Navigating Data Security and Governance in Australia’s Finance Sector

I. Introduction

The Australian finance sector operates within a complex regulatory landscape, requiring financial institutions to comply with stringent data security, data governance, and data privacy laws. With the increasing reliance on digital services and cloud environments, financial institutions must ensure compliance while maintaining data security and operational efficiency. This article explores key regulations affecting the sector, outlines critical compliance obligations, and demonstrates how Securiti’s solutions can help organizations meet these challenges.

II. Regulatory Overview

1. Privacy Act 1988 and the Australian Privacy Principles (APPs)

The Privacy Act 1988 (Privacy Act) governs the handling of personal information by Australian organizations, including financial institutions. Enforced by the Office of the Australian Information Commissioner (OAIC), the Privacy Act establishes the Australian Privacy Principles (APPs), which dictate how personal information must be collected, used, disclosed, and secured. Key obligations under this law include ensuring transparency in data practices (APP 1) and implementing security measures to protect personal data (APP 11).

2. Credit Reporting Code 2014 (CR Code)

The Credit Reporting Code 2014 (CR Code) is a code under the Privacy Act that governs the handling of credit information by credit reporting bodies (CRBs) and credit providers (CPs) in Australia. It supplements Part IIIA of the Privacy Act, which regulates the collection, use, and disclosure of credit-related personal information, ensuring transparency and accountability in credit reporting practices.

The CR Code applies to:

• Credit Reporting Bodies (CRBs): Businesses that collect, hold, use, or disclose personal information to assess an individual's creditworthiness, whether for profit or not.
• Credit Providers (CPs): Banks, lenders, retailers issuing credit cards, leasing businesses, and any entity providing credit under regulated terms.
  • Agents, Securitisation Entities, and Acquirers: Entities that process credit applications, manage securitised credit, or acquire credit provider rights are also treated as CPs
• Other entities handling credit information, including utilities and telecommunication providers offering postpaid services.

3. Consumer Data Right (CDR) for Open Banking

The Consumer Data Right (CDR), introduced in 2019, gives consumers greater control over their financial data by allowing them to share it with accredited third parties securely. Enforced by the Australian Competition and Consumer Commission (ACCC), the CDR Rules establish stringent data security and governance requirements for financial institutions participating in Open Banking. These rules mandate clear data access controls, data retention policies, and compliance with consumer consent requirements.

Under the designated instrument for the banking sector, CDR data includes information about the consumer (such as contact details), information about their use of financial products (such as transaction data), and details of the products themselves (such as terms and conditions). This means CDR data extends beyond just credit data and encompasses a broader range of consumer and product-related financial information.

4. APRA Prudential Standard CPS 234 – Information Security

The Australian Prudential Regulation Authority (APRA) enforces CPS 234 mandates that financial institutions maintain information security capabilities. Introduced in 2019, CPS 234 requires financial institutions to implement risk-based security controls, regularly assess security threats, and ensure third-party service providers maintain appropriate security measures. APRA enforces additional prudential standards that are relevant to financial institutions. These standards are examined in their respective contexts throughout the paper.

5. Security of Critical Infrastructure Act (SOCI Act)

The Security of Critical Infrastructure Act was introduced to protect Australia’s critical infrastructure sectors, including financial services, from cyber threats and data breaches. Enforced by the Department of Home Affairs, the SOCI Act imposes obligations on financial institutions to implement risk management programs, report cyber incidents, and ensure the security of critical data assets.

6. Australian Corporations Act 2001 – Section 286

The Australian Corporations Act 2001, enforced by the Australian Securities and Investments Commission (ASIC), mandates that financial institutions and corporations retain financial records for at least seven years. This requirement ensures that businesses maintain accurate and verifiable records for financial reporting, audits, and regulatory oversight. Organizations failing to comply with record-keeping obligations may face penalties, legal action, or operational risks.

7. Australian Anti-Money Laundering Act (AML Act)

The Anti-Money Laundering Act (AML Act) was enacted in 2006 to prevent financial crimes such as money laundering and terrorist financing. Enforced by the Australian Transaction Reports and Analysis Centre (AUSTRAC), the law requires financial institutions to implement customer due diligence, monitor transactions for suspicious activity, and retain transaction and customer identification records for at least seven years.

