A guide to compliance regulations that impact identity
Keeping up with identity-related compliance regulations can feel like riding a hamster wheel. Every year, new rules come into force, existing frameworks change, and organizations are left scrambling to avoid fines, legal trouble, and damage to their reputation. The compliance gears just keep turning.
Although the details of each regulation may differ, one thing stays the same: Identity and Access Management (IAM) is a critical piece of the regulation puzzle. Without the right IAM strategy, businesses face skyrocketing risks, including non-compliance, data breaches, and operational disruptions.
While seemingly endless regulations exist for specific industries and geographic regions, this article will touch upon five key regulations: CFIUS, NYDFS, DORA, HIPAA, and ITAR. We’ll also explore how Identity Orchestration helps organizations stay compliant without disrupting their workflows.
CFIUS (Committee on Foreign Investment in the United States)
The Committee on Foreign Investment in the United States (CFIUS) is responsible for reviewing foreign investments in U.S. businesses to assess potential national security risks. Its regulation is primarily focused on mergers, acquisitions, and takeovers, but also applies to any transactions that could grant foreign entities access to sensitive U.S. data, infrastructure, or intellectual property.
Industries impacted by CFIUS
Industries such as utilities, manufacturing, telecommunications, and critical technologies are most commonly impacted. Taking a step further, any company wishing to do business with U.S. government agencies will also face CFIUS scrutiny.
What CFIUS non-compliance can mean
CFIUS can block or unwind transactions deemed a security risk, impose mitigation agreements, or issue heavy penalties for non-compliance. Fines and legal fees can quickly add up, so compliance is more than a nice-to-have for any organization dealing with foreign investments.
In one recent example, T-Mobile was fined $60 million for violations surrounding its inability to prevent and report unauthorized access to sensitive data. It’s becoming clear that identity-centric compliance failures come at a high cost.
The role of identity management in CFIUS compliance
IAM is also a big part of meeting CFIUS requirements, as it helps ensure unauthorized individuals, including foreign entities, cannot access restricted data or systems. Organizations can stay compliant with finely tuned and consistent access controls, multi-factor authentication (MFA), and secure identity federation.
Ultimately, what this means is that only authorized users will be able to access sensitive systems. Think about the principle of least privilege (PoLP) rule, which is essentially what government access has always been about.
NYDFS (New York Department of Financial Services Cybersecurity Regulation)
The NYDFS Cybersecurity Regulation (23 NYCRR 500) establishes strict cybersecurity requirements for financial institutions operating in the state of New York — including banks, insurance companies, and investment firms. Its mandate includes strong security policies, frequent risk assessments, and strict access controls to protect against cyber threats.
Companies found in non-compliance could face fines of $2,500 per violation per day, with some cases resulting in multimillion-dollar penalties (PayPal was recently penalized over $2 Million). If the superintendent concludes that a violation has been committed “knowingly and willfully,” the fine jumps to $75,000 daily. Beyond financial costs, violations can lead to a stained reputation and increased regulatory scrutiny.
IAM is a fundamental requirement for NYDFS compliance, since organizations must properly manage privileged access, implement MFA, and monitor unauthorized login attempts.
Identity Orchestration simplifies compliance by providing adaptive authentication, seamless identity federation across cloud and on-prem environments, and automated enforcement of security policies.
Read this customer story to learn more.
DORA (Digital Operational Resilience Act)
The Digital Operational Resilience Act (DORA) is an EU regulation enacted to improve cybersecurity resilience in the financial sector. It applies to banks, insurers, investment firms, and other financial entities based in the EU and international organizations with operations in the region. DORA’s requirements include the mandate to demonstrate business continuity, manage ICT risks, conduct penetration testing, and establish robust incident response plans.
DORA is all about organizations maintaining continuous operational resilience, which essentially means financial services remain available even during cyber incidents. Failure to comply can result in fines of up to 2% of a company’s global annual revenue, reputational harm, and legal repercussions.
Why is identity resilience important in DORA compliance?
