If you work in compliance, you're probably already very aware of all the regulations surrounding data handling.
Companies handling sensitive data related to finance and customer information must maintain strict security standards. The Service Organisation Control (SOC) frameworks -SOC 1 and SOC 2- help ensure data security, integrity and confidentiality.
Understanding the differences between SOC 1 and SOC 2 is essential when applying the correct controls across an organisation, and background checks play a key role in meeting both standards.
Let's dive into why.
The difference between SOC 1 and SOC 2
The standards are split into two main categories:
SOC 1 focuses on internal controls over financial reporting. It’s primarily relevant for organisations that offer finance-related services, like payroll providers or loan processors.
Within these, background checks play a crucial role in ensuring that those handling financial data have a history free of malpractice, are trustworthy and qualified. Checks can include criminal records, credit history, and employment verification.
SOC 2, on the other hand, applies to broader system-level controls covering security, availability, processing integrity, confidentiality and privacy.
It's relevant for tech companies, including cloud service providers and SaaS platforms. In this context, background checks extend to all employees accessing system processes, aiming to strengthen data security across the business.
SOC 1: Prioritising financial reporting controls
The SOC 1 standard — formally known as the “Report on controls at a service organisation relevant to user entities’ internal control over financial reporting” — primarily focuses on financial reporting controls. These are particularly relevant to auditors evaluating how a service organisation handles financial operations and data integrity.
While the specific controls vary depending on the organisation. SOC 1 typically addresses areas such as:
Data backup and recovery: Ensuring all financial data is regularly backed up, easily retrievable, and safeguarded against unexpected data loss events.
Computer operations: Maintaining stable performance of IT systems that manage financial data, monitoring for system disruptions and addressing them promptly.
Data processing: Guaranteeing accurate and timely processing of financial data whilst minimising errors caused by system glitches or human oversight.
Information security: Establishing robust security measures to prevent unauthorised access and protect against potential cyber threats targeting financial data.
Environmental protections: Implementing physical safeguards, such as climate control in server rooms, to provide optimal conditions and protect equipment from damage.
SOC 2: Broader control objectives
The key difference between SOC 1 and SOC 2 lies in their focus.
While SOC 1 is centred around financial reporting, SOC 2 addresses a broader set of trust criteria, related to security, availability, processing integrity, confidentiality and system privacy.
SOC 2 compliance assesses how organisations manage:
Security: Implementing measures to protect systems from unauthorised access, whether physical break-ins or digital breaches.
Availability: Ensuring systems are up and running when needed, maintaining consistent operational availability.
Processing integrity: Making sure that all system processing is accurate, timely, thorough and authorised.
Confidentiality: Restricting access to sensitive information to only those with the proper permissions.
Privacy: This goes beyond confidentiality by protecting personal information per agreed-upon terms or legal requirements.
SOC compliance with thorough background checks
For SOC 1, rigorous background checks are critical to validate that personnel handling financial data are reliable and free from any history of fraud or misconduct.
This includes criminal record checks for financial crimes, credit checks to assess financial responsibility, and employment verification to confirm past roles and responsibilities.
Organisations in the finance sector need assurance that employees will not misuse their access to sensitive data and financial systems.
For SOC 2, since the scope covers broader system security and privacy, comprehensive background checks should extend to anyone with access to internal systems or customer data.
Checks help mitigate insider threat risks, verify identity and prevent potential data breaches by screening for any red flags in candidates' histories. As data privacy regulations like GDPR carry steep penalties for non-compliance, thorough vetting of employees becomes a legal and operational priority.
Aligning with UK regulations
When conducting checks on candidates in the UK, businesses must carefully adhere to regulations like the Rehabilitation of Offenders Act 1974. This law prohibits requiring candidates to disclose convictions after a rehabilitation period.
Organisations should consult guidance from the Ministry of Justice and only conduct legally compliant checks, balancing diligent screening and fair opportunity.
Extra care must also be taken regarding sensitive personal data to avoid unlawfully intrusive background checks and breaching privacy laws. The Data Protection Act 2018, which incorporates the principles of the General Data Protection Regulation (GDPR), outlines how personal data must be collected, processed and stored.
While SOC standards are established by the American Institute of Certified Public Accountants (AICPA), aligning with global frameworks like ISO 27001 can help UK businesses meet both international and national standards for data security.
Roles and responsibilities of SOC compliance
Before aiming for SOC compliance, organisations should do a readiness assessment to identify potential gaps and improvement areas in systems and procedures, before an official audit.
SOC 1 and SOC 2 compliance is a shared responsibility and collective effort within an organisation.
While Data Protection Officers manage data handling, the IT team ensures the technological infrastructure meets the required standards.
HR and recruitment play pivotal roles in vetting and hiring individuals with the right skills, and senior management allocates resources, sets strategies and defines the compliance agenda.
In short, cross-functional collaboration is key to meeting compliance requirements and keeping them up to date.
Ongoing monitoring and continuous compliance
Achieving SOC compliance isn’t a one-time project. It requires ongoing monitoring and continual improvement.
Background check procedures should be reviewed regularly to adapt to evolving risks, legal standards and best practices. HR teams, in collaboration with IT and legal departments, should ensure that checks remain both effective and compliant.
Training and awareness for SOC compliance
Consistent training for employees is essential to uphold compliance. HR, alongside department heads, should ensure periodic training sessions are held. This guarantees that staff, especially those in recruitment and those accessing sensitive data, are up-to-date with the current standards, procedures, and best practices, including the significance and methods of thorough background checks about SOC.
Change management and incident response
SOC 2 places a strong emphasis on change management. Any updates to systems or procedures must preserve security controls. This means thorough evaluations before implementing new software, tools or access privileges. Background checks can also play a role in these transitions, helping ensure that new users or roles are introduced securely.
In the event of a data breach or incident, quick and compliant responses are essential. Under UK law, serious breaches must be reported to the Information Commissioner’s Office (ICO) within 72 hours.
Final thoughts
Achieving SOC 1 and SOC 2 compliance is a major milestone, but maintaining it requires continuous diligence.
For businesses handling sensitive financial or customer data, such compliance frameworks are more than just checklists; they offer an opportunity to build trust, strengthen internal processes and create a culture of accountability.
By investing in strong background checks and keeping them aligned with SOC standards, organisations can confidently protect both their operations and their reputation, ensuring customer data and trust are never compromised.
To learn more about how Zinc’s automated, secure background checks can help you stay compliant with SOC regulations, book a call with our team today.
FAQs
How often should background checks be updated to maintain SOC compliance?
Background checks should be reviewed periodically, especially when an employee’s role changes or when systems are updated. Regular screening helps ensure ongoing compliance and mitigates emerging risks.
Do background checks for SOC compliance differ by role?
Yes. For SOC 1, checks focus on those involved in financial data, while SOC 2 expands to all staff with system access. The level of scrutiny may vary depending on access privileges and data sensitivity.
Can using third-party providers for background checks support SOC compliance?
Absolutely. Partnering with a compliant third-party provider ensures checks are thorough, consistent and aligned with data protection laws, while also saving time and reducing admin burdens.
If you’re looking for a reliable solution, book a demo today and see how Zinc can support your compliance efforts.
