Records Retention Policies Support Compliance and Data Security for Financial Services
Banks, credit unions, investment firms, and other financial services organizations generate and manage vast amounts of sensitive data as part of their day-to-day operations. These records include financial statements, loan applications, transaction histories, account details, and personally identifiable information (PII)—all of which are highly valuable to the organization and a prime target for cybercriminals. At the same time, financial data is governed by some of the most rigorous regulatory frameworks, with strict requirements for how data must be stored, accessed, and ultimately disposed of.
Developing strong protections around collected data, alongside sound strategies for data retention and disposal, is a fundamental part of any financial institution’s security, compliance, and governance policies. A well-defined records retention policy ensures sensitive information is preserved as required by law, helps mitigate the risk of data loss, and supports operational efficiency by automating the data lifecycle.
What is a Records Retention Policy for Financial Services, and Why is it Important?
A records retention policy is a set of rules applied within an IT system to govern how long specific data is retained, when it can be modified, and when it must be archived or deleted. These rules ensure organizations meet regulatory obligations and maintain compliance with financial industry requirements.
For example, a bank might establish a policy that prevents deletion of any customer data while the customer’s account remains active. Similarly, investment firms must retain transaction records and communications for fixed periods—often six years or more—to comply with regulations from agencies like the SEC and FINRA. Retention policies automate these requirements, reducing the risk of human error and ensuring consistent compliance across systems.
How to Build a Records Retention Policy in Financial Services
To create an effective retention policy, financial organizations must first assess the nature of the data they collect, balancing operational needs with regulatory requirements and risk tolerance:
- What types of financial data must be retained, and for how long?
- How should the data be stored (format, location, encryption)?
- Who needs access to the data, and what permissions should be granted?
- Should data be archived after a certain period, or securely destroyed?
- Which regulations dictate retention periods and data handling processes?
- What are the risks of retaining data longer than necessary?
- How will the organization respond in case of legal or compliance breaches?
Once this information is defined, organizations can begin building retention policies through a structured process:
- Gather all relevant data types across systems and departments.
- Classify data according to sensitivity, regulatory requirements, and retention needs.
- Define appropriate retention policies for each classification.
- Identify responsible stakeholders, communicate policies clearly, and implement controls.
- Review and update policies regularly to align with evolving regulations and business needs.
Common Financial Services Retention Requirements
- SEC Rule 17a-4: Customer records and account information – 6 years
- SEC communications, trade confirmations, order tickets – 3 years
- FINRA – 6 years
- Bank Secrecy Act (BSA) – typically 5 years
- SOX – 7 years
- GDPR – no fixed period; data must not be kept longer than necessary
Retention policies not only help financial institutions comply with these regulations—they also contribute to more efficient data management, reducing operational risks and strengthening organizational resilience.
FileCloud for Records Retention in Financial Services
FileCloud is a robust Enterprise File Sync and Share (EFSS) solution that delivers secure file storage, data governance, and advanced retention policy management for financial organizations. Its Governance dashboard provides a centralized platform to manage visibility, access controls, and automated policies with precision.
FileCloud supports five types of hierarchical retention policies, ensuring that the most restrictive controls always take precedence. These policies help financial institutions meet stringent regulatory and legal obligations by locking data against unauthorized deletion or modification:
- Admin Hold: Prevents updates or deletions indefinitely.
- Legal Hold: Freezes files to aid legal discovery or compliance audits; disallows modification.
- Retention: Retains files for a set period before permitting archiving or deletion.
- Archival: Moves aging files to long-term storage; prevents deletion until conditions are met.
- Trash Retention: Controls how deleted files are handled—either permanent deletion or retention for review.
Combined with FileCloud’s advanced features—automated classification, metadata tagging, granular permissions, SIEM integration, and detailed audit logs—these policies make it simple for financial organizations to manage records retention at scale. FileCloud helps ensure compliance, reduces administrative burden, and strengthens security while giving institutions full control over their sensitive data throughout its lifecycle.