With the increasing reliance on cloud-based identity services, the risks for businesses when their primary IDP experiences downtime are significant, even more so when they fall under DORA. Identity Continuity addresses these challenges by monitoring the health and performance of IDPs in the identity fabric. It can transparently failover from a primary cloud IDP to an on-premises IDP.
As identity-related compliance failures receive more public attention, businesses must proactively secure their IAM strategies under DORA guidelines. Identity continuity helps enforce zero-trust principles, deploy least privilege access, and integrate IAM policies across hybrid and multi-cloud environments.
HIPAA (Health Insurance Portability and Accountability Act)
HIPAA, one of the longest-standing U.S.-based privacy laws, was enacted in 1996 and is designed to protect the privacy and security of healthcare data. It covers hospitals, insurance providers, healthcare clearinghouses, and business associates handling electronic protected health information (ePHI). Basically, if a business has anything to do with healthcare, it’s probably
What are the 3 rules of HIPAA?
The regulation consists of three primary rules: the Privacy Rule, which governs the use and disclosure of ePHI; the Security Rule, which mandates safeguards for protecting ePHI; and the Breach Notification Rule, which requires the reporting of security incidents. Non-compliance can result in:
- Civil penalties ranging from $141 to over $71,000 per violation
- Maximum annual fines reaching $2.1 million per violation category
- ln severe cases, criminal penalties, and prison time may apply.
Why IAM matters in meeting HIPAA standards
Even small companies handling HIPAA-regulated data must be diligent, as regulatory agencies are cracking down on compliance violations. Identity plays a crucial role in meeting HIPAA standards by restricting access to patient data, enforcing authentication policies, and logging access attempts.
With identity orchestration, healthcare organizations can achieve compliance by orchestrating authentication mechanisms, applying contextual access controls, and enforcing security policies across EHR systems, SaaS applications, and on-prem environments—all without costly application rewrites.
ITAR (International Traffic in Arms Regulations)
The International Traffic in Arms Regulations (ITAR) control the export of defense-related articles, services, and technical data. U.S. companies involved in manufacturing, selling, or distributing defense-related products must comply, which means only authorized U.S. persons can access controlled materials.
ITAR requires strict end-user verification, access control, and encryption to prevent unauthorized access. ITAR violations are penalized heavily: civil fines of up to $500,000 per violation, criminal fines of up to $1 million per violation, and up to 20 years in prison for individuals knowingly breaking the law.
With regulatory enforcement like ITAR increasing, companies must secure access to sensitive data before compliance failures lead to hefty penalties. Identity orchestration provides a solution to prevent unauthorized access by enabling dynamic access controls, location-based restrictions, and real-time enforcement of ITAR compliance policies across multi-cloud environments.
Why Identity Orchestration is your compliance hero
Maintaining regulatory compliance is no longer an option for businesses operating in these industries (or almost all industries) — it’s a critical part of doing business today. In addition to being compliant, it’s about protecting business continuity, avoiding fines, and maintaining customer trust.
The truth is that organizations need to be proactive in securing their IAM strategies to actually stay ahead of evolving regulations and get off the hamster wheel.
Whether preventing unauthorized foreign access under CFIUS, meeting NYDFS cybersecurity mandates, ensuring operational resilience under DORA, protecting patient data for HIPAA, or restricting defense data under ITAR, Strata helps simplify compliance.
With Identity Orchestration, businesses can unify identity management, enforce granular access policies, and seamlessly adapt to changing regulations without rewriting applications.
Staying compliant today can secure your organization’s future tomorrow.
Multinational organizations face even more complexities in managing identities across various jurisdictions, each with its own data protection regulations, such as GDPR. Learn how Strata’s Identity Orchestration can help you maintain compliance and streamline identity management across borders in this blog post: Solving Global IAM & Compliance Challenges for Multinational Companies.
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*** This is a Security Bloggers Network syndicated blog from Strata.io authored by Mark Callahan. Read the original post at: https://www.strata.io/uncategorized/guide-compliance-regulations-identity/
