Why do Brazilian Banks and Insurers Require Test Data Anonymization for LGPD Compliance? 

by Filip Pelivanović March 28, 2023
Why Brazilian Banks and Insurers Require Test Data Anonymization for LGPD Compliance

Brazilian General Data Protection Law (LGPD) has been in force since September 2020, and companies need to comply to avoid penalties and fines.

For banks and insurance companies in Brazil, compliance with the LGPD is critical due to the sensitive data they collect, process, and store. Data masking and anonymization can help these companies comply with the regulations while allowing them to use the data for business purposes.

In this blog post, we will explore why banks and insurance companies in Brazil need data masking and anonymization to comply with the LGPD and the benefits of these practices.

What is LGPD and Why is Compliance Essential for Banks and Insurance Companies?

The LGPD is Brazil’s comprehensive data protection regulation designed to ensure the privacy of individuals’ data. Banks and insurance companies collect and process a significant amount of sensitive data, including personal identification, and financial and health-related information, making them high-risk entities under the LGPD. 

Failure to comply with the LGPD can result in significant penalties and fines, which can damage the reputation and financial stability of the company. The ANPD (Autohidden Nacional de Proteção de Dados or National Data Protection Authority in English) sets the penalties for non-compliance, which can include fines of up to 2% of a company’s annual revenue and a maximum of 50 million Brazilian reais (€7.5 million or US$9.6 million) per violation. 

In the event of a violation, the ANPD has the power to ban data processing operations, prevent access to or delete personal data from related databases, and partially or completely block access to personal data. 

Examples of Non-compliance with LGPD and Fines in Brazil

In August 2021, the Brazilian Data Protection Authority (ANPD) fined a Brazilian bank 70 million Brazilian reais (approximately €12.6 million and US$13.5 million) for failing to adequately protect customer data. The ANPD found that the bank had failed to implement appropriate technical and organizational measures to protect personal data, including the use of data masking techniques to protect sensitive information. 

Similarly, in May 2021, the ANPD fined a major Brazilian insurance company 50 million Brazilian reais (approximately €7.5 million or US$9.6 million) for data protection violations, including failure to anonymise and encrypt data. The ANPD found that the company had not adequately protected customer data and had not complied with LGPD requirements for data protection. 

These cases demonstrate the importance of data masking and other data protection measures in complying with data privacy regulations in Brazil and avoiding significant fines. 

Do Banks and Insurance Companies Need Data Masking and Data Anonymization Software?

Data masking and anonymization are essential methods that can help banks and insurance companies comply with the LGPD. These methods help companies protect sensitive data while still being able to use it for business purposes. By masking or anonymizing sensitive data, it is no longer identifiable or traceable to an individual, ensuring the privacy of the data is maintained. In addition to complying with regulations, data masking, and anonymization can also help companies reduce the risk of data breaches, ensuring data security. 

If you are just starting and are not sure how data masking software works and want to know what steps to take before choosing the right tool, read the blog post where we answered some of the questions we were asked by CIOs, CISOs, DBAs, and Heads of IT in Brazil. 

Do They Use Data Anonymization Software?

Anonymizing data is an essential part of data protection and helps companies ensure the privacy and security of their customers’ data. With the increase in data breaches and cyber-attacks, data anonymization has become crucial to protecting sensitive data and complying with data protection regulations. 

Based on our conversations with several Brazilian companies in the financial industry, which include banks, neo-banks, and insurance companies, they are interested in purchasing software to anonymize data to comply with the Brazilian General Data Protection Law. 

Many companies in Brazil are in the process of adopting data masking software such as BizDataX to help them comply with data protection and reduce the risk of data breaches. 

What are the Benefits of Data Masking and Data Anonymization for Banks and Insurance Companies?

  • Compliance with LGPD 

Data masking and anonymization help businesses comply with the LGPD and avoid the penalties and fines associated with non-compliance. 

  • Data Security 

Data masking and anonymization reduce the risk of data breaches and ensure the security of sensitive data. 

  • Cost Reduction 

Data masking and anonymization can reduce costs associated with data storage and infrastructure, helping companies save money. 

  • Test Data Generation 

Data masking and anonymization can also generate test data that can be used for testing and development purposes without compromising the privacy of sensitive data. 

  • Enhanced Trust

By protecting sensitive data, banks and insurance companies can increase trust and build a positive reputation with their clients, which can lead to better business opportunities.

Benefits of Data Masking and Anonymization for Compliance and Beyond

LGPD compliance is crucial for banks and insurance companies in Brazil because of the sensitive data they collect and process. Effective strategies that can help these companies comply with regulations while continuing to use the data for their business objectives include data masking and anonymization.

In addition to compliance, data masking and anonymization bring numerous benefits, including data security, cost reduction, generation of test data, and enhanced trust. To comply with the LGPD and enjoy the benefits of adequate data security and privacy, Brazilian banks and insurance companies should consider implementing data masking and anonymization solutions such as BizDataX. 

If you have any questions, would like to discuss the topic of data anonymization, or are looking for a data masking tool, reach out to our Data Masking Consultants via the contact form. 


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