Blog

What Is a SOC 2 Type 2 Audit?

Libby Bevin · November 6, 2023 ·

A System and Organization Controls for Service Organizations 2 (SOC 2) audit assesses how well a service provider’s internal controls and practices safeguard customer data’s privacy and security. Service providers include those providing Software-as-a-Service (SaaS) or cloud computing services, as well as other professional services such as consulting that third-party vendors routinely offer.

The common criteria for SOC 2 audits are the Trust Services Principles established by the American Institute of CPAs (AICPA). These core principles include security, availability, processing integrity, confidentiality, and privacy. SOC 2 audits evaluate an organization’s controls against these criteria to assure customers their sensitive data is appropriately managed and protected.

SOC 2 audits are becoming increasingly important for cloud services, healthcare organizations, companies handling personal data, and any entity responsible for sensitive customer information. Regular SOC 2 assessments can help reduce risks from data breaches while demonstrating compliance with regulations like the General Data Protection Regulation (GDPR).

What is a SOC 2 Audit?

A SOC 2 auditor measures the vendor’s internal controls and practices against applicable Trust Services Criteria developed by the American Institute of Certified Public Accounting (AICPA). The resulting audit report, or attestation, states whether the vendor’s controls are sufficient to assure data security – or, if not, where the vendor needs to improve.

The five Trust Services Criteria are as follows:

Security. The system is protected against unauthorized access (both physical and logical).
Availability. The system is available for operation and use as committed or agreed.
Processing integrity. System processing is complete, valid, accurate, timely, and authorized to meet the organization’s objectives.
Confidentiality. Information designated as “confidential” is protected according to policy or agreement.
Privacy. Personal data is collected, used, retained, disclosed, and disposed of in conformity with the commitments in the entity’s privacy notice and with criteria outlined in Generally Accepted Privacy Principles issued by the (AICPA).

Type 1 vs. Type 2

SOC 2 audits can be one of two types.

A Type 1 report only assesses whether the vendor’s controls are adequately designed to achieve specific control objectives (usually those defined by the TSCs used to guide the audit) as of a specific date. In other words, a Type 1 report is a snapshot of the vendor’s security controls simultaneously.

A Type 2 report goes further to test whether those controls then work as intended over some time (say, six months or one year).

SOC 2 reports of either type are usually meant for something other than widespread circulation. The company requesting the audit, the vendor undergoing it, and the audit firms performing it can all see the report. Still, since each SOC 2 audit has a specially tailored scope defined by the TSCs used in the audit, the final SOC 2 report is intended to be private from others. (In contrast to a SOC 3 report, which is.)

Benefits of SOC 2 Type 2 compliance

SOC audits highlight operational effectiveness and integrity. Key benefits include:

1. Trust and Assurance:

Provides stakeholders assurance of robust controls and data protection.
Shows adherence to standards, building confidence.

2. Regulatory Compliance:

SOC reports independently evaluate controls to meet regulations.
Assurance helps satisfy regulators and avoid penalties.

3. Risk Management:

SOC audits identify data management, security, and processing risks.
Assessing controls addresses vulnerabilities.

4. Competitive Advantage:

Shows commitment to quality and security.
Vendors with SOC audits may be preferred.

5. Vendor and Third-Party Management:

Companies require SOC audits to validate vendor controls.
SOC reports facilitate vendor oversight.

6. Operational Efficiency:

Preparing for an audit can optimize processes.
Feedback enhances effectiveness.

7. Financial Integrity:

SOC 1 focuses on financial reporting controls.

8. Market Confidence:

Adhering to standards and SOC audits builds confidence.

9. Legal Protection:

Shows proactive security after incidents.

10. Transparency:

Provides insights on controls and operations.

In essence, SOC audits are a critical mechanism for demonstrating accountability, enhancing operational efficiency, and fulfilling regulatory requirements, which collectively contribute to the overall credibility and success of an organization. All audits are conducted against the trust services categories to test information security and operating effectiveness.

What are SOC 2 Type 2 requirements?

To obtain SOC 2 Type 2 certification, companies must meet several key requirements:

Have controls and safeguards that align with Trust Services Criteria from the American Institute of Certified Public Accountants (AICPA). These emphasize security, availability, processing integrity, confidentiality, and privacy.
Prove effective operation of controls over a minimum 6-month period. This demonstrates ongoing compliance versus just a point-in-time audit.
Hire an accredited CPA firm to perform the audit. They must follow AICPA attestation standards.
Implement remediation for any issues uncovered during the audit. Auditors will verify fixes.
Adhere to regulations like HIPAA and PCI DSS if applicable. SOC 2 also helps satisfy frameworks like ISO 27001.
Establish proper control operation for all relevant systems and service components.
Provide infrastructure documentation like policies, processes, and procedures.
Maintain documentation related to change management and risk assessments.
Give auditors access to facilities, systems, and staff involved in services.
Develop a roadmap for how to prepare using readiness assessments and SOC 2 Type 1 audits.
Allocate resources for audit preparation using templates and automation where possible.

SOC 2 Type 2 certification requires an ongoing commitment to internal control monitoring, transparency, compliance, and continuous security improvement. The extensive evaluation provides customers assurance their data is properly safeguarded.

What does a SOC 2 audit include?

A SOC 2 audit is an extensive evaluation of the policies, procedures, systems, facilities, and personnel involved in handling customer data. Auditors use multiple methods to validate that an organization’s security and privacy controls are functioning effectively.

