Cloud computing is the delivery of computing services, including servers, storage, databases, networking, software, and analytics, over the internet. Instead of owning and maintaining physical infrastructure, organisations access computing resources on demand from cloud service providers.

In the compliance context, cloud computing offers scalability, cost savings, and operational agility, but it also introduces new challenges around data protection, jurisdiction, and regulatory oversight. Institutions handling sensitive financial data, for example, must ensure their cloud environments meet the requirements of frameworks such as the Financial Action Task Force (FATF) and data privacy laws like the EU’s General Data Protection Regulation (GDPR).

Solutions like FacctGuard for real-time monitoring and FacctView for customer screening can be integrated into cloud infrastructures to ensure compliance processes remain consistent and secure.

Cloud Computing Definition

Cloud computing is defined as the on-demand availability of computer system resources, particularly data storage and computing power, without direct active management by the user. Service providers manage the infrastructure while customers consume services through a pay-as-you-go or subscription model.

This model enables organisations to scale resources quickly, improve redundancy, and shift capital expenditure to operational expenditure. According to the National Institute of Standards and Technology (NIST), cloud computing must include on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service.

Cloud Computing Service Models

A clear understanding of cloud computing service models is critical for compliance teams, as each model defines different boundaries of responsibility between the cloud provider and the customer. These boundaries directly influence how security, data protection, and regulatory obligations are managed. In regulated industries such as banking, payments, and insurance, selecting the right model can determine how easily an organisation meets requirements for data sovereignty, audit readiness, and real-time monitoring.

Each model, Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), offers unique advantages but also imposes distinct compliance and security responsibilities. For instance, IaaS allows greater control over system configurations but requires stronger in-house expertise to manage compliance risks, while SaaS reduces operational overhead but limits control over security mechanisms. Integrating solutions like FacctList for watchlist management or FacctGuard for transaction monitoring can help maintain compliance consistency across all models.

Compliance officers and IT leaders must evaluate each model’s risk profile, contractual obligations, and shared responsibility frameworks before adoption. This ensures that both security controls and regulatory safeguards are embedded from the outset, avoiding costly remediation or regulatory penalties later.

Infrastructure as a Service (IaaS)

IaaS provides virtualised computing resources over the internet. Customers manage operating systems, applications, and data, while the provider manages networking, storage, and hardware.

Platform as a Service (PaaS)

PaaS offers hardware and software tools over the internet, allowing developers to build, test, and deploy applications without managing the underlying infrastructure.

Software as a Service (SaaS)

SaaS delivers software applications over the internet on a subscription basis. The provider manages the infrastructure, middleware, application software, and data security.

Benefits Of Cloud Computing For Compliance

When implemented with the right safeguards, cloud computing can significantly improve an organisation’s ability to meet and maintain regulatory compliance. By leveraging cloud-based infrastructure and applications, compliance teams gain access to flexible, scalable resources that adapt to changing regulatory demands, industry risks, and transaction volumes. This agility is particularly valuable in environments where sanctions lists, regulatory reporting requirements, and fraud detection rules are constantly evolving.

Cloud platforms also provide advanced data security controls, built-in monitoring tools, and rapid deployment capabilities that reduce operational delays in compliance workflows. With the ability to integrate solutions like FacctList for watchlist management or FacctView for customer screening directly into cloud environments, organisations can maintain real-time monitoring without sacrificing performance. Additionally, cloud services enable more efficient resource allocation, allowing budgets to be focused on high-priority compliance initiatives rather than costly on-premises infrastructure.

When coupled with encryption, strict identity and access management, and continuous monitoring, cloud adoption not only supports compliance but can also strengthen resilience against emerging risks. This combination of operational efficiency and regulatory alignment makes cloud computing a strategic asset for modern compliance programs.

Scalability And Flexibility

Cloud resources can be adjusted in real-time to match changing workloads, supporting compliance functions such as real-time sanctions screening.

Cost Efficiency

Cloud eliminates the need for large upfront infrastructure investments, redirecting budgets to compliance monitoring and risk mitigation.

Enhanced Collaboration

With secure cloud platforms, teams across multiple jurisdictions can access compliance data simultaneously, improving coordination and audit readiness.

Compliance And Security Risks In Cloud Computing

While cloud computing offers scalability, cost savings, and agility, it also introduces a unique set of compliance and security challenges that organisations must address from the outset. Regulatory frameworks such as the GDPR, CCPA, and sector-specific standards place strict obligations on how sensitive data is stored, processed, and transmitted in the cloud. Failure to meet these obligations can result in significant fines, reputational harm, and operational disruption.

One of the most pressing issues is that compliance responsibilities in the cloud are often distributed between the service provider and the customer under a shared responsibility model. This can create gaps in security if roles and duties are not clearly defined. Risks also arise from storing data in multiple jurisdictions with conflicting legal requirements, relying on third-party infrastructure, and the potential for misconfigurations or human error during deployment.

A proactive approach to governance, combined with regular audits, automated policy enforcement, and vendor due diligence, is critical for maintaining compliance. As the European Union Agency for Cybersecurity (ENISA) advises, customers must fully understand their role in securing cloud workloads to avoid regulatory breaches and operational weaknesses.

Data Sovereignty And Jurisdiction

Data stored in multiple countries may be subject to different regulatory regimes, complicating compliance with local laws.

Third-Party Risk

Reliance on cloud providers increases exposure to vendor-related breaches or operational failures.

Misconfiguration And Human Error

Incorrect setup of cloud resources is a common cause of data exposure. Regular audits are essential to minimise this risk.

The European Union Agency for Cybersecurity (ENISA) warns that shared responsibility models require customers to understand their security obligations clearly.

Best Practices For Secure Cloud Computing In Compliance

Implementing cloud computing in a compliance-heavy environment requires more than simply migrating workloads. Organisations must adopt structured best practices that integrate security, governance, and monitoring into every stage of cloud deployment. This ensures that sensitive data, such as customer records or transaction histories, is protected against breaches and misuse while meeting regulatory obligations across jurisdictions.

Strong identity controls, robust encryption policies, and continuous monitoring form the foundation of a secure cloud strategy. These measures should be embedded in operational processes rather than added as afterthoughts, allowing compliance teams to detect threats early, enforce policies consistently, and maintain audit readiness in real-time.

Implement Strong Identity And Access Management

Use multi-factor authentication and role-based access controls to restrict sensitive data access.

Encrypt Data At Rest And In Transit

Encryption safeguards data even if a breach occurs. Effective key management is essential for maintaining encryption integrity.

Conduct Continuous Monitoring

Using tools like FacctShield for payment screening in cloud environments ensures suspicious activities are flagged in real-time.