III. Key Compliance Areas and Solutions

1. Data Security

Within data security, CDR Division 1.2 requires financial institutions to restrict access to personal financial data based on purpose and consent. This obligation aligns with APP 11, which mandates protection against unauthorized access, misuse, and loss. Additionally, the SOCI Act requires financial institutions handling critical data assets to implement measures ensuring cyber resilience and reporting security incidents. This is further reflected in CDR Division 2.2 and Division 7, which extend data safeguarding responsibilities, requiring data holders and ADRs to:

• Implement appropriate security controls to protect CDR data from misuse, loss, or unauthorized access.
• Use secure transmission methods when sharing data between accredited parties.
• Ensure ongoing monitoring and auditing of data access, modifications, and transfers.
• Maintain compliance with authentication and authorization standards, such as OAuth 2.0, to verify access permissions.

Additionally, CPS 234 requires continuous security assessment, including penetration testing, incident response preparedness, and real-time threat monitoring.

To ensure compliance with these obligations, financial institutions should:

• Implement Role-Based Access Control (RBAC) and Identity and Access Management (IAM) systems to ensure only authorized personnel access sensitive data.
• Monitor and log all data access activities to detect anomalies and prevent unauthorized access.
• Establish a zero-trust framework, limiting access on a need-to-know basis and continuously verifying users and devices.
• Conduct regular security audits and penetration tests to identify vulnerabilities and mitigate risks.
• Develop and test incident response plans to ensure quick action in case of data breaches.
• Implement automated threat detection and response mechanisms to prevent cyber incidents.
• Establish data minimization and security-by-design principles, ensuring that security is embedded into systems from the outset.
• Utilize encryption standards like AES-256 for data at rest and TLS 1.2/1.3 for data in transit, protecting sensitive financial data.

How Can Securiti Help? Securiti’s Data Security Posture Management (DSPM) solution ensures compliance with CDR Division 7, APP 11, and CPS 234 by automating access controls, encryption enforcement, and real-time monitoring. Organizations can leverage Securiti’s platform for:

• Continuous risk assessment and anomaly detection.
• Automated policy enforcement to secure sensitive financial data.
• Real-time monitoring and incident response automation to proactively detect and respond to threats.
• Automated penetration testing insights and real-time access control enforcement.
• Comprehensive encryption management, ensuring data security across its lifecycle.

1.1 Data Mapping and Categorization

Under Australia’s regulatory framework, financial institutions must map and categorize consumer data to facilitate secure and compliant data management. The SOCI Act imposes obligations on financial entities designated as critical infrastructure to maintain visibility over data assets and implement risk management programs. Additionally, APRA’s CPS 234 mandates that financial institutions classify information assets based on risk exposure to ensure adequate security controls. The Privacy Act requires organizations to manage personal data responsibly, ensuring it is accurately categorized to uphold transparency and security.

Other regulatory obligations include:

• Notifiable Data Breaches (NDB) Scheme: Requires organizations to assess the sensitivity of compromised data when determining breach notification requirements.
• AML Act: Mandates financial institutions to maintain transaction records and credit records and categorize customer data to prevent financial crimes and monitor suspicious activity.
• Australian Corporations Act 2001 – Section 286: Requires financial institutions to maintain proper financial records, ensuring accurate classification and retention of transactional data for auditing and compliance.

To comply with these obligations, your organization should:

• Conduct comprehensive data discovery to identify and classify stored personal, financial, and transactional information across structured and unstructured environments.
• Implement data categorization frameworks based on sensitivity, regulatory requirements, and risk exposure, ensuring continuous compliance with CPS 234 and Privacy Act APP 11.
• Maintain an updated data inventory to track data flows, monitor anomalies, and detect unauthorized access, facilitating SOCI Act compliance and AML/CTF monitoring.

Traditional data governance models struggle with static controls and manual oversight, making compliance reactive rather than proactive. Unlike traditional governance models that rely on static controls, DSPM proactively answers key compliance questions. Securiti’s AI-driven DSPM solutions empower financial institutions by:

1. Automating data discovery and classification, ensuring financial and personal data is mapped accurately to meet SOCI Act, CPS 234, and Privacy Act requirements.
2. Enforcing real-time risk-based access controls, mitigating unauthorized use and aligning with AML/CTF Act and APP 6 (data access restrictions).
3. Providing continuous monitoring and automated policy enforcement, ensuring that data remains protected, risks are identified early, and compliance is sustained across evolving regulatory landscapes.

By leveraging a DSPM approach, financial institutions can elevate compliance beyond static governance models, actively reducing risk exposure while meeting Australia’s complex financial and data security laws.