The documentation review examines information security policies, privacy policies, data classification procedures, vendor management programs, incident response plans, and other policies and procedures related to the control environment. Gaps or issues in written policies are identified.

Interviews are conducted with personnel in management, operations, security, compliance, and IT to understand how controls are implemented in actual practice. Differences between documented policies and real-world procedures may emerge.

Inspections of facilities, including data centers, call centers, and offices, evaluate physical access controls like badge access systems, cameras, locks, and environmental monitoring.

Change management analysis reviews records of modifications to systems, policies, and personnel to ensure proper vetting and risk analysis are performed.

When Should You Conduct a SOC 2 Type 2 Audit?

There are several strategic times when organizations should undertake a SOC 2 Type 2 audit:

Before Renewing a Major Contract: Get certified before renegotiating terms with a large customer to build trust.
After a Merger or Acquisition: Evaluate controls after integrating entities to identify and address any gaps.
When Expanding Operations: Assess controls when adding new services, technologies, or data centers to maintain compliance.
When Upgrading Systems: Audit how changes to infrastructure like cloud migrations affect security and availability.
After a Cybersecurity Incident: Demonstrate controls are strengthened after a breach or attack.
To Maintain Certification: Conduct annually or biannually to keep status current.
When Regulations Change: Ensure controls satisfy new rules and requirements.
To Compare Against Competitors: Gain an advantage by undergoing audits more frequently than peers.
To Assure Customers: Provide regular assurance that controls effectively protect sensitive data.
To Support Vendors: Require third parties to furnish SOC 2 Type 2 reports for risk management.

Proper planning is key as SOC 2 audits evaluate the entire control environment. Frequent assessments demonstrate an ongoing commitment to customers, regulators, and partners.

How do you conduct a SOC 2 Type 2 audit?

Successfully undergoing a SOC 2 Type II audit involves careful preparation and execution across multiple phases:

Planning: Determine the scope and American Institute of CPAs (AICPA) Trust Services Criteria for the audit. Assemble a team to own the process. Develop a timeline aligned with business needs.
Gap Analysis: Compare existing controls against SOC 2 requirements. Identify deficiencies and create plans to remediate them.
Policy Update: Revise documentation like security policies, procedures, and contracts to fulfill SOC 2 criteria.
Control Implementation: Make necessary improvements to security controls, access restrictions, monitoring, encryption, etc., per the gap analysis.
Readiness Assessment: Conduct an informal “mock audit” to validate preparedness for the accurate audit.
Auditor Selection: Vet and select a licensed CPA firm to perform the independent SOC 2 assessment.
Audit Engagement: Work collaboratively with the auditor during system and facility inspections, staff interviews, and policy reviews.
Remediation: Address any remaining issues or weaknesses based on audit findings to strengthen security practices and controls.
Certification: The auditor provides the official SOC 2 Type 2 audit report and certificate once satisfied with remediation efforts.
Monitoring: Implement ongoing monitoring of controls to maintain compliance until the next audit.

Rigorous controls, updated documentation, remediating gaps, and transparency with auditors during the process led to successful SOC 2 Type II certification.

SOC 2 Compliance is Made Easy with ZenGRC

If SOC 2 certification were easy, everyone would have done it already. Unfortunately, SOC 2 is a complex information security and privacy framework that changes frequently and can be confusing – especially for organizations trying to manage compliance using Excel or other spreadsheets. You can simplify the task and save time by using a digital solution.

ZenGRC, a compliance and audit management system, provides a faster, smoother road to compliance by reducing time-consuming manual procedures, expediting onboarding, and keeping you informed about the status and efficacy of your programs.

You gain a unified, real-time view of risk and compliance with seamless integrations with tools within the platform, providing the context-specific perspective necessary to make savvy, strategic choices that keep your company secure and earn the trust of your customers, partners, and employees.

An automated and integrated database of references will keep you ahead of the constantly changing regulatory landscape. RiskOptics allows you to:

Get audit-ready in under 30 minutes
Alleviate staff burdens with collaboration and automated workflows
Learn about the impact of compliance initiatives on your cyber risk posture to prioritize resources

ZenGRC provides the visibility you need to analyze the progress and success of your compliance activities and their influence on risk reduction. An audit overview report summarizes the frameworks, requirements, and controls in scope, the activities to be done, and the present audit status.

Schedule a demo today to learn how ZenGRC can streamline your audit process.

Do Banks Need to be PCI Compliant?

Libby Bevin · November 6, 2023 ·

Financial institutions are one of the most heavily regulated industries around, and for good reason. Access to the personal information and funds of their customers makes banks a popular target with hackers and a dangerous location for a cybersecurity breach.

With all the regulations a bank needs to obey, you may have overlooked the Payment Card Industry Data Security Standard or PCI DSS.

All parties that handle credit card data from one of the four major U.S. credit card brands (Visa, Mastercard, Discover, and American Express), as well as JCB International (an international payment brand based in Japan), are required to comply with PCI DSS requirements.

The PCI Security Standards Council maintains the PCI DSS. If your bank works with these companies (and most do), then you’ll need to meet the compliance standards that the council has put in place.

There are many benefits to PCI compliance for financial institutions. In addition to providing a solid foundation for credit card security, achieving compliance can also help you gain the confidence of your customers and give you an edge against your competitors.

The requirements are specifically designed to protect against security breaches, which means that your data is automatically more secure. The PCI DSS guidelines also overlap with many other security frameworks, giving you a head start if you need to achieve compliance in other areas.

What Is PCI DSS?

PCI DSS is a set of information security standards put in place to assure that organizations that accept, process, store, or transmit payment card information maintain secure environments to protect consumers and merchants.

