Outsourcing Requirements

Definition ∞ Outsourcing requirements refer to the regulatory and operational standards that entities must meet when delegating functions or services to external third-party providers. These requirements typically cover due diligence, risk management, contractual agreements, and ongoing oversight to ensure the outsourced activities comply with legal and security standards. They are designed to protect consumers and maintain financial stability.
Context ∞ For financial institutions and virtual asset service providers operating in the digital asset space, outsourcing requirements are a critical compliance consideration, especially when using third-party custodians or technology providers. News often highlights regulatory scrutiny on how these entities manage risks associated with their outsourced operations, particularly regarding cybersecurity and data privacy. Adherence to these requirements is essential for maintaining operational integrity and regulatory approval in the evolving digital finance landscape.