Vestlane is SOC 2 Certified: The Gold Standard in Data Security

It’s incredible how far cloudification has come, to the point where almost every service once conceived in the physical world has been reimagined in the virtual cloud.

The transformation in financial and investor services is perhaps the most exciting of all. Entire investment portfolios, once managed with spreadsheets and in-person meetings, now live on secure cloud platforms where investors can fundraise digitally, monitor performance, execute trades, and automate and manage risk from anywhere in the world with a smartphone.

When you think about it, cloud-based SaaS solutions and third-party service providers are now an essential cog of modern business and everyday life. And this brings us to the topic we want to discuss SOC 2 and Vestlane’s significant milestone of being designated as a SOC 2 secure enterprise.

SOC 2 (System and Organization Controls 2) has established itself as the benchmark for cybersecurity and data protection. We’re proud to say that Vestlane stacks up against the best when it comes to this world renowned and coveted security compliance standard.

Developed in response to growing concerns around customer data privacy, the SOC 2 audit provides a rigorous attestation of how service organizations manage internal controls, protect customer information, and uphold the Trust Services Criteria.

As a compliance checklist, it includes expectations on security, availability, processing integrity, confidentiality, and privacy. Rooted in the standards created by the American Institute of Certified Public Accountants (AICPA), SOC 2 has evolved into a foundational audit, evaluating organization controls that reflect a company’s dedication to cybersecurity and operational integrity.

For any service organization today, a SOC 2 Type I or Type II report not only examines technical measures but also outlines a strong commitment to transparency and trustworthiness. If you read on, you’ll learn all about SOC 2's history, explore its Trust Services Criteria, and we’ll explain why this certification has become indispensable for businesses handling sensitive data.

What is SOC 2?

SOC 2 is a compliance framework put together by the American Institute of Certified Public Accountants (AICPA). It sets the standard for managing customer data based on five Trust Services Criteria or principles: security, availability, processing integrity, confidentiality, and privacy.

Unlike other cybersecurity quality benchmarks, SOC 2 is specifically designed for technology and cloud-based businesses that store and process sensitive information, such as SaaS providers. Its goal is to ensure that service providers have measures to protect client data from unauthorized access, misuse, or potential vulnerabilities.

Many SaaS companies want SOC 2 designation because it provides proof of their commitment to securing customer data and maintaining trust. A key feature of SOC 2 is its flexibility, allowing tech organizations to adapt its criteria to their specific operations. But the end goal remains the same: to demonstrate that a business takes its data security responsibilities seriously.

The History of SOC2

SOC 2 has its origins in the development of financial auditing guidelines in the 1970s. In 1973, the American Institute of Certified Public Accountants codified standards for auditing with the release of the long titled document, Codification of Auditing Standards and Procedures; Statement on Auditing Standard, 100.

It mostly focused on establishing the responsibilities of auditors, explaining that while management is responsible for maintaining accurate financial records and an effective system of internal control, the auditor's role was to independently express an opinion on the fairness of the financial statements.

But how did the American Institute of Certified Public Accountants pivot from developing financial auditing codes to establishing frameworks that now signal data security expertise for some of the world’s largest tech companies?

Well the journey of the AICPA reflects the changing nature of business and technology over time. As businesses transitioned from traditional on-premise infrastructure to cloud services in the early 2000s, the need for a standardized set of controls became pretty evident. In response to the rise of cyber threats, data breaches, and privacy concerns, the AICPA introduced SOC 2 in 2011 as a framework for service organizations handling sensitive data.

Since then, SOC 2 has become a totem in data protection efforts across industries. What makes SOC 2 particularly relevant today is its continual evolution. The framework adapts to new risks and technology developments, making it one of the most reliable indicators of an organization's commitment to security. Over time, SOC 2 has matured into a rigorous audit process that doesn’t just cover security protocols but also focuses on an organization’s culture of risk management and defense.

