2023 File Transfer Best Practices: 10+ Tips to Succeed

Chart showing rising data breach costs from IBM report

File transfers are the lifeblood of business. Every day, massive volumes of data are shared between systems, applications, and users via file transfers. These transfers underpin critical workflows like financial transactions, supply chain logistics, IoT data ingestion, and content distribution.

However, without proper governance and security, file transfers can expose organizations to serious risks ranging from data leaks to regulatory non-compliance. For example, an IBM study found that improper data transfers accounted for over 20% of reported breaches. And according to Verizon‘s 2022 DBIR report, misconfigured file transfer systems were the #3 pattern associated with breaches.

So how can your organization ensure secure, compliant, and accelerated file transfers? In this comprehensive guide, we’ll explore 10+ tips and best practices any business can implement in 2024.

Why File Transfer Security is Non-Negotiable

Before jumping into the how-to, it’s important to level-set on why applying security measures to file transfers is crucial for any company.

Data Breaches Have Massive Hidden Costs

The average cost of a data breach now exceeds $4.35 million globally according to IBM’s Cost of a Data Breach Report 2022. For the United States, the average breach cost is close to $9 million. These costs include fines, lawsuits, technical investigations, notifications, and loss of customer trust and business.

Chart showing rising data breach costs from IBM report

Average cost of data breaches over time. Source: IBM

Crucially, over 20% of breaches involve improper access and transfers of data by privileged insiders and partners according to Verizon‘s report. Basic misconfigurations in transfer tools or misdirected emails containing sensitive data commonly cause these breaches.

Following best practices for secure file transfers and avoiding unforced errors is key to preventing massive breach costs.

Compliance Mandates Security

Industry regulations like HIPAA, PCI DSS, GDPR, and SOX include stringent requirements around safe data transfers and sharing. Shortcomings can lead to heavy penalties.

For example, a breach at medical testing giant LabCorp resulted in a $6.85 million HIPAA fine from the Office for Civil Rights due to improper data transfers. And credit bureau Equifax paid a $650+ million GDPR fine for its 2017 breach enabled by unpatched systems.

Simply put, regulated industries can‘t afford to gamble with transfer security. Protocols must be watertight.

Productivity Depends on Seamless Sharing

The speed of business depends on the ability to seamlessly share information across systems and users. Employees wasting hours conducting insecure manual transfers or tracking down files impedes productivity.

Conversely, automated managed file transfers with complete audit trails accelerate collaboration while still ensuring security. Workflows reliant on timely data sharing thrive.

Customer Trust Requires Security

Customers expect their sensitive personal and financial information to be carefully safeguarded by companies they engage with. Data mishandling damages brand reputation and loyalty, especially in the wake of high-profile breaches.

In one survey, 60% of consumers indicated they‘d switch providers after a breach. Losing customers has long-term monetary impact on top of immediate breach costs.

By locking down file transfers, companies affirm to their customers that data protection is paramount.

Distinguishing File Transfers vs. File Sharing

Now that we‘ve established why transfer security matters, let‘s ground ourselves in some key terminology.

Secure File Transfer

File transfers refer to the act of moving one or more files securely between two endpoints like:

  • Server to server
  • Network to network
  • Application to application

Measures like access controls, encryption, network security, and activity logging preserve confidentiality and integrity during the transmission.

File transfer use cases include:

  • Migrating data from on-prem storage to the cloud
  • Financial transactions between branches
  • Medical image sharing between healthcare facilities
  • Video file distribution from media providers to streaming platforms

Secure File Sharing

File sharing enables access to files across users, systems and applications via methods like:

  • Cloud drives like OneDrive and Dropbox
  • Portals for distributing software, media, documents
  • Sync and share tools for collaboration

File sharing use cases include:

  • Sharing working documents between employees
  • Enabling developer access to source code
  • Distributing press releases to media contacts

Core features of file sharing tools include permissions, previews, commenting, version history, notifications, and retention policies. These facilitate collaboration while also providing access controls for security.

Now let‘s explore best practices that apply broadly to file transfers and sharing.