Simply put, the PCI DSS standards apply to any organization that holds, processes, or passes cardholder information from any credit or debit card branded with the logo of any of the card brands.

Even if an organization processes just four credit card transactions a month, it must be PCI compliant. A company that uses a third-party payment processor must still comply with PCI standards.

Also, if an organization doesn’t store credit card data, but cardholder data does pass through its server, it must comply with PCI requirements.

The PCI Council offers information to financial institutions and other organizations about how to prevent and detect fraud and data loss and how they should react during data breaches.

Is PCI DSS a Legal Requirement for Banks?

No, PCI DSS is not required by law. Instead, PCI DSS compliance is required by the contracts that govern participation with the major payment card brands.

Financial institutions, including issuing banks and acquiring banks, as well as merchants and service providers that process transactions, enter into contracts with the five card brands that enable those financial firms to process credit card information.

Issuing banks are banks that offer credit cards to consumers. Acquiring banks are the financial institutions that hold merchants’ bank accounts, facilitate payment processing through the card processors, and deposit funds on behalf of the merchants.

If your organization falls under either of these categories, then PCI DSS compliance will be legally required of your company.

Becoming a PCI Compliant Bank

The PCI DSS has 12 primary requirements for those wishing to prove compliance:

Protect all cardholder data with a system of well-maintained firewalls.
Change all passwords from any defaults to unique and secure options.
Any stored cardholder data should be protected.
Encrypt any cardholder data that is transmitted via open networks.
Use antivirus software and make sure it is up-to-date.
Make sure that your systems and applications are secure.
Access to cardholder data should be permitted only on a need-to-know basis.
Any staff members with access should be assigned a unique ID.
Any physical access to cardholder data should be restricted.
All-access from staff should be closely monitored.
All security measures should be tested regularly.
Your information security policies should be consistent and clear to all employees.

Within these 12 main requirements are 281 additional directives, which may or may not apply to you based on the size of your company and how many credit card transactions you process in a given year.

To become PCI DSS compliant, you first must determine which standards you need to meet. Then, assess your existing program to see where your data protection is sufficient and where you may need to make changes to meet the necessary security requirements.

Establishing and proving compliance with all of the appropriate standards can be a challenging and time-consuming process.

Fortunately, the PCI SSC provides organizations with the tools to implement the PCI data security standards, including PCI Self-Assessment Questionnaires (PCI SAQs), training and education, assessment and scanning qualifications, and product certification programs.

Should Banks Complete a PCI Assessment?

Yes. PCI assessments result in either a Report on Compliance (ROC), an Attestation of Compliance (AOC), or both. The merchant provides its RoC or AoC to its credit card acquirer annually to prove compliance with PCI requirements.

As with the assessment methods, the proof of compliance method is determined by the merchant level and the requirements of the specific card brand. Higher-level merchants may also need to provide quarterly network vulnerability scans performed by an Approved Scanning Vendor (ASV).

A PCI Self-Assessment Questionnaire (SAQ) is used by lower-level businesses (with fewer transactions) to self-assess their compliance.

There are multiple SAQs available, and the specific SAQ to use is determined by how customers perform credit card transactions (for example, card not present versus card present or fully outsourced authorizations versus partially outsourced authorizations).

If you work for a financial institution, you may have met some or all of the PCI DSS requirements based on previous compliance requirements or government audits. This head start is convenient, but you must ensure all PCI DSS standards are accounted for to prove compliance.

The bottom line is that if your bank issues credit cards on behalf of the major credit card companies, it must assure PCI DSS compliance.

Non-compliance could result in the loss of your privileges for both issuing and processing credit cards, as well as potential fines. Moreover, loss of your customers’ data due to a breach can result in loss of consumer confidence and lawsuits.

PCI Compliance Best Practices for Banks

The PCI Security Standards Council has a comprehensive list of resources to help you achieve and maintain compliance. Here’s a summary of the recommendations made in their “Best Practices for Maintaining PCI DSS Compliance” supplement:

Develop and Maintain a Sustainable Security Program

To maintain compliance, banks must first comprehend the PCI DSS’s principal goal, securing cardholder data.

Cardholder information and other consumer data should only be kept for as long as is required. Any cardholder data not necessary for business purposes should be deleted from the environment per the organization’s data retention policy.

Develop Program, Policy, and Procedures

A compliance program is a structured collection of policies, processes, and procedures inside an organization with assigned responsibilities to assure the business’s long-term compliance with applicable and essential standards and regulations.

A structured compliance program enables a company to monitor the health of its security measures, be proactive if one fails, and effectively communicate actions and compliance status throughout the company.

When developing a compliance program, it is critical to grasp the distinctions between the following concepts:

A program usually contains strategic objectives, roles and duties, and a plan for achieving company goals.
A policy often contains a declaration of management purpose or mandatory restrictions.
A process/procedure often defines the step-by-step actions responsible staff must accomplish per the program and supporting rules.

Develop Performance Metrics to Measure Success

By defining a set of metrics that describe the performance of the installed security controls and compliance program, organizations should be able to quantify their capacity to sustain security practices and PCI DSS compliance.

Compliance managers may utilize metrics to illustrate the performance of security programs, distribute resources correctly, and show stakeholders the efficiency and return on security investment.

Metrics can be computed using a mix of security-status monitoring, security-control evaluation data, and data gathered from one or more security controls or technologies.