1.2 Data Retention and Deletion

Financial institutions must adhere to strict data retention and deletion requirements under various Australian regulatory frameworks. APP 11.3 mandates that organizations delete or de-identify personal data once it is no longer necessary for its original purpose. APRA Prudential Standard CPS 234 requires financial institutions to establish structured data lifecycle management policies, including secure disposal measures, to mitigate cybersecurity risks. The SOCI Act further enforces stringent data protection and disposal measures for entities managing critical data assets.

Beyond these privacy and security requirements, financial institutions are also subject to:

• AML Act: Requires financial institutions to retain customer identification and transaction records for at least seven years to support anti-money laundering investigations.
• Australian Corporations Act 2001 – Section 286: Requires financial institutions to retain financial records for seven years to ensure compliance with corporate governance and auditing obligations.
• CR Code: Credit information must be retained only for specified periods to ensure fairness and accuracy in credit reporting. Repayment history information can be retained for two years, while defaults and credit inquiries must not be kept for more than five years. Serious credit infringements remain on record for seven years due to their impact on credit risk assessment. Additionally, CRBs and CPs are obligated to delete or correct any credit information that is inaccurate, outdated, or misleading, ensuring compliance with data accuracy requirements.

To meet these retention and deletion obligations, financial institutions should:

• Implement automated retention and deletion policies aligned with regulatory requirements.
• Conduct regular reviews to remove outdated, unnecessary, or redundant data.
• Utilize secure deletion techniques, such as cryptographic erasure, to prevent unauthorized data recovery.
• Establish data minimization policies to ensure data is retained only for as long as necessary for legal and operational purposes.

Securiti’s Sensitive Data Intelligence module uses AI to identify and remove unnecessary data, reducing storage costs and ensuring compliance with APP 11.3, APRA CPS 234, AML/CTF Act, and the Australian Corporations Act. 

1.3 Data Hosting and Localization

The CDR in Division 2.2 imposes data hosting restrictions, requiring that CDR data be stored in Australia unless stringent security conditions are met. Additionally, the SOCI Act mandates securing critical financial data assets and reporting security incidents to authorities. Financial institutions must also comply with APRA CPS 231 (Outsourcing), which requires that outsourced data storage services meet security and risk management standards. The AML Act and Australian Corporations Act 2001 – Section 286 further impose obligations on financial institutions to maintain accurate records within the Australian jurisdiction for compliance, legal, and audit purposes.

To comply with these requirements, financial institutions should:

• Store financial and CDR data within Australia unless specific security measures and contractual safeguards are in place for overseas data transfers.
• Conduct risk assessments before transferring data outside Australia, ensuring compliance with APRA CPS 234 and AML requirements.
• Implement data sovereignty controls that ensure compliance with Australian laws and prevent unauthorized cross-border data transfers.
• Establish incident reporting protocols in line with the SOCI Act and APRA breach reporting requirements to notify regulators in case of data security breaches.
• Ensure third-party providers adhere to Australian data protection laws, including contractual safeguards for data hosting and processing.

Securiti’s data mapping controls, automated compliance monitoring, and cross-border data transfer governance solutions enable financial institutions to enforce data hosting policies and facilitate compliance with CDR, SOCI Act, and APRA prudential standards. The platform provides continuous monitoring of data residency compliance, ensuring that sensitive financial data remains secure and aligned with regulatory expectations.

2. Data Governance

Beyond technical safeguards, CDR Division 1.3 requires ADRs to establish a CDR data security governance framework, ensuring oversight and accountability. Financial institutions must:

• Maintain clear policies and procedures for handling CDR data securely.
• Conduct regular security risk assessments to identify vulnerabilities and mitigation strategies.
• Implement incident response mechanisms to address security breaches promptly.
• Establish data retention and deletion policies, ensuring compliance with CDR data minimization principles.

Under CPS 234 and the Privacy Act, organizations must also demonstrate proactive risk management through penetration testing, breach response planning, and security-by-design approaches.

To meet these governance requirements, organizations should:

• Develop and enforce a formalized data security policy, aligning with CDR Division 7 requirements.
• Conduct periodic security audits and risk assessments, ensuring vulnerabilities are identified and mitigated.
• Implement automated data retention and deletion workflows, ensuring CDR data is only retained as long as necessary.
• Establish a structured breach response plan, ensuring rapid incident containment and regulatory compliance.
• Ensure third-party compliance monitoring, verifying that data shared with accredited entities meets CDR security standards.

Your organization should operationalize CDR Division 1.3 requirements by implementing:

• Automated risk assessments and security audits to ensure ongoing compliance.
• Data retention and deletion automated tools, ensuring organizations comply with CDR’s data minimization obligations.
• Incident response orchestration, allowing financial institutions to detect, respond to, and report security incidents efficiently.

