Compliance Frameworks for Third-Party Cloud Vendors

 

A dive into the cloud computing compliance regulations concerning third-party vendors


Cloud computing has evolved from an inventive notion to a disruptive undertaking over time, more so since the pandemic. Today, it is a thriving business with firms and academics pushing the frontiers of what is possible and providing new and improved solutions to crucial issues. To add, the ninth annual Flexera 2021 State of the Cloud Report states that companies are increasingly adopting multi-cloud strategies, with 92% already having one and 82% having a hybrid cloud strategy. And with a recent Gartner's report predicting the worldwide end-user expenditure on the public cloud to surpass $480 billion by next year, it is only fair to join the cloud race. Similarly, it is only reasonable to ensure that your third-party vendors follow the cloud compliance management guidelines as you do for a fair and smooth cloud-based endeavor. Some examples of third-party vendors are:

  • Service providers

  • Consultants and advisors

  • Marketing companies

  • Short and long-term contractors

  • Telephone companies

  • Delivery companies


Though these third-party vendors and the compliance regulations that apply to them vary depending on the geographical jurisdiction and the industry, they should be towards the top of an organization's compliance priority list. Noncompliance with these rules can have serious consequences, but if done correctly, the company can join the 87% of businesses that have seen a boost in productivity because of using cloud data management services.


Healthcare Sector: HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) was passed by the United States Congress to secure people's health-related information, and it includes parts that deal specifically with information security.


The HIPAA-regulated cloud computing organizations are needed to address threats to the confidentiality, integrity, and availability of essential health data they manage. It states if your business manages and transmits protected health information (PHI) or ePHI using cloud-based services, it is your responsibility to ensure that you and the third-party service provider use HIPAA compliance software and that you have followed best practices in the cloud configuration and information management.


Financial Services Industry: SEC & FINRA

The Financial Industry Regulatory Authority (FINRA), regulated by the Securities Exchange Commission (SEC), oversees member brokerage companies and exchange markets and was established by Congress to safeguard American investors.


FINRA's cloud computing in securities industry guidelines states that organizations outsourcing a task or function to a cloud service provider or another third-party cloud vendor do not absolve them of their final duty to ensure compliance with all relevant securities rules and regulations. In addition, each member has an ongoing obligation to oversee, supervise, and monitor the service provider's execution of covered activities, according to the FINRA and  SEC compliance outsourcing advice.


Additionally, firms should also evaluate the dangers of vendor lock-in and the possibility that FINRA third-party service providers may be unable to offer services dependably. Platforms and technologies do not yet allow for easy migration across cloud suppliers if an existing cloud solution fails to satisfy a company's needs.


Credit Card Industry: PCI DSS

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security guidelines for all businesses that work with credit or debit cards to safeguard cardholders against credit card fraud and identity theft.


PCI DSS cloud computing guidelines state that if your company stores and maintains sensitive credit or debit card data on the cloud, it is your responsibility to ensure that your IT staff and third-party vendors have the necessary cloud experience to build and maintain a safe cloud infrastructure.


European Union: GDPR

The General Data Protection Regulation (GDPR) is one of the strictest data privacy compliance regulations globally, intending to safeguard the personal data of all persons and businesses inside the European Union (EU).


According to the GDPR, "third party" refers to any natural or legal entity, public authority, agency, or body other than the data subject and controller who are allowed to handle personal data under the controller's direct authority. These third-party entities are called "data processors" whose compliance with GDPR regulations should be ensured and monitored by the data controllers.


Therefore, according to GDPR, the data controller should get into an agreement with the third party and ensure the following:

  • Lawfulness, fairness, and transparency — Processing must be lawful, fair, and transparent to the data subject.

  • Purpose limitation — You must process data for the legitimate purposes specified explicitly to the data subject when you collected it.

  • Data minimization — You should collect and process only as much data as absolutely necessary for the purposes specified.

  • Accuracy — You must keep personal data accurate and up to date.

  • Storage limitation — You may only store personally identifying data for as long as necessary for the specified purpose.

  • Integrity and confidentiality — Processing must be done in such a way as to ensure appropriate security, integrity, and confidentiality (e.g., by using encryption).

  • Accountability — The data controller is responsible for being able to demonstrate GDPR compliance with all these principles.


Unites States of America: CCPA

The California Consumer Privacy Act (CCPA) is a state law to enhance California citizens' privacy rights and consumer protection.


Under CCPA, people in the United States can opt out and ask that any information acquired or gathered in the future not be sold to a third party. They can even request that the data stored (including the one with a third party) be erased under specific circumstances if this does not place the organization in violation of other laws.


CCPA compliance also states that before companies sell their customers' personal information to a third party, they must first obtain their consent. This permission must come from a parent or guardian if the person is under the age of 13.

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