FTC Safeguards Rule

Definition

A federal regulation under 16 CFR Part 314 that requires non-banking financial institutions, including tax preparers and CPA firms, to implement a comprehensive information security program to protect customer financial data. The updated rule, fully enforced since June 2023, mandates specific controls such as multi-factor authentication, data encryption, written risk assessments, and designation of a qualified security officer. Non-compliance can result in FTC enforcement actions and significant penalties.