Completing a SOC 2 Audit

Achieving SOC 2 compliance involves undergoing an in-depth audit by an independent third-party firm or vendor. In the US a SOC 2 audit is completed by an CPA (Certified Public Accountant). There are five different types of SOC reports:

• SOC 1 Report: This is all about the internal controls over financial reporting. It is used by organizations that provide services impacting their clients' financial statements, ensuring that controls relevant to financial data are properly managed. For example, a healthcare billing company that manages medical billing, insurance claims processing, and patient payment collections for healthcare providers would undergo a SOC 1 audit.
  
  
• SOC 2 Report: Primarily focuses on information security and the Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy. It is most common among technology and cloud-based service providers.
  
  
• SOC 2 Type I: Assesses the design of an organization's controls at a specific point in time.
  
  

• SOC 2 Type II: Evaluates the operating effectiveness of those controls over a period of time. This authentication is generally carried out over six months to a year.
  
  
• SOC 3 Report: Similar to SOC 2 but intended for a general audience. It provides a high-level summary of an organization's security posture without going into the detailed, sensitive information found in a SOC 2 report. SOC 3 reports are quite often used for marketing purposes.

An audit process typically involves:

• Scoping and Readiness Assessment: This is where you define what will be covered in the audit. The focus is on identifying key systems and processes that handle sensitive data or personally identifiable information and ensuring they comply with regulatory and information security standards. Many organizations carry out a pre-audit readiness assessment to ensure all security controls, such as access controls, are in place before the official audit begins.
  
  
• Gap Analysis: After the readiness assessment, organizations often perform a gap analysis to detect areas of weakness or non-compliance with security controls. Any deficiencies found in information security practices or access controls should then be addressed to ensure a smooth audit process and meet the criteria laid out by frameworks like SOC 2 and ISO 27001.
  
  
• Testing and Evidence Gathering: During the audit, the independent auditor will test your security controls and request evidence to demonstrate compliance with the Trust Services Criteria. This involves reviewing policies, interviewing key personnel, and conducting technical tests to ensure your security posture aligns with industry standards for information security. Remember, for SOC 2, the trust principles revolves around security, availability, processing integrity, confidentiality, and privacy.
  
  
• Audit Report: Once completed, the SOC report will detail whether your organization’s security controls and practices meet the SOC 2 criteria. A successful audit, particularly for a SOC 2 Type II, provides evidence that your organization is committed to data security, regulatory compliance, and operational integrity. This report can be shared with business partners and stakeholders to build trust.

Is SOC 2 Compliance Related to GDPR?

SOC 2 and GDPR (General Data Protection Regulation) are similar in that they are both considered ways in which data security and privacy standards can be measured. However, there are some major differences.

First of all, GDPR is a European Union regulation that governs how organizations must handle personal data.On the other hand, SOC 2 certification is a voluntary mechanism through which companies can prove their security efficacy.

Also, SOC 2 can be applied to a number of different types of data.But GDPR compliance requirements have a narrower focus, concentrating on personal data (i.e., any information relating to an identifiable individual). Its primary concern is making sure that organizations handle personal data in a way that respects privacy rights. GDPR also grants individuals rights like the right to be forgotten and data portability.

With Vestlane, fund managers can securely manage fund operations through our streamlined registration and document submission processes. Our infrastructure complies with data protection laws and holds ISO 27001, GDPR, and SOC certifications.

How Vestlane Gained SOC 2 Status

As an investor onboarding platform for private funds, security and compliance are central to everything we do at Vestlane. To ensure we meet the highest standards in these areas, we engaged a licensed CPA firm, Prescient Assurance, to audit our security practices, policies, procedures, and operations in accordance with SOC 2 standards.

The subsequent successful SOC 2 audit report demonstrated that Vestlane handles sensitive data with the utmost security and compliance. "Customer data is managed, processed, and stored in accordance with the relevant data protection and other regulations,” the SOC 2 report concluded.

“All employees and contractors of the company are obligated to respect and, in all cases, to protect customer data. Additionally, Vestlane has policies and procedures in place to proper and secure handling of customer data.”

If you would like to hear more about our platform and data security standards, contact our team here.