Assign Ownership for Coordinating Security Activities

Maintaining PCI DSS compliance demands a well-managed program that integrates security into the organization’s day-to-day operations. Centralizing multiple technologies, procedures, and people helps ongoing compliance. A person in charge of compliance should be:

Assigned overall authority for these operations,
Qualified to carry out such duties.
Knowledgeable of the organization’s corporate structure and payment methods.
Given sufficient funds and resources.
Given the necessary power to manage and utilize such resources efficiently.

Emphasize Security and Risk Management to Attain and Maintain Compliance

PCI DSS establishes a minimal set of security criteria for payment card account data protection. PCI DSS measures may not be sufficient to fully mitigate the financial risks connected with various forms of sensitive data that enterprises may have and should not be regarded as a comprehensive checklist for addressing all security concerns.

A more robust strategy would be to focus on developing a security culture, protecting your organization’s IT infrastructure, and then allowing compliance to follow. Choosing security controls using a risk-based approach will enable businesses to adjust particular security measures to address varied degrees of operational risks.

Continuously Monitor Security Controls

The first stage in developing a continuous monitoring strategy is to create systems for conducting periodic audits of all relevant security measures. These procedures should:

Be closely connected with the organization’s business and security objectives.
Cover all facilities and sites included in the scope, including retail shops, data centers, and back-office locations.
Ensure that PCI DSS standards are in place and functioning correctly.
Ensure that workers continue to adhere to acceptable security practices.
Consider any changes inside the company, the operational environment, and the technologies that have been adopted.
Produce adequate documentation to demonstrate ongoing compliance with security standards.

Detect and Respond to Security Control Failures

Organizations must be able to detect security control failures during the control review or control monitoring procedures. It is also critical that businesses have mechanisms in place for responding to security control failures promptly and that those processes are tested regularly.

Maintain Security Awareness

Data breaches are increasingly including the use of social-engineering tactics in addition to the exploitation of technological weaknesses.

While implementing security monitoring and access-management solutions allows the company to minimize its risk profile, it does not ensure that risk can be reduced to negligible levels. No security technology can offer this level of risk reduction.

This is when information security awareness training comes in handy. PCI DSS Requirement 12.6 specifies the requirement to develop a security awareness program, define communication methods, give such training upon hiring and yearly, and execute effective security awareness communication channels.

Monitoring Compliance of Third-Party Service Providers

Third-Party Service Providers (TPSP) are frequently in charge of implementing and maintaining the security measures necessary to comply with PCI DSS. Entities and their TPSPs must have an explicit knowledge of their roles and duties to comply with applicable PCI DSS criteria.

Monitoring TPSP compliance status is an essential part of ensuring compliance because it allows the entity to assess if a change in status necessitates a change in the relationship.

Evolve the Compliance Program to Address Changes

Continuous compliance demands concentrated effort and collaboration. Organizations used to a point-in-time approach to PCI DSS compliance may struggle to nurture security across their people, processes, and technology as needed to ensure long-term compliance.

Compliance Managers should devote resources to monitoring and effectively communicating to all impacted parties newly detected risks, organizational structure changes, and industry developments that may influence the organization’s PCI DSS compliance activities.

Failure to assess how such changes affect the organization’s risk environment and PCI DSS scope may expose critical business processes to disruption or non-compliance.

ZenGRC Helps Organizations Manage Their Compliance

If you need to prove PCI DSS compliance, you’ll need the right tools. Spreadsheets and other outdated risk management methods can lead to confusion, redundancies, and dangerous gaps in your data security controls.

Whether performing a self-assessment or preparing for an audit, ZenGRC is a software platform designed to make compliance more straightforward than ever before. By centralizing your information and automating assignments and requests, ZenGRC can streamline your compliance process and ensure no detail is left to chance.

Schedule a demo today and learn how ZenGRC can help you enhance your vulnerability management program and keep your customer’s data secure.

What Are the PCI Audit Log Retention Requirements?

Libby Bevin · November 6, 2023 ·

Generating an audit trail is not just good practice but is also integral to achieving PCI compliance, which stands for Payment Card Industry Data Security Standard (PCI DSS). This standard is what retailers and banks rely on to safeguard consumers’ sensitive credit card information.

In particular, when striving for PCI compliance, audit logs, log management, and log retention become crucial components, as stipulated in PCI DSS requirement 10.7. This requirement mandates that audit logs must be retained for at least one year. Additionally, for immediate analysis, companies must maintain the last ninety days of PCI audit logs readily accessible.

So, how can a company meet these demanding compliance requirements while addressing the need to be PCI compliant? This article is here to provide the answers you seek, starting with the fundamental steps to ensure PCI compliance.

What Is PCI DSS?

The Payment Card Industry Data Security Standard (PCI DSS) is a widely recognized (and used) standard to safeguard the personal information of payment card users and to improve the security of transactions using credit, debit, and cash cards. The four major credit card issuers – Visa, MasterCard, Discover, and American Express – jointly developed and launched PCI DSS in 2004.

The standard has six primary goals.

Companies must maintain a secure network. This criterion calls for deploying reliable firewalls without putting consumers or merchants through unnecessary hardship.
Cardholder data must be secure. You should store vital information such as birth dates, names, Social Security numbers, phone numbers, and postal addresses in databases that are safe against hacking. The data should be encrypted before being sent over public networks.
Use regularly updated antivirus software, anti-spyware tools, and other anti-malware solutions to protect against attackers. Every application should be protected against flaws and security holes that might allow hackers to steal or modify cardholder data.
Limit and manage access to system information and processes. Cardholders should only be required to provide data companies need to know to complete a transaction. Each computer user must be given a unique and private identifying name or number.
Networks must be continuously monitored and tested to ensure all security procedures and measures are in place, maintained, and working effectively.
Companies should create, maintain, and abide by a documented information security policy to ensure that security and information protection follow a rigorous, thoughtful process that reflects the company’s risks.