Securiti’s governance and risk management tools help organizations operationalise these modalities by automating all the above-listed obligations. 

3. Vendors and Third Parties

Financial institutions in Australia must implement third-party risk management frameworks to ensure compliance with APRA’s CPS 230 (Outsourcing) and other regulatory requirements governing outsourcing, data security, and operational resilience.

To manage vendor and third-party risks effectively, institutions should:

• Structure contracts with clear security and compliance obligations, including encryption, data residency, access controls, and real-time security monitoring.
• Ensure service providers comply with breach notification obligations under the Privacy Act 1988 and NDB Scheme including incident response timelines and reporting requirements.
• Conduct regular vendor security assessments, covering penetration testing, vulnerability assessments, and independent third-party audits.
• Mandate strict data localization for payment and regulatory data, where required under CDR Rules and CPS 230, ensuring consumer data remains within Australian jurisdictions unless appropriate safeguards exist.
• Assess concentration risks and critical dependencies, particularly when outsourcing key financial functions or relying on cloud service providers, aligning with ASIC RG 104 (Licensing) and CPS 231.
• Require comprehensive business continuity and contingency planning, ensuring vendors maintain resilience against disruptions, in compliance with CPS 230’s operational risk requirements.
• Maintain detailed audit trails of vendor interactions, enabling financial institutions to monitor compliance, enforce contractual obligations, and ensure regulatory alignment.

Securiti’s Vendor Risk Management solution automates vendor risk assessments, streamlines compliance monitoring, and enables organizations to track third-party security postures, subcontractor engagements, and regulatory adherence through real-time alerts and audits.

IV. Data Privacy Regulations in the Financial Sector

1. Privacy Principles

Under the Privacy Act and the APPs, financial institutions must adhere to fundamental privacy principles, including:

• Purpose Limitation: Personal information must be collected only for lawful and necessary purposes relevant to financial services and should not be used or disclosed beyond those purposes unless an exemption applies.
• Data Accuracy and Integrity: Institutions must ensure that the personal information they use or disclose is accurate, up-to-date, and complete.
• Data Retention and Deletion: Personal information must be retained only for as long as necessary for its intended purpose or as required by law, after which it should be securely destroyed or de-identified.

Additionally, financial institutions handling credit-related information must comply with Part IIIA of the Privacy Act and the Privacy (Credit Reporting) Code 2014 (CR Code) when collecting, using, and sharing credit information. It informs that credit reports may contain repayment history, defaults, and serious credit infringements, but credit providers cannot collect sensitive information (such as health data) unless a specific legal exception applies.

Securiti’s Data Privacy solution automates compliance with evolving global privacy regulations and principles.

2. Consent

Under the Privacy Act and CR Code, financial institutions must obtain informed and voluntary consent when collecting and processing personal and credit-related information. Organizations should:

• Collect consent at or before the time of requesting data;
• Ensure consent is explicit, freely given, informed, unambiguous, and indicated through affirmative action;
• Allow individuals to withdraw consent easily, with clear explanations of the consequences.

For direct marketing, financial institutions must comply with APP 7, which provides individuals with the right to opt out. Additionally, under the Spam Act 2003, organizations must obtain express or inferred consent before sending marketing emails, SMS, or other electronic communications.

Securiti’s Consent Module automates consent tracking and management, simplifying the management of first-party and third-party consent and enabling organizations to obtain, record, track, and manage individuals' explicit consent.

3. Privacy Policy

A financial institution’s privacy policy must comply with APP 1 and APP 5, ensuring that individuals are informed about how their personal information is collected, used, stored, and disclosed. The policy must:

• Be written in clear, simple language and be accessible free of charge;
• Outline the purpose for which data is collected and how it will be used;
• Specify retention periods and data deletion practices;
• Disclose whether data will be shared with overseas entities, including the countries involved, where practicable;
• Provide details on individual rights and how to exercise them.

As per the Privacy Act’s 2024 amendments, organizations must also disclose when automated decision-making (ADM) is used in ways that significantly affect individuals' rights or interests. This requirement has a two-year transition period, becoming mandatory on 10 December 2026.

Securiti’s Privacy Policy and Notice Management enables organizations to rapidly build and deploy privacy notices, automate updates, and easily manage hundreds of privacy and cookie policies and notices via a unified privacy dashboard.

