Compliance Check: Is Your Credit Union Meeting FFIEC Standards?

As a critical infrastructure component, credit unions remain one of the top targets of cybercriminals globally. Financial organizations and healthcare are the top two targeted sectors in this area, increasing the threats they must contend with to keep their customer data secure. However, the data protection problems for credit unions go well beyond external security threats. In the U.S., credit unions have several regulations governed by the FFIEC, mandating everything from securing customer data to overseeing the privacy controls protecting it. 

These rules outline in-depth controls to follow and mandate harsh fines for those who do not comply. You may think you are protecting your client data, but is your credit union confident it is doing everything necessary to avoid fines and penalties for non-compliance? 

This article will explore the FFIEC regulations credit unions need to adhere to and suggest actionable solutions to remain compliant. 

What are FFIEC Regulations?

Regulations set out by the Federal Financial Institutions Examination Council (FFIEC) lay out guidelines for organizations in the U.S. financial industry. This council is comprised of a collection of different regulators, including: 

• FRB (Federal Reserve Board): Oversees the nation’s monetary policy and regulates banks, ensuring the financial system’s stability.
• FDIC (Federal Deposit Insurance Corporation): Insures deposits at banks and savings associations and promotes consumer confidence in the financial system.
• NCUA (National Credit Union Administration): Regulates, charters, and supervises federal credit unions and insures savings in federal and most state-chartered credit unions.
• OCC (Office of the Comptroller of the Currency): Charters, regulates, and supervises all national banks, federal savings associations, and federal branches and agencies of foreign banks.
• CFPB (Consumer Financial Protection Bureau): Enforces consumer protection laws and oversees financial products and services, including mortgages, credit cards, and student loans.

Despite each having a targeted focus, these organizations work together to set uniform principles, standards, and reporting rules. The regulations set out by this council cover areas including management, cybersecurity, and consumer compliance. They ensure that banks, credit unions, and other financial entities meet comprehensive federal requirements to protect the financial system and consumer data.

Who Is Affected by FFIEC-NCUA? 

Credit unions are supervised by the NCUA and are subject to the regulations they create. The oversight of the FFIEC for credit unions extends far beyond the individual credit unions to include their holding companies and any nonfinancial subsidiaries. While this may seem to overreach on the part of the FFIEC, this broad oversight provides necessary safeguards to the financial stability and integrity of U.S. credit unions, ensuring they meet both federal standards and the specific needs of their members.

Meeting Compliance with Privacy Laws (GLBA)

As part of FFIEC regulations, credit unions must meet many of the same rules as big banks, including the Gramm-Leach-Bliley Act of 1999 (GLBA). The GLBA requires credit unions to protect the privacy of their members’ personal information. It mandates how credit unions ensure the security and confidentiality of customer records and information. It covers how they should protect against any anticipated threats or hazards to the security or integrity of such records and prevent unauthorized access to, or usage, of them. 

Beyond security and privacy controls, GLBA focuses on consumer privacy rights. It starts with requiring credit unions to provide their members with privacy notices that explain their information-sharing practices and to comply with the members’ rights to opt out of certain sharing practices. Beyond this, it also mandates how credit unions handle consumer rights such as data access requests, correction, and deletion under various privacy laws.

Why Credit Unions Should Have Privacy-by-Design

The best way for credit unions to meet the mandates of the FFIEC is to incorporate privacy from the outset rather than as an afterthought, with a privacy-by-design mindset. Privacy-by-design ensures that privacy measures are integrated into the technology infrastructure during the System Development Life Cycle (SDLC). This means embedding privacy considerations at every stage, from initial design through development, testing, and deployment. 

These considerations should include proactive measures and data minimization to allow only essential data collection, reducing vulnerabilities, and enhancing data protection throughout the operational process.

Data Anonymization Techniques

Data anonymization is a foundational component in implementing privacy-by-design. To minimize sensitive member information throughout its life cycle, including storage, analysis, or sharing with other credit unions, data must be modified to only what is essential for the task. Sensitive data can be replaced using masking with obfuscated characters, allowing the use of data in scenarios like testing or training without compromising privacy.

There is also tokenization, which substitutes sensitive data with unique identifiers or tokens that maintain essential information without revealing specifics. Alternatively, data swapping and generalization are also effective techniques, with the former rearranging data within a dataset to prevent source tracing and the latter reducing data precision—such as adjusting ages into age ranges—to obscure individual identities but still provide valuable insights. Pseudonymization can also replace private identifiers with pseudonyms, allowing data processing while protecting personal privacy.

How Credit Unions Can Address Threats

To meet FFIEC rules, credit unions must address emerging cyber threats to keep customer data safe. While traditional controls such as patching, antivirus (AV), and firewalls are sufficient to address some current threats, they are not enough to manage the modern threat landscape. Attackers have continued to up their game, especially against financial organizations with valuable data on the line. They are leveraging AI to improve the effectiveness of phishing and modifying malware so that it evades the signatures used by many AV solutions. 

Credit unions must also improve their defenses to address these new threats: 

• It starts with visibility from continuous monitoring, allowing credit unions to rapidly detect and respond to threats. 
• This is augmented by threat intelligence, which provides information about the latest cyber threats and allows teams to develop proactive defense strategies. 
• Helping aid in detection, behavioral analytics help identify unusual activities that may signal a breach, enhancing response times.

However, sometimes, despite the best defenses, incidents occur. A well-structured incident response plan is essential in these cases, detailing roles and procedures for effectively managing and recovering from security incidents. 

How Votiro Helps Credit Unions Protect Sensitive Data  

To maintain compliance, credit unions must enhance their security posture to protect sensitive customer data. Votiro’s Zero Trust Data Detection and Response (DDR) proactively defends against file-based threats and manages real-time privacy and compliance from a single platform. The Votiro platform also provides in-depth data analytics to comprehensively protect credit unions and their members from digital threats while managing cyber risks. 

Votiro’s Zero Trust DDR prevents data leaks and breaches by sanitizing sensitive data as it crosses organizational boundaries through file sharing, emails, collaboration, and more. It detects sensitive information in structured and unstructured data in real time, anonymizing information based on organizational rules to prevent data leaks – keeping security teams in control of their defenses. 

To learn more about Votiro’s Data Detection and Response capabilities, sign up for a one-on-one demo of the platform, or try it free for 30 days and see for yourself how Votiro can proactively defend your PII, PCI, and other sensitive data in 2024 and beyond.