This year, the stakes for regulatory compliance are higher than ever. Organizations face an increasingly complex landscape of data protection and privacy regulations, many of which impose strict requirements on how you move, process and store sensitive data during file transfers. Secure file transfers are no longer just a best practice — they are a compliance imperative.
As discussed in a previous blog post, file transfer data breach risk is real, and the consequences are costly. This blog post explores why secure file transfers are critical in today’s regulatory environment and how businesses can meet compliance demands with the right solutions.
Major data protection/privacy regulations impact file transfers
Regulatory mandates around the globe influence how organizations manage file transfers. These laws, designed to safeguard sensitive data and protect individual privacy, hold businesses accountable for data security. Here are some of the key regulations that may affect your own file transfer workflows:
- Health Insurance Portability and Accountability Act (HIPAA)
- Payment Card Industry Data Security Standard (PCI DSS)
- General Data Protection Regulation (GDPR)
- California Consumer Privacy Act (CCPA)
- Sarbanes-Oxley Act (SOX)
- Federal Information Security Management Act (FISMA)
- Various data localization laws
|
Regulation |
Data affected |
Sectors or organizations covered |
|
HIPAA |
Electronic protected health information (ePHI), e.g., personally identifiable patient data, medical and health data, payment and insurance details |
Healthcare providers, health plans and business associates handling ePHI |
|
PCI DSS |
Cardholder data (e.g., primary account number, cardholder name, expiration date, authentication data) |
Organizations processing, storing or transmitting payment card information |
|
GDPR |
Personal data of European Union residents |
Any organization handling personal data of EU citizens |
|
CCPA |
Personal data of California residents |
Businesses serving California residents |
|
SOX |
Financial data |
Publicly traded companies in the United States |
|
FISMA |
Federal information and sensitive data |
US federal agencies and their contractors |
|
Data localization laws |
Personal and sensitive data (varies by country) |
Organizations handling data in countries with data localization requirements (e.g., China, Russia) |
Regulatory risks of insecure file transfers
When you use insecure methods to transfer files containing sensitive data, you expose your business to significant regulatory risks. These include the following:
- Fines and penalties: Non-compliance with data protection laws can result in substantial financial penalties. For instance, GDPR fines can reach up to 20 million euros or 4% of global revenue, whichever is higher. HIPAA violations, on the other hand, may reach over 2 million USD per violation.
- Audit failures: Regulators require companies to demonstrate their compliance through documentations and audits. File transfer systems that fail to meet the requirements can lead to failed audits and additional costs to achieve compliance.
- Loss of business: Non-compliance with standards like PCI DSS or HIPAA can jeopardize relationships with trading partners who demand adherence to widely recognized security standards.
Key security controls that help achieve regulatory compliance
To comply with regulations affecting your organization, you must implement the security controls those regulations require. Most of them require the following controls:
- Encryption: When you encrypt data both in transit and at rest using widely recognized algorithms like Advanced Encryption Standard (AES) 256 or those that meet standards like Federal Information Processing Standards (FIPS) 140-2, you protect them from threats to data confidentiality.
- Strong authentication: Strong authentication mechanisms such as two-factor authentication (2FA) or multi-factor authentication (MFA) prevent unauthorized individuals from gaining access to your data.
- Access control: Access control mechanisms, such as IP-based access control and role-based access control (RBAC), further limit who can access your data and ensure that even legitimate users can only access information they’re authorized for.
- Data integrity: Data integrity methods. such as hash-based message authentication code (HMAC) and Applicability Statement 2 Message Disposition Notification (AS2 MDN), enable you to verify the integrity of data you receive from another party.
- Audit trails: These mechanisms help you demonstrate compliance during audits and trace back file transfer activities during digital forensic investigations if something goes wrong.
The business case for secure and compliant file transfers
Investing in secure and compliant file transfers makes sound business sense. Here’s why.
- Cost avoidance: The cost of non-compliance, which may include fines, penalties, lawsuits, breach notification and so on, usually far exceeds the expense of implementing secure file transfer systems.
- Market competitiveness: Many trading partners, especially large enterprises and government agencies, include compliance as a requirement for doing business. Thus, having a secure file transfer infrastructure increases your eligibility for lucrative partnerships.
- Customer trust: Customers are increasingly becoming security conscious. Many of them now prioritize businesses that are able to demonstrate a commitment to data privacy and security. Thus, secure file transfers can build trust and enhance your brand reputation.
How managed file transfer (MFT) solutions simplify compliance
MFT platforms, like JSCAPE by Redwood, deliver secure and compliant file transfers through a centralized, automated, and easy-to-manage solution. JSCAPE, in particular, already comes with an array of security controls, including: data-at-rest and data-in-motion encryption, strong authentication, access control, data integrity, audit logs, data loss prevention (DLP), malware protection, high availability and many others.
These built-in controls simplify compliance because you normally have to integrate several disparate security tools to acquire the security capabilities these controls provide. With MFT, you can have all these controls baked into a single solution. This allows all these controls to work cohesively and, as a result, reduces your administrative overhead.
When I was a member of the JSCAPE tech support staff, I was often asked to fill out compliance questionnaires for file transfer-related regulatory requirements. In almost all cases, I didn’t have to recommend any additional third-party solutions, as JSCAPE’s built-in controls easily satisfied every single requirement on their own.
Next steps
In today’s evolving regulatory landscape, secure file transfers aren’t just a technical necessity — they’re a compliance imperative. Don’t leave your organization exposed to security and regulatory risks. Discover how JSCAPE’s highly secure architecture can protect your sensitive data and simplify compliance.
Download our free guide: “How to secure file transfers in the breach era”