4. Data Subject Rights

Financial institutions must provide individuals with the following rights under the Privacy Act:

• Right to Access (APP 12): Individuals can request access to their personal information.
• Right to Correction (APP 13): Individuals can request the correction of inaccurate, outdated, or misleading information.
• Right to Be Informed (APP 5): Individuals must be notified of data collection, its purpose, and any overseas disclosure.
• Right to Object to Direct Marketing (APP 7): Individuals can opt out of marketing communications at any time.
• Right to Withdraw Consent: Individuals must be able to withdraw consent easily, with clear information on the impact of withdrawal.
• Right to Anonymity and Pseudonymity (APP 2): Where lawful and practical, individuals must be allowed to engage with financial services without revealing their identity.

For credit reporting, under the CR Code, individuals also have:

• Right to Access and Correction: Individuals can request their credit report for free once every 3 months and request corrections to inaccurate data.
• Right to Dispute Information: Credit providers and CRBs must respond to disputes within 30 days and notify individuals of outcomes.
• Right to Protect Credit Information: If an individual has been or is at risk of identity theft, they can place a ban period on their credit file (initially 21 days, extendable).

Financial institutions must ensure efficient handling of data access and correction requests, as delays can lead to regulatory penalties under the Privacy Act.

Securiti’s Data Subject Rights Management solution automates handling requests like access, deletion, and correction. It streamlines request tracking, identity verification, and secure data transfer, ensuring timely compliance and reducing administrative workload.

5. Assessment

Australian financial institutions must manage operational risk, cybersecurity, and data compliance under APRA CPS 230, CPS 234, the Privacy Act, the SOCI Act, and the Digital ID Act 2024.

Under CPS 230, institutions must assess how new products, services, and technologies impact operational risk and resilience. This includes:

• Monitoring and analyzing risks with effective information systems.
• Identifying critical processes, dependencies, and third-party risks.
• Conducting scenario analysis to test resilience and strengthen controls.

Under CPS 234, institutions must perform regular security risk assessments to safeguard financial data. Those classified as critical infrastructure under the SOCI Act must further assess data risks to prevent financial disruptions.

The Privacy Act & Digital ID Act 2024 empower regulators to audit compliance with data protection, credit reporting, tax file number rules, and digital identity safeguards. The Information Commissioner can request compliance data and publish findings.

Securiti’s Assessment solution helps financial entities evaluate internal security measures, conduct privacy impact assessments, and ensure compliance with evolving regulatory obligations.

V. Artificial Intelligence in Financial Services

The increasing use of AI in financial services—such as credit assessments, fraud detection, algorithmic trading, and risk management—introduces both opportunities and regulatory challenges. Financial institutions deploying AI must align with evolving legal and ethical requirements to mitigate compliance risks. AI in financial services operates under both mandatory and voluntary regulations:

• Privacy Act & CR Code – The proposed amendment imposed stricter transparency requirements on AI-driven decision-making; this means AI used in credit scoring and automated lending decisions, etc., would be affected.
• Australian AI Ethics Principles (Voluntary) – Encourages fair, accountable, and transparent AI, particularly in loan approvals, risk profiling, and customer interactions.
• ASIC’s Responsible AI Use Guidance – Requires AI used in automated financial advice, credit decisions, and fraud detection to be explainable and fair to avoid consumer harm.
• SOCI Act (for Critical Infrastructure Entities) – AI systems handling payment processing, real-time fraud detection, and financial data analytics must meet strict security requirements.

Financial institutions using AI must implement ongoing risk assessments as a best practise to ensure compliance and prevent legal scrutiny:

• Bias & Fairness Audits – Ensure AI-driven credit scoring and loan underwriting models do not result in discriminatory lending practices.
• Explainability & Transparency Reviews – Require AI-driven trading algorithms and automated credit risk assessments to provide clear, interpretable decision-making.
• Cybersecurity & Data Protection Assessments – Protect AI-powered fraud detection systems and payment security models from data breaches and adversarial attacks.

Securiti’s Gencore AI enables institutions to govern, secure, and operationalize AI while ensuring compliance with ASIC, APRA, and Privacy Act requirements. It offers safe enterprise AI copilots to enforce financial compliance, data vectorization to process unstructured financial data, context-aware LLM firewalls to protect sensitive data, and automated compliance mapping between AI models and financial regulations.

VI. Conclusion

Australia’s financial sector is subject to stringent privacy, data security, and governance regulations, requiring institutions to implement effective compliance measures. By leveraging Securiti’s DSPM and Data Governance solutions, organizations can ensure adherence to regulatory obligations while enhancing data security and operational efficiency.