12 Best Practices for Secure File Transfers

Based on extensive experience advising Fortune 500 companies on data security, here are 12 impactful best practices any organization can implement:

1. Verify Recipient Identities

Confirm the identity of authorized recipients via phone, email or an identity provider before transferring sensitive data. This mitigates the risk of transfers falling into the wrong hands.

Communicate recipient identities through an authenticated channel separate from your file transfer pipeline. Don‘t solely rely on usernames provided over unsecured requests.

2. Test Transfers with Sample Data

When establishing new data transfer integrations, first send a sample file and validate successful receipt before transferring the full dataset. For example:

  • Send a subset of records instead of an entire database dump.
  • Transfer a single representative image rather than a batch.

This confirms your transfer settings are configured correctly between endpoints. It also provides recipient‘s the opportunity to verify usability of the sample data.

3. Maintain Regular Software Updates

Consistently update operating systems, databases, file transfer tools and other software components involved in your transfer workflows. Vendors issues patches to address known vulnerabilities.

Make use of automatic updates where possible, along with a formal monthly or quarterly maintenance window to install updates across all systems. Don‘t run outdated software containing security gaps.

4. Implement Disaster Recovery Processes

Have backups of transferred files as well as contingency plans to recover and re-initiate failed transfers. These measures hedge against data loss in events like:

  • Network outages interrupting active transfers
  • Corrupted transfers due to software faults
  • Operational errors like accidental deletions
  • Ransomware attacks that disable systems

For recurring transfers, save transfer batch metadata and audit trails, not just the data itself. This simplifies re-running batch transfers.

5. Enforce Strict Access Controls

Limit access to file transfers through measures like:

  • Strong passwords: Enforce password complexity, expiration and rotation policies.
  • Multifactor authentication (MFA): Require a second factor like a code from an authenticator app in addition to a password.
  • Role-based access: Restrict access based on user roles like read-only, upload or admin.
  • Time-based controls: Prohibit transfers outside permitted hours or expiration dates.
  • IP allowlisting: Only permit transfers from specified address ranges.
  • Digital signatures: Require files be cryptographically signed.

These controls prevent both outsider attacks as well as insider threats. Integrate controls with your identity provider (IdP) where possible.

6. Encrypt Data End-to-End

Encrypt files at rest before transferring them. Use transport encryption protocols like SFTP, HTTPS and FTPS that encrypt data in transit. Follow the principle of "encrypt early, encrypt often."

Common encryption types include:

  • Symmetric encryption uses a shared secret key for efficiency.
  • Asymmetric encryption uses public-private key pairs for enhanced security across organizations.
  • Hybrid encryption combines symmetric and asymmetric crypto.

Managed file transfer (MFT) tools typically handle encryption intricacies for you.

7. Transfer Over Secure Protocols

In addition to encrypting data itself, transfer files over protocols that secure the transport layer. Common options include:

  • SFTP (SSH File Transfer Protocol): Leverages SSH for encryption and authentication.
  • FTPS (File Transfer Protocol over SSL): Adds TLS encryption to regular FTP.
  • AS2 (Applicability Statement 2): Popular for B2B file transfers.
  • HTTPS (HTTP Secure): Uses TLS encryption and integrates with web apps.
  • VPN Tunnels: Provide private connectivity between endpoints or networks.

Use the most secure protocol supported by your endpoints. Avoid unencrypted protocols like FTP.

8. Educate Employees on Security

Make ongoing security education a priority across your workforce. Ensure employees understand basics like:

  • How to resist phishing attacks.
  • Using strong passwords and enabling MFA.
  • Securing devices used for file transfers like laptops.
  • When and how to securely share or transfer sensitive data.
  • How to identify and report suspicious activity.

Dedicate time during onboarding plus quarterly refreshers. Employees are often the weakest security link.

9. Compress Files Judiciously

Compression helps accelerate transfers and reduces storage burdens by shrinking file sizes.

However, certain files should never be compressed. This includes encrypted archives and raw database backups which may become corrupted. Also avoid compressing JPEG images as they use lossy compression already.

