federal Reserve Board, the Federal Deposit Insurance Corporation, The National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau. A consortium group called the Federal Financial Institutions Examination Council maintains a clearing house for guidance and regulatory information from the various regulators. On July 10, 2012, the Council issued a press release with guidance on public cloud utilization in banking.
The core of the guidance is public cloud risk management should follow the same risk management principles as any outsourcing contract. “The Federal Financial Institution Examination Council Agencies consider cloud computing to be another form of outsourcing with the same basic risk characteristics and risk management requirements as traditional forms of outsourcing.”
The Council calls out some specific areas for attention by regulated entities.
The Council makes special reference to legal considerations, and it is worth a deeper exploration of what those are. The primary privacy regulations affecting U.S. financial services are contained in the Gramm-Leach-Bliley Act (GLB). GLB originated as a response to concerns about banks sharing detailed account-holder information with third parties for marketing or cross-selling purposes.
The act basically specifies handling requirements around data deemed personally identifiable and non-public. It bars sharing such data with third parties without explicit agreement from customers. GLB applies to a broad range of U.S. financial services including banks, mortgage originators and servicers, consumer credit agencies, et al.
Because outsourcing infrastructure provisioning to a public cloud is, almost by definition, allowing 3rd party access to data, some specifics about GLB merit a closer look.