Compliance - CompTIA Security+ SY0-701 - 5.4

Summary

Compliance involves meeting standards set by laws, regulations, or agreements. It is crucial for businesses to adhere to these standards to avoid penalties like fines, job loss, or imprisonment. Compliance can be national or international, and organizations often have a Chief Compliance Officer to ensure adherence. Examples include the Sarbanes-Oxley Act, HIPAA, and the Gramm-Leach-Bliley Act. Non-compliance can lead to financial, legal, and reputational damage. Organizations use internal and external monitoring, due diligence, and automated systems to maintain compliance and mitigate risks.

Takeaways

• 🛡️ Compliance involves meeting standards set by regulations, laws, or agreements with third parties.
• 📋 Compliance requirements vary based on the type of business and location.
• ⚖️ Non-compliance can lead to penalties such as fines, loss of employment, or even incarceration.
• 🌐 Compliance can be mandated by local, national, or international laws.
• 🏢 Many organizations have a Central Compliance Officer (CCO) responsible for ensuring compliance across the organization.
• 📊 External compliance requirements may involve ongoing reporting and adherence to third-party standards.
• 🔒 Examples of regulatory compliance include the Sarbanes-Oxley Act (SOX) for accounting and HIPAA for healthcare privacy.
• 💼 Failure to comply with regulations can result in significant financial and reputational damage.
• 🔍 Compliance monitoring often involves due diligence and due care to ensure all standards are met.
• 🛠️ Many organizations use automated compliance monitoring systems to keep track of compliance status and requirements.

Q & A

What is the definition of compliance according to the script?

Compliance is the process of meeting a series of standards, which can be created by regulations, laws, or agreements with third parties.

Why is compliance important for an organization?

Compliance is important because there can be penalties for non-compliance, including fines, loss of employment, and in severe cases, incarceration.

What are the potential consequences of failing to comply with compliance requirements?

Consequences can include fines, loss of employment, reputational damage, and in some cases, imprisonment.

What is a Central Compliance Officer (CCO) and what is their role in an organization?

A Central Compliance Officer (CCO) is an individual responsible for ensuring that the entire organization complies with state, local, federal, and other requirements, and for informing others of the compliance status.

What is the purpose of a compliance report and how often might it be required?

A compliance report is used to demonstrate that a company is meeting its compliance obligations. The frequency of these reports can be annual or determined by the compliance requirements themselves.

What is the Sarbanes-Oxley Act (SOX) and why is it significant?

The Sarbanes-Oxley Act (SOX), formally known as the Public Company Accounting Reform and Investor Protection Act of 2002, is a regulatory compliance example that aims to improve corporate governance and accountability.

What does HIPAA stand for and what is its main objective?

HIPAA stands for the Health Insurance Portability and Accountability Act. Its main objective is to ensure the privacy and security of individuals' medical information in the United States.

What are the potential penalties for HIPAA noncompliance?

Penalties for HIPAA noncompliance can include fines up to $50,000, imprisonment up to one year, or both, depending on the severity and intent behind the noncompliance.

Can you provide an example of a company that faced significant repercussions for non-compliance?

Uber is an example of a company that faced repercussions for non-compliance. They experienced a data breach in 2016 but did not disclose it until 2017, resulting in $148 million in fines and reputational damage.

What is meant by 'Due diligence' and 'Due care' in the context of compliance monitoring?

Due diligence refers to the activities performed with third parties to ensure compliance, while due care refers to internal activities within the company to maintain compliance. Both terms describe the good faith and honesty of a company's compliance efforts.

How can organizations automate compliance monitoring and what are the benefits?

Organizations can automate compliance monitoring by using systems that collect data from various sources, compile reports, and ensure ongoing compliance. The benefits include efficiency, accuracy, and the ability to stay up-to-date with compliance requirements.