What Is a PCI Audit?

The PCI DSS Standard requires that merchants who accept credit card transactions must undergo a routine audit to assure and maintain compliance. Sometimes, you may also need additional audits in response to a specific breach or other security failure.

These audits are conducted by auditors specially qualified to assess PCI compliance. They evaluate whether the company’s internal processes adhere to standards by looking at point-of-sale systems and other components of the company’s IT infrastructure. Companies also receive risk assessments from the assessment outlining their PCI level of compliance.

7 Steps of a PCI Audit

1. Gap Analysis

Evaluate compliance against PCI-DSS requirements to reveal any vulnerabilities or non-compliant areas in security policies, cardholder data handling, access controls, etc.

2. Remediate Findings

Strengthen security based on gap analysis results. Update firewall rules, encryption protocols, account access procedures, physical security, and other controls to fulfill PCI requirements.

3. Define Audit Scope

Work with your Qualified Security Assessor (QSA) to determine which systems, facilities, payment channels, and data sets the audit will assess.

4. Gather Documentation

Compile detailed records demonstrating PCI compliance, including risk analyses, security procedures, vulnerability scan reports, access logs, and other audit evidence to provide the QSA.

5. Onsite Inspection

Escort the QSA during the inspection of facilities and observation of compliance processes. Ensure transparency in all audit areas.

6. Resolve Outstanding Issues

Fix any remaining vulnerabilities or policy gaps identified during the audit with guidance from the QSA.

7. Achieve Certification

Upon successful remediation, the QSA issues the organization an Attestation of Compliance for displaying adequate security controls and fulfilling PCI requirements.

Following these steps helps streamline the audit process. Maintaining diligence between audits is critical for sustaining robust protection of cardholder data.

What triggers a PCI audit?

A PCI audit can be triggered by various factors, including:

Compliance Requirements: Routine audits, as part of a PCI DSS assessment, are often mandated by the Payment Card Industry Data Security Standard (PCI DSS) to ensure ongoing adherence to security standards, compliance levels, and the comprehensive Report on Compliance (ROC).
Security Incidents: Data breaches or security incidents can trigger audits, necessitating a thorough incident response and potential penetration testing to assess the extent of the breach and identify vulnerabilities.
Merchant Classification: Businesses may be selected for audits based on their merchant classification, history, payment card data, transaction volume, and the need for network segmentation and enhanced authentication.
Random Selection: Some audits are conducted randomly as part of PCI compliance monitoring, requiring businesses to maintain a constant state of readiness.
Customer Requests: Card-issuing banks, payment processors, and acquiring banks may request audits from merchants in specific cases. This may involve engagement with an Approved Scanning Vendor (ASV) and a compliance checklist to ensure the security posture and protection of sensitive data.

The specific trigger for a PCI compliance audit may vary. Still, continuous PCI DSS compliance and adherence to security standards and software development practices are vital to avoiding unexpected audits and maintaining a solid security posture.

How often are PCI audits required?

The PCI DSS has become a crucial framework for any business that processes, stores, or transmits credit card data. But how often do you need to undergo PCI-DSS audits to remain compliant?

Unfortunately, there is no one-size-fits-all answer. The major card brands like Visa, Mastercard, and American Express each set their requirements for audit frequency that businesses must follow. However, there are some general guidelines:

Level 1 merchants (over 6 million annual transactions) must complete an onsite audit with a Qualified Security Assessor (QSA) annually.
Companies that experience a confirmed data breach must complete a PCI audit before continuing payment processing successfully.
Smaller merchants may only need to complete Self-Assessment Questionnaires (SAQ) or Attestations of Compliance (AOC) once every two years.
Service providers like payment gateways often undergo audits multiple times per year.

The PCI Security Standards Council determines the core components of an audit, including checking firewalls, access controls, data encryption, and other security measures that comprise the PCI DSS. Whether onsite or virtual, audits aim to confirm cardholder data environments comply with all requirements.

While not overly frequent for small businesses, verifying PCI compliance is crucial. Audits not only help avoid costly non-compliance fines and damage from breaches, but they assure customers that your business takes payment security seriously. Investing in continuous PCI DSS audit readiness ensures you are protecting sensitive cardholder data.

What are the consequences of not complying with PCI DSS?

Failing to comply with the Payment Card Industry Data Security Standard (PCI DSS) can have far-reaching implications for businesses. From financial penalties to the erosion of trust and reputation damage, non-compliance poses many challenges.

Financial Penalties and Increased Fees

Non-compliance with PCI DSS can lead to significant financial penalties and higher transaction fees. The fines vary depending on the violation’s severity and the number of affected cards, putting a financial strain on businesses.

Loss of Trust and Legal Actions

Data breaches and non-compliance can erode trust among customers and partners, resulting in reduced sales and potential legal actions. Businesses may face customer lawsuits and regulatory penalties, incurring substantial legal costs.

Reputation Damage and Additional Costs

Non-compliance harms a company’s reputation, making it challenging to rebuild customer trust. This negative publicity has lasting effects. Addressing non-compliance requires increased security investments and mandated security improvements, escalating costs.

What Is a SIEM?

The SIEM acronym stands for Security Information and Event Management System. It is a system that integrates multiple cybersecurity disciplines such as file integrity monitoring, intrusion detection systems, user activity, data breach detection, and Syslog aggregation.