Stick to compressing text files like XML, CSV and log files which shrink well without loss of data integrity.

10. Meet Regulatory Compliance Obligations

Understand regulations like HIPAA, PCI DSS, GDPR and SOX that apply to your industry. Implement required controls and audit logging specifically around file transfers that handle sensitive and regulated data.

Non-compliance penalties canbecome substantial very quickly. For example, British Airways received a $230 million GDPR fine after customer data was compromised.

11. Monitor and Audit Transfer Activity

Log transfer metadata like source, destination, filenames, timestamps and status codes to create an immutable audit trail. Proactively monitor logs with alerting rules to detect anomalies.

Periodically audit logs for details like:

  • Unauthorized outbound transfers
  • Transfers occurring outside allowed hours
  • Manipulation of audit logs themselves

This provides rich forensic evidence in the event of an incident. It also demonstrates compliance during audits.

12. Evaluate Managed File Transfer (MFT) Software

Consider implementing an MFT platform that combines security, governance, automation and analytics. MFT solutions like GoAnywhere MFT, Globalscape EFT, and Progress MOVEit add powerful controls while simplifying transfers.

MFT tools help orchestrate and monitor transfers through dashboards, allowing you to spot bottlenecks. Extensive reporting also aids compliance.

Securing Different File Transfer Scenarios

With those universal best practices covered, let‘s explore how security controls apply to different file transfer use cases:

Intra-Organization Server Transfers

When transferring data between servers within your organization like migrating files to Office 365 or AWS, focus on:

  • Network encryption using IPSec, TLS/SSL VPN tunnels.
  • Server authentication using mutual certificate validation.
  • Access controls tied to your identity provider and user roles.
  • Auditing using tools like Syslog, Splunk or managed file transfer.
  • High bandwidth connections to accelerate large transfers.

Application Integration Transfers

Transfers between business applications like ERP, CRM and payroll systems warrant:

  • Native connectors or APIs to avoid brittle custom scripts.
  • Validation rules to verify completeness of transferred records.
  • Orchestration to schedule and sequence multi-step transfers.
  • Format handling like CSV, XLM, JSON to prevent data loss.
  • Service accounts for authentication instead of user credentials.

Ad-Hoc End User File Sharing

For one-off scenarios like an employee sending a file to a coworker:

  • Cloud sharing platforms with password protection, expiration and revocation.
  • Portal uploads via https with authentication.
  • Email attachments only for non-sensitive data.
  • Access confirmation to verify correct recipient.
  • AV scanning of untrusted files.

IoT and Machine Data Transfers

For transfers from IoT devices to data platforms:

  • MQTT TLS for encrypting messages between devices and brokers.
  • VPNs to provide private connectivity between locations.
  • IPsec or TLS for device-to-gateway communications.
  • Certificate authentication for machine identities.
  • Aggregate data before transferring to manage volume.

Third-Party and Vendor Transfers

When providing external partners access to internal systems:

  • Multi-factor authentication using one-time codes.
  • Time-limited access via expiring tokens or accounts.
  • IP allowlisting to restrict to approved ranges.
  • Isolated staging areas rather than direct access.
  • File watermarking and providence tracking.
  • Monitoring for unauthorized actions.

Key Takeaways

File transfers provide the lifeblood for critical workflows but also introduce monumental risk if not properly secured. Companies can realize benefits like improved productivity and customer trust by implementing controls like:

Encryption to protect data in motion and at rest. Don‘t transfer plaintext data haphazardly.

Secure protocols like SFTP and HTTPS to encrypt transport channels.

Access controls & auditing to confirm transfers are authorized and create an evidence trail.

Education to ensure staff handle sensitive data correctly.

Compliance with any regulatory requirements in your industry.

For large enterprises, managed file transfer (MFT) tools provide security, governance and automation all in one package.

By proactively securing transfers, companies avoid disastrous breaches while enabling business-critical data flows to continue unimpeded. Contact our experts if you need help assessing your file transfer security posture.