Outlines

00:00

📜 Compliance Essentials and Penalties

This paragraph delves into the fundamental aspects of compliance, which involves adhering to a set of standards dictated by regulations, laws, or third-party agreements. It highlights the potential extensiveness of compliance requirements based on business type and geographical location. The paragraph underscores the severe consequences of non-compliance, such as fines, job losses, and even incarceration, and mentions the role of a Central Compliance Officer (CCO) in ensuring organizational adherence to various legal standards. It also touches on the necessity of external compliance, especially when dealing with third parties, and the importance of accurate and timely reporting to avoid penalties. The paragraph provides examples of regulatory compliance from different sectors, such as SOX for public companies, HIPAA for healthcare, and GLBA for financial institutions, and discusses the hefty fines and sanctions associated with non-compliance, including the repercussions of underreporting or misreporting compliance statuses.

05:03

🛡️ Beyond Fines: The Broader Impact of Non-Compliance

The second paragraph expands on the broader implications of non-compliance beyond financial penalties. It discusses the potential loss of licenses crucial for business operations and the economic impact this can have, especially if the license is integral to product sales. The paragraph also addresses the contractual aspect of compliance, where breaches can occur if a company fails to meet agreed-upon standards, potentially leading to private resolutions between organizations. The concept of 'Due diligence' and 'Due care' is introduced as a means to demonstrate good faith in compliance monitoring. The paragraph emphasizes the importance of ongoing monitoring and the use of internal tools or automated systems to track compliance status, suggesting that large companies with diverse products may have complex compliance needs. It concludes by noting the availability of automated compliance monitoring systems that can aid in data collection, reporting, and ensuring up-to-date compliance information.

Keywords

💡Compliance

Compliance refers to the act of conforming to a set of rules, regulations, standards, or agreements. In the context of the video, it is about meeting legal requirements or third-party agreements that an organization must adhere to. Compliance is central to the video's theme, as it discusses the various aspects and consequences of adhering to or failing to meet these standards, such as penalties, fines, and reputational damage.

💡Penalties

Penalties are the negative consequences or punishments that result from non-compliance with regulations or agreements. The video emphasizes the importance of compliance by highlighting potential penalties, which can include fines, loss of employment, and even incarceration. These penalties serve as a deterrent and a reminder of the severity of non-compliance.

💡Central Compliance Officer (CCO)

A Central Compliance Officer, or CCO, is an individual within an organization who is responsible for ensuring that the organization meets all compliance requirements. The role of the CCO is crucial as they oversee internal compliance checks and report the compliance status to relevant stakeholders. The script mentions the CCO as a key figure in maintaining an organization's compliance.

💡Regulatory Compliance

Regulatory compliance pertains to adherence to laws and regulations set by governing bodies. The video provides examples of regulatory compliance, such as the Sarbanes-Oxley Act (SOX) and the Health Insurance Portability and Accountability Act (HIPAA), which are specific to the financial and healthcare sectors, respectively. These examples illustrate the industry-specific nature of regulatory compliance.

💡Reporting

Reporting in the context of compliance refers to the process of documenting and communicating an organization's compliance status to external parties, such as regulatory bodies or third-party partners. The video mentions that incorrect reporting or missing reporting deadlines can lead to penalties or sanctions, emphasizing the importance of accurate and timely compliance reporting.

💡HIPAA

The Health Insurance Portability and Accountability Act, or HIPAA, is a U.S. regulation that ensures the privacy and security of individuals' medical information. The video uses HIPAA as an example of a compliance standard in the healthcare field, highlighting the legal requirements for protecting patient data.

💡Gramm-Leach-Bliley Act (GLBA)

The Gramm-Leach-Bliley Act of 1999, or GLBA, is a U.S. law that requires financial institutions to explain their information-sharing practices to their customers. The script mentions GLBA as an example of a compliance requirement that affects financial institutions and impacts customer privacy notices.

💡Fines

Fines are monetary penalties imposed for non-compliance with regulations or laws. The video discusses various levels of fines associated with HIPAA non-compliance, ranging from $50,000 to $250,000, depending on the severity and intent behind the non-compliance. Fines are a tangible consequence of failing to meet compliance standards.

💡Reputational Damage

Reputational damage refers to the harm to an organization's reputation due to negative publicity or public perception. The video provides the example of Uber's delayed disclosure of a data breach, which led to significant fines and damage to the company's reputation. This illustrates the broader impact of non-compliance beyond legal penalties.