The SIEM consumes log server data and provides log analysis to establish an audit trail history. In addition, a proper SIEM has alerting configured to help information security professionals find the operating system and user account compromises that may lead to credit card and card data compromise.

An organization’s IT and security infrastructure, including host systems, networks, firewalls, and antivirus security devices, are all sources of event data that a SIEM gathers and aggregates. The program allows security teams to learn more about attackers’ Tactics, Techniques, and Procedures (TTPs), using threat rules generated from knowledge of known Indications Of Compromise (IOCs) and prior TTPs.

Since SIEMs are crucial to generating audit trails for cybersecurity analysis and risk management, and audit trails are a requirement of PCI DSS compliance, a company can’t achieve and maintain its PCI compliance without using some SIEM system.

What are the SIEM PCI Compliance Requirements?

As we mentioned earlier, PCI DSS has six broad goals. Within those six overall goals are 12 more specific requirements.

Goal 1: Creating and keeping a secure network

Requirements:

Upkeep of firewall configuration
Verify that all system passwords are distinct and original

Goal 2: Safeguard cardholder data

Requirements:

Defend stored cardholder information
Transmit cardholder information across public networks securely

Goal 3: Keep a vulnerability management program going

Requirements:

Use and update antivirus software.
Create secure systems and apps

Goal 4: Implement adequate access control procedures

Requirements:

Limit cardholder information to those who need to know it.
Give each employee with access to the company’s computers a unique ID
Limit physical access to cardholder information

Goal 5: Monitor and test networks

Requirements:

Keep an eye on and record access to cardholder information and appropriate network resources
Test security procedures and systems regularly

Goal 6: Maintain an information security policy

Requirements:

Establish an information security policy and implement it within the company.

An organization should take the following three actions to comply with the PCI DSS:

Identification of cardholder data, inventorying technology, business procedures, and vulnerability analysis are all parts of the assessment.
Fix the vulnerabilities as soon as you find them, and avoid storing unneeded cardholder data.
Report, record, and deliver compliance and remediation validation reports to banks and card brands.

Automate PCI Compliance Effortlessly with RiskOptics ROAR

Regardless of your compliance issues, it helps you incorporate data security into your operations. Our state-of-the-art governance, risk, and compliance management system provides the most accurate PCI assessment tool. ROAR continuously scans your networks and methods to assess where you stand concerning PCI DSS compliance requirements and where you (and your vendors) fall short.

Your business can use ROAR compliance management, risk management, and workflow management features as a single solution. ROAR interfaces to a variety of tools with ease, moving data for you and associating controls with all of your compliance requirements, including the Payment Card Industry (PCI), Health Insurance Portability and Accountability Act (HIPAA), Security Operations Center (SOC), and others.

Additionally, it performs internal audits with a few clicks as frequently as you wish while looking at the controls surrounding your Cardholder Data Environment (CDE).

Schedule a demo to learn how RiskOptics can help you automate, simplify, and manage your compliance needs.

What is PCI Compliance Level 2?

Libby Bevin · November 6, 2023 ·

The Payment Card Industry Data Security Standard (PCI DSS) Level 2 merchants process between 1 and 6 million Visa, Mastercard, and Discover transactions yearly, 50,000 to 2 million American Express sales, and fewer than 1 million JCB International credit card transactions.

Service providers–entities that process credit card payments for merchants and their financial institutions (also known as “acquiring banks”) or that handle card and cardholder data in some other capacity, such as data destruction–qualify as PCI Compliance Level 2 if they process, store, or transmit fewer than 300,000 total card transactions annually.

Suppose your enterprise qualifies as merchant Level 2 or service provider Level 2. In that case, it won’t need a yearly onsite audit by a Qualified Security Assessor or a resulting Report on Compliance to demonstrate PCI DSS compliance. Only level 1 entities need the audit.

Instead, merchants in levels 2, 3, and 4 may submit a completed Self-Assessment Questionnaire to the PCI Security Standards Council (PCI SSC) and perform a few other tasks before making an Attestation of Compliance. However, with as many as 281 requirements to address and other required tasks, becoming PCI compliant can take Level 2 entities an entire year or more.

What is PCI DSS?

The payment card industry—particularly credit card brands Visa, Mastercard, American Express, Discover, and JCB—leads the Security Standards Council. It developed the PCI DSS framework in 2004 to ensure the security of credit card data and cardholder data, in particular, e-commerce transactions.

Recognizing that different organizations have different security risks, however, the council established four merchant levels and two service provider levels. Level 1 is the most stringent for entities processing 6 million or more credit card transactions per year (as well as those that have suffered a data breach) and service providers handling more than 300,000 transactions annually.

What is PCI DSS Level 2?

PCI DSS compliance is vital for businesses entrusted with cardholder data, ensuring the highest security standards are upheld. PCI DSS Level 2, an integral classification within this framework, is particularly relevant for merchants and service providers managing 1 to 6 million Visa transactions annually. To maintain the trust of your customers and safeguard sensitive payment card data, a thorough understanding of the specific PCI DSS requirements and security parameters associated with Level 2 is paramount.

PCI DSS Level 2 extends the overarching PCI DSS framework, incorporating essential security principles while introducing tailored criteria and best practices for mid-sized organizations.

With a strong focus on security, Level 2 aligns with fundamental PCI DSS requirements, including stringent authentication, penetration testing, and the implementation of anti-virus software. The compliance process is a collaborative effort involving Qualified Security Assessors (QSAs) and service providers, necessitating robust risk assessments and secure network configurations.

