Six Features a D3P Needs to Make the Cloud 17a-4 Compliant

Six Features a D3P Needs to Make the Cloud 17a-4 Compliant

Here are six things you should look for in a D3P to help you make the cloud 17a-4 compliant.

1. Direct Cloud Connector:

The first thing firms need in a cloud D3P provider is a connector built into their software that logs directly into all popular cloud sets and archives data. Furthermore, this connector will copy data seamlessly to their system, automatically each night as opposed to using a sync tool to access the cloud. The sync tool is a problem because it adds an additional step to the cloud archiving course of action which may end up causing gaps.

Similarly, when choosing a cloud provider avoid the less popular ones such as ShareFile, SugarSync or iCloud because they are proprietary and don’t allow direct connections with cloud archiving sets. Instead use Office 365, Dropbox, Google Suite or OneDrive. However, for small firms I don’t recommend SharePoint for file storage because its too complicate. The best cloud storage combinations are Office 365 hosted email with OneDrive or the G Suite email including electronic records stored in Google personal drives or team drives.

2. Automatic Detection of New Cloud Data

Also, the D3P’s software must automatically detect new cloud data sets as they are produced. For example, as the firm adds new users in Office 365, SharePoint, or OneDrive sites, its automatically additional to the 17a-4 archive. This applies to G Suite in addition where user accounts are frequently additional including their personal or team drives. If the D3P has automatic detection, they don’t need to be notified every time new employees are additional to the cloud.

3. Electronic Records Retention

Once the provider has the cloud data transferred to their system, it must be retained properly as per 17a-4. Now, here is where it gets dicey because if you’ve truly read the rule, you’ll find an overly complicated laundry list of retention stipulations. For example, the rule states that exception reports must be kept at the minimum 18 months, order tickets 3 years, records relating to customer accounts (first two years in an easily easy to reach place); for 6 years or default 6-year retention period for those FINRA books and records that don’t otherwise have a stated retention period.

My advice: Ignore the rule here and simply ensure the D3P applies a 7-year blanket retention rule to ALL data relating to the business. With this policy you’re done separating different data types then trying to apply a rare retention policy to each set, which is impossible to continue, especially for a small firm without an IT dept.

4. Downloading Data:

At the end of the day, the reason you hire a D3P at all is to access archived electronic records or emails when needed. Aside from disaster recovery, the main reason you need a D3P is during the electronic records request when FINRA asks for a sample data set that can go back seven years.

First, its important the D3P has a obtain Web portal to access the 17a-4 data archive. What’s meaningful here is data must be downloadable in a format regulators can read, especially when they are breathing down your neck during the audit. Here are the guidelines: emails must be downloadable in pst format, office docs in their native format, and customer data bases should be exported in file formats that can be accessed such a csv or text. Finally, these electronic record downloads from the 17a-4 archive must be copied immediately to a DVD so the regulator can take it back to their office for review.

Secondly, the D3P must retain cloud data for users that have been removed and keep them in an archive state so they can be retrieved. This includes Office 365 mailboxes or G suite users that have been removed and OneDrive sites or Dropbox accounts that get deleted. Keeping electronic records from users that have been removed from the cloud will also help with compliance since old employee data is often requested during audits.

5. Security:

Of course, security is something firms need to worry about every time they make a change in their technology, and the compliance officer will surely get called in if data is compromised. But, security breaches rarely occur on the D3P’s end. This is because they great number their systems in obtain data centres that are locked down, protected by firewalls, and observed closely. Instead, most hackers set afloat their attacks from the end user’s PC. What this method is compliance officers that are concerned with protecting electronic records to meet 17a-4 need to understand that hackers will try to adventure systems from inside the office. consequently, the best defence against security threats is strong passwords, understanding how to limit administrator rights to cloud systems, locking or logging off computers that have access to the cloud and keeping virus programs up to date to prevent people from downloading malicious malware that will hack into cloud systems.

6. Pricing:

Finally, when choosing a D3P to archive your cloud data, its important their price structure is based on raw data, not per user license. You want to find one that uses raw data only pricing because it will be cheaper to archive cloud data backup sets since products like Dropbox, G Suite and Office 365 are based on individual user accounts that can increase exponentially as the firm grows but contain little data. Having pricing based on raw data amounts will average out the cost across all cloud users no matter how many you add, consequently the price will only increase as more data is additional. consequently, giving your firm more flexibility to control data archiving costs as you grow.


Since cloud providers are not 17a-4 compliant as a compliance officer for a FINRA firm you need to outsource to a designated third party (D3P) that can make the cloud compliant before you begin storing electronic records and emails there. There are six things you need to look for in a D3P that will ensure no gaps appear in the data archiving course of action, that electronic records can be accessed during an audit, and costs are kept low as possible.

About AdvisorVault:

AdvisorVault is the only D3P that has designed their software to help small FINRA firms archive cloud data to meet 17a-4 – focusing on solving this rare problem, our consolidated solution gives firms one vendor to help them satisfy today’s demands surrounding data archiving and supervision. We have produced a centralized archiving option that captures data and emails no matter where they are stored – in-house or in the cloud: total peace of mind – out of the box.

AdvisorVault Contact:

[email protected]

Direct: 416-985-0310

Toll-free: 1-866-732-1407 ex 1

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