💡Due Diligence

Due diligence is the process of thoroughly investigating and verifying all aspects of a business deal or transaction, often involving compliance with regulations. In the video, due diligence is associated with the activities performed with third parties to ensure compliance, demonstrating a commitment to good faith and honesty in business dealings.

💡Due Care

Due care refers to the responsibility of an organization to act in good faith and with reasonable care in its operations, including compliance monitoring. The video contrasts due care with due diligence, with due care being the internal activities related to compliance, showing the organization's commitment to ethical practices.

💡Attestation

Attestation is the act of formally confirming or asserting the truth or accuracy of a statement, often related to compliance. The video describes how an executive may sign off on compliance, providing an attestation that the organization is in good standing with its compliance requirements, which is a demonstration of responsibility and accountability.

💡Automated Compliance Monitoring

Automated compliance monitoring involves using technology to track and ensure an organization's adherence to compliance requirements. The video mentions the use of automated systems to collect data, compile reports, and maintain up-to-date compliance information, highlighting the efficiency and importance of technology in managing compliance.

Highlights

Compliance involves meeting standards set by regulations, laws, or third-party agreements.

Organizations may have extensive compliance requirements based on their business type and regional laws.

Non-compliance can result in penalties such as fines, job loss, or even incarceration.

Compliance can be based on national or international laws.

Central Compliance Officer (CCO) is responsible for an organization's compliance with various regulations.

External compliance requirements may necessitate ongoing reporting to third parties.

Incorrect reporting or missing deadlines can lead to penalties or sanctions.

Sarbanes-Oxley Act (SOX) is an example of regulatory compliance in the corporate sector.

HIPAA ensures the privacy of medical information in the United States.

Gramm-Leach-Bliley Act (GLBA) requires financial institutions to provide privacy notices to customers.

HIPAA noncompliance can result in severe fines and prison sentences.

Intent to misuse health information can lead to higher fines and longer prison terms.

Reputational damage from non-compliance can impact stock prices and public perception.

Uber's delayed disclosure of a data breach in 2016 led to significant fines and reputational harm.

Losing a license due to non-compliance can have severe economic consequences for a company.

Contractual compliance agreements between organizations can be breached if compliance is not maintained.

Due diligence and due care are terms associated with compliance monitoring and good faith actions.

Attestation by executives confirms that compliance activities are conducted in good faith.

Ongoing monitoring of compliance is crucial for large companies with diverse product lines.

Automation of compliance monitoring can help organizations stay up to date with their compliance status.

The market offers various automated compliance monitoring systems to assist organizations.

Transcripts

Compliance is the process of meeting a series of standards.

These standards may be created by regulations or laws,

or they might be an agreement that you

make with a third party.

There may be extensive amounts of compliance

that are required by your organization, and many of these

may be based upon your type of business or laws

associated with your area of the country.

One of the most important considerations,

though, when dealing with compliance is

there are often penalties if you are not in compliance.

These penalties could be fines.

They could be loss of employment for yourself or others,

and in worst cases, it may involve incarceration.

There may be compliance based on the laws

of your particular country, or this compliance

may be international.

Many organizations will perform their own internal compliance

checks.

Often, this is associated with a Central Compliance

Officer, or CCO.

This is an individual responsible for making sure

that the entire organization is complying with state, local,

federal, and any other requirements.

This is also the office that is responsible for informing

others of the compliance status of the organization.

You might also have external compliance requirements,

especially when working with a third party that has set

requirements for your company.

This may also require ongoing reporting,

so you may have to create a compliance report every year

or in an interval determined by the compliance itself.

If the reporting is incorrect, or you

miss one of those reporting periods,

there could be penalties or sanctions

associated with that mistake.

A good example of regulatory compliance

would be the Sarbanes-Oxley Act, or SOX.

This is formally known as the Public Company Accounting

Reform and Investor Protection Act of 2002.

If you're in the health care field,

you're probably familiar with the compliance associated

with HIPAA.

This is the Health Insurance Portability

and Accountability Act.

This compliance ensures that everyone's medical information

in the United States remains private.