PCI DSS 2.0 brings new requirements to bolster data protection in e-commerce, point-of-sale systems, and payment applications, emphasizing the importance of adhering to Payment Application Data Security Standard (PA-DSS) and collaborating with Approved Scanning Vendors (ASVs) to identify vulnerabilities.

Who needs to comply with PCI DSS Level 2?

Merchant Level 2 generally applies to merchants processing, storing, or transmitting 1 million or more transactions (up to 6 million) per year. That’s the PCI DSS standard. But the major credit cards also have their designated merchant levels, so your organization’s designation depends partly on which cards it accepts.

Filling out and submitting a Self-Assessment Questionnaire—a lengthy process with as many as 281 requirements to address—is one of several tasks those in PCI compliance Level 2 must complete before completing their Attestation of Compliance.

The PCI DSS compliance criteria and requirements for merchant and service provider Level 2 are:

Merchants

Criteria:

Process 1 million to 6 million Mastercard, Discover, or Visa transactions per year
Process 50,000 to 2.5 million American Express transactions annually
Process fewer than 1 million JCB transactions annually

Validation Requirements:

Annual Self-Assessment Questionnaire
Quarterly network scan by PCI SSC-Approved Scan Vendor
Attestation of Compliance Form

Service providers

Criteria:

Process, store, or transmit fewer than 300,000 credit card transactions per year

Validation requirements:

Annual Self-Assessment Questionnaire
Quarterly network scan by an Approved Scan Vendor
Penetration test
Internal scan
Attestation of Compliance Form

Service providers that qualify as Level 2 may be asked by partners, clients, or other business partners to validate their PCI DSS compliance with an onsite audit by a Qualified Security Assessor or Internal Security Assessor and meet other, more stringent, Level 1 criteria. Also, they may opt to validate as a Level 1 provider to be included on Visa’s Global Registry of Approved Service Providers.

What are the benefits of PCI DSS Level 2?

PCI DSS Level 2 offers a range of benefits beyond just compliance, enhancing your overall cybersecurity posture. Here’s how Level 2 can protect your Cardholder Data Environment (CDE) and bolster your cyber defenses:

Robust Cybersecurity: Level 2 compliance mandates strong access control measures, default security parameters, and integration of the latest cybersecurity methodologies. This ensures a robust defense against threats, including malware and potential vulnerabilities.
Enhanced Network Security: Level 2 requires the implementation of firewalls, especially in the CDE. This secures your system components and prevents unauthorized access, safeguarding sensitive data from breaches.
Lifecycle Integrations: Compliance encourages the incorporation of security throughout the lifecycle of your processes and systems. This proactive approach helps identify and address security risks early, ensuring data protection at every point.
Keeping Up with the Latest Standards: Level 2 aligns with new PCI DSS versions such as PCI DSS v4.0, ensuring your compliance stays up-to-date with evolving industry requirements and emerging threats.
Robust Access Control: Maintaining Level 2 compliance necessitates strong access control measures and a defined information security policy. This guarantees that only authorized personnel can access cardholder data and other sensitive information.
Protection against Data Breaches: By following Level 2 requirements, your organization is better prepared to prevent data breaches and the unauthorized transmission of cardholder data. This safeguards your reputation and financial stability.
Compliance Integration: Being Level 2 PCI DSS compliant enhances your integration capabilities, enabling secure connections with stakeholders and systems while addressing Frequently Asked Questions (FAQs) regarding cardholder data security.
Efficient Data Retention: Level 2 compliance supports efficient data retention processes, which ensures the appropriate handling of data and contributes to maintaining a secure environment.
Strong Relationships with Stakeholders: Compliance strengthens your relationships with stakeholders, including payment processors. Adhering to Level 2 requirements demonstrates your commitment to protecting cardholder data and complying with industry standards.

ZenGRC Offers PCI Compliance Solutions

Step away from the spreadsheet chaos and welcome a new era of streamlined compliance with RiskOptics ZenGRC. Achieving and maintaining PCI compliance has never been easier or more cost-effective. Our quality software simplifies the process, offering precise requirements and intuitive tools for efficient documentation management. Pre-loaded templates guide you through every step, reducing your team’s workload.

This not only simplifies the compliance journey but also ensures you’re ready to manage the whole lifecycle of your essential cybersecurity risk management frameworks. With ZenGRC, real-time threat identification and preemptive control measures are at your fingertips, helping you tackle potential issues before they become real problems.

Schedule a demo today and discover how ZenGRC can transform your compliance efforts, making them efficient, accessible, and cost-efficient.

What is PCI Compliance Level 3?

Libby Bevin · November 6, 2023 ·

The Payment Card Industry Data Security Standard’s (PCI DSS) compliance Level 3 applies to mid-size merchants that, generally speaking, process between 20,000 and 1 million credit card transactions per year.

As is the case with all the PCI compliance levels, however, the exact number of transactions qualifying a merchant for Level 3 depends mainly on which credit cards that merchant accepts. Also, for Level 3, the number of e-commerce transactions versus in-store transactions matters.

What is PCI DSS?

The PCI Security Standards Council (PCI SSC), representing financial institutions, merchants, processor companies, software developers, and point-of-sale vendors, developed PCI DSS in 2004 to safeguard credit card and cardholder data against breach and other unauthorized access.

To process, store, or transmit credit card data, merchants and payment or internet service providers must be PCI compliant. Otherwise, they face strict penalties, including fines and possible loss of credit card privileges.

