Banks look for audit and remediation rights, timely breach disclosure, notice of subcontractor changes, data return or destruction at exit, and continuity terms such as recovery time and recovery point objectives. These come from the contract section of the 2023 interagency guidance.
This is general information, not legal advice. Have counsel review your contracts.
The terms and why they exist
| Term | What the guidance says | Vendor position to consider |
|---|---|---|
| Right to audit and require remediation | Covers periodic independent audits of you and relevant subcontractors | Offer independent reports, define scope and frequency |
| Breach notification | Contract should specify when and how you disclose security breaches in a timely way | Name a clock, a channel and a contact role |
| Subcontracting | You notify the bank of changes such as use of subcontractors | Keep a current subcontractor list |
| Data return | Timely return or destruction of the bank's data | Define formats and timelines |
| Continuity | Procedures when continuity plans activate, with recovery time and recovery point objectives, possible joint testing | State objectives you can actually meet |
| Transition | Assign costs and obligations tied to termination, allow transfer of accounts or data without penalty if you fail | Agree the scope early |
Other listed topics include performance measures, data access, compliance responsibilities, costs, and ownership and licensing.
Negotiating without overpromising
Agree to a notification window you can hit at three in the morning. A shorter promise you miss is worse than a longer one you keep. Likewise do not accept recovery objectives you have never tested.
Ask what the bank needs the clause to achieve. Often a defined contact and a documented process meets the need without an unrealistic number.
A practical pre-read
- List every security clause in the draft and map it to a control you operate.
- Mark clauses that depend on subcontractors, and check your agreements with them allow the same flow down.
- Confirm who inside your company owns each obligation.
- Test the notification path with a drill before signing.
Where Safeguard fits
Safeguard's compliance and evidence automation helps keep control evidence current, and its SBOM and dependency scanning supports subcontractor and component inventories. A free scan is at gold.safeguard.sh/scan.
Quick check
Does the guidance set a breach notice deadline?
No. It says the contract should specify when and how you disclose breaches. The time is negotiated, though separate rules may set clocks for the bank itself.
Why do banks ask about subcontractors in contracts?
Because risk can sit with your suppliers. The guidance expects notice when you change subcontractors.
Sources
Last reviewed: 19 October 2026.