And another regulatory compliance

would be the Gramm-Leach-Bliley Act of 1999, or GLBA.

If you're in the United States, you'll occasionally

get a note from your financial institution that

describes their privacy information,

and that is due to the Gramm-Leach-Bliley Act.

We mentioned earlier that there can be significant penalties

for being out of compliance.

A good example of this are the HIPAA noncompliance fines

and sanctions.

It's important to understand what the results might

be for not being in compliance.

It could be a fine of up to $50,000 US dollars or up to one

year in prison or both of those, because that

would be a Class 6 Felony.

If this compliance is done under false pretenses,

the fine goes up to $100,000, up to five years in prison,

or both, and that would be a Class 5 Felony.

If there is an intent to sell, transfer, or use

individually-identifiable health information

for commercial advantage, personal gain,

or malicious harm, the fine goes up

to $250,000 or up to 10 years in prison.

And for other civil fines, the maximum

would be $100 for each violation,

with the total amount not to exceed

$25,000 for all violations of an identical requirement.

This is a good example of why we spend so much time and money

making sure that our organizations are

in compliance with everything that's expected of us.

There's also reputational damage that might occur,

if you fall out of compliance.

For example, many states have requirements for disclosure,

if an organization is hacked or breached,

and the reputational damage of disclosing that hack

could cause stock prices to drop, at least in a short term,

with that organization.

A good example of how reputational damage

could harm a company started in October of 2016.

The company Uber was breached, and 25.6 million names,

email addresses, and phone numbers

were exfiltrated from their systems.

However, Uber didn't announce this breach

until November of 2017, over a year later,

and in the meantime, they allegedly

paid the hackers $100,000 to have

them keep quiet by using a non-disclosure agreement.

This caught up to the company in 2018,

and Uber had to pay $148 million in fines.

The hackers owned up to this and pled guilty in October of 2019.

In May, 2023, Uber's former chief security officer

was sentenced and got three years probation

and a $50,000 fine.

The company would have been in compliance

if they announced the breach originally,

instead of trying to keep the breach quiet

and have it go away.

This ultimately affected the company

financially and reputationally.

These aren't the only things that could happen

if you're not in compliance.

You could lose a particular license

that is associated with that compliance.

This could be a significant economic hit to the company,

especially if that license is required

to sell the company's product.

Other organizations may also be limited

from purchasing from any other company that is sanctioned,

and it might be very expensive to regain

that license in the future.

Some compliance is done at a contractual level, where there

is an agreement between two organizations

to stay in compliance, and if a company

doesn't maintain that compliance,

the contract is then breached.

Since this is between two private organizations,

it is possible to resolve this out-of-compliance issue

between the two organizations without any type

of legal proceeding.

You can see how being out of compliance

might affect an organization negatively,

and that's why a lot of organizations

will have individuals that are specifically tasked

with compliance monitoring.

You might often hear the terms "Due diligence"

and "Due care" associated with compliance monitoring.

This is a way to describe how the companies are acting

in good faith and honestly about the terms of the compliance.

Normally, the activities that you're doing internally

are referred to as due care, and any activities

that you perform with a third party

would be based on due diligence.

It's very common to have the executive who's

in charge of this compliance process

to be the one who signs off stating that the compliance is

indeed in good standing.

We refer to this as "Attestation"

and "Acknowledgment" and ultimately, it's

the executive who is responsible for making sure

that all of that information is done in good faith.

As you can imagine, a large company

with many types of products may have a significant amount

of compliance requirements, and that's

why it's important to provide ongoing monitoring

of the compliance.

Normally, you would use internal tools in the organization

to keep track of where the status is

of all of the compliance tasks.

This may be something that is completely internal,

or you may have to interact with third parties

to gather more information to determine

if you're truly in compliance.

That's why many organizations will

find ways to automate this process as much as possible.

The compliance requirements are quite

different between different types of companies,

and this automation will vary a great deal

from one company to another.

Fortunately, there is a large market of automated compliance

monitoring systems that collect data

from people, from third parties, and from other parts

of the organization.

A company can use these automated processes

to collect as much compliance information as possible,

compile reports, and make sure that they are always up to date

with all of their compliance details.