What is the difference between PCI Level 2 and Level 3?

The PCI Data Security Standard has different PCI DSS compliance levels that merchants and service providers must adhere to, depending on their transaction volume. PCI Level 2 has more stringent security requirements than Level 3.

The critical differences between PCI Level 2 and Level 3 include:

Level 2 requires quarterly network scans by an Approved Scanning Vendor (ASV), while Level 3 only requires annual scans.
Level 2 requires annual penetration testing, but this is not a requirement for Level 3.
Level 2 merchants must use 2-factor authentication for remote access to the cardholder data environment, but Level 3 does not have this exact requirement.
Level 2 has required procedures for personnel and processes like background checks, while these are recommended but optional for Level 3.

Overall, PCI Level 2 compliance has more advanced security requirements appropriate for higher transaction volumes. Level 3 is designed for smaller merchants handling under 20,000 Visa e-commerce transactions or 1 million Visa transactions total per year.

What are the benefits of PCI Level 3 compliance?

Achieving PCI Level 3 compliance provides several key benefits for small merchants and service providers, including:

It validates compliance with baseline PCI data security standards for protecting cardholder data and card information. This helps minimize risk and potential damage from a data breach.
Meeting requirements for third-party compliance validation. This is necessary for obtaining merchant accounts and payment processing services.
Avoiding non-compliance fines and penalties.
Maintaining a positive reputation and trust with customers for taking security seriously.
Access to resources and tools provided by the PCI Security Standards Council (PCI SSC) to assist with ongoing PCI DSS compliance.
Ongoing reminders and guidance for maintaining good security practices like strong passwords, anti-virus software, restricted access, and network protections.

PCI Level 3 compliance establishes security best practices appropriate for smaller businesses to help them safely accept credit card and debit card payments.

What is a PCI Level 3 service provider?

A PCI Level 3 service provider is a business that stores, processes, or transmits less than 300,000 Visa transactions or 1 million Visa transactions annually. They also must adhere to the PCI Data Security Standard (PCI DSS).

Examples of PCI Level 3 service providers include:

Web hosting companies
Payment gateways
IT support firms
Credentials management providers
Shopping cart providers
Other businesses supplying payment-related services to merchants

To validate compliance, PCI Level 3 service providers must complete an annual Self-Assessment Questionnaire (SAQ) and network scans. They may also undergo validation requirements from their customers. Maintaining PCI compliance is mandatory for service providers to operate within the payments industry.

Am I a PCI Level 3 Merchant?

If your organization meets any of these criteria, it qualifies as a PCI Level 3 merchant:

Processes between 20,000 and 1 million Visa e-commerce transactions annually
Processes 20,000 Mastercard e-commerce transactions annually but less than or equal to 1 million total Mastercard transactions annually
Processes between 20,000 and 1 million Discover “card-not-present” (e-commerce) transactions annually
Processes fewer than 50,000 American Express transactions annually

Note that card provider JCB has no Level 3. All merchants processing fewer than 1 million JCB transactions yearly qualify as Level 2 merchants.

What is required for Level 3 PCI compliance?

There are specific PCI compliance requirements merchants must meet to achieve PCI Level 3 validation. This level applies to merchants processing 1-6 million total credit card transactions annually across all card brands like Visa, Mastercard, American Express, and Discover.

Key PCI Level 3 compliance requirements include:

Completing an annual Self-Assessment Questionnaire (SAQ) to evaluate compliance with PCI data security standards. SAQ D is commonly used for merchants handling credit card data in their systems.
Passing quarterly network scans by an Approved Scanning Vendor (ASV) to check for vulnerabilities.
Using and maintaining a firewall to protect the cardholder data environment.
Preventing storage of sensitive payment card data like magnetic stripe information, PINs, or CVV codes.
Securing systems and protecting cardholder information according to defined PCI information security standards.
Working with an acquiring bank or Qualified Security Assessor (QSA) to validate compliance, if applicable.
Submitting an annual Attestation of Compliance (AOC) form to the payment brands.
Completing all applicable PCI DSS requirements for Level 3 merchants and service providers.

The PCI compliance process aims to uphold data security best practices for organizations handling credit, debit, and prepaid card transactions. Achieving and maintaining Level 3 compliance helps minimize risk and safeguard sensitive cardholder information.

How Does a Level 3 Merchant Achieve PCI DSS Compliance?

Unlike Level 1 merchants, Level 3 merchants do not require a yearly onsite audit by a Qualified Security Assessor or Internal Security Assessor or the resulting Record of Compliance (ROC) to establish itself as PCI DSS compliant.

The validation requirements for a Level 3 merchant are the same as those for Level 2 merchants:

Annual Self-Assessment Questionnaire
Quarterly network scan by an Approved Scan Vendor (ASV)
Attestation of Compliance form

Although Level 3 merchants are not required to commission an on-site audit or obtain an ROC, some may choose to do so to boost their business profile or ensure that their cardholder data environment is completely secure.

Payment and internet service providers for merchants and financial institutions also must validate their PCI DSS compliance, but there needs to be compliance Level 3 for service providers. Instead, those that process fewer than 300,000 payment card transactions per year qualify as Level 2 service providers.

Meet your compliance goals with ZenGRC

Simplify your PCI compliance process with ZenGRC’s intuitive software. Effortlessly manage assessments, controls, and documentation while reducing costs.

Our quality software simplifies the process, offering precise requirements and intuitive tools for efficient documentation management. Pre-loaded templates guide you through every step, reducing your team’s workload.

See how ZenGRC transforms compliance. Request a demo today.