Financial services firms operate under some of the strictest data handling requirements in any industry. Client confidentiality is not a preference — it is a legal obligation with specific regulatory consequences.

Yet when I ask compliance officers at banks and asset managers how their teams translate documents across languages, the answer is usually some version of: "I assume they use DeepL." Followed by a pause. Followed by: "I should probably check."

This guide maps translation tool security criteria to the regulatory frameworks that actually govern financial services. Not generic GDPR advice — specific controls for FCA, MiFID II, and the client confidentiality obligations that underpin the industry.

Why financial services need specialized translation controls

Every financial services firm handles documents that are confidential by law, not just by policy:

Client portfolio data — investment positions, transaction histories, account statements
M&A documentation — deal terms, valuations, due diligence reports
Regulatory filings — submissions to FCA, BaFin, AMF, or other national authorities
Audit reports — findings, recommendations, management responses
Internal communications — board minutes, risk committee papers, compliance reports

When an analyst pastes a client's portfolio summary into a free translation tool, they are not just violating an internal policy. They may be breaching specific regulatory obligations — obligations that carry personal liability for senior managers under regimes like the SM&CR (Senior Managers & Certification Regime).

The regulator will not accept "we didn't know the tool was insecure" as a defense.

Compliance requirements that affect tool choice

FCA and SM&CR

The FCA requires firms to have adequate systems and controls for protecting client data. Under SM&CR, senior managers have personal responsibility for ensuring these controls exist and function.

A translation tool that stores, logs, or trains on client data is a systems and controls failure. If your compliance team hasn't evaluated translation tools as data processors, that is a gap in your control framework.

MiFID II

MiFID II requires firms to protect client information and maintain confidentiality. Article 16 mandates organizational requirements including adequate security of information processing systems.

Translation tools that process investment advice, research reports, or client communications are information processing systems. They fall within scope.

Financial services firms process significant volumes of personal data. Any translation tool handling this data is a data processor under GDPR. This requires:

A signed Data Processing Agreement (DPA)
Documentation of the processing activity
Verification that the tool meets GDPR requirements (Article 28)
Inclusion in the firm's Record of Processing Activities (ROPA)

If your translation tool doesn't have a DPA, it cannot be used for any document containing personal data. Full stop.

SOX (for US-listed firms)

Sarbanes-Oxley requires internal controls over financial reporting. If translation tools are used in the preparation or review of financial documents, they may fall within the scope of SOX controls. This includes access controls, audit trails, and data integrity requirements.

5 security criteria for financial translation tools

Based on the regulatory requirements above, here are the minimum criteria a translation tool must meet for financial services use:

1. No training on customer content

The tool must contractually guarantee that no client data, financial data, or document content is used for model training, fine-tuning, or service improvement.

Why it matters for finance: A client's portfolio positions appearing in a model's training data could constitute a market abuse risk. An M&A target's valuation leaking through model outputs could be insider information. The regulatory consequences are severe.

2. Defined retention window

The tool must specify exactly how long content exists on their systems, with hard deletion (not soft delete, not "marked for deletion," not "retained in backups").

Why it matters for finance: Regulatory data requests and subject access requests require firms to know exactly where data is held and for how long. "We think the tool deletes it eventually" is not acceptable documentation.

3. Data residency

The tool must process and store content within a defined geographic boundary, ideally the EU for European firms.

Why it matters for finance: Cross-border data transfers trigger additional compliance requirements (SCCs, adequacy decisions). For some regulatory data, cross-border transfer may not be permissible at all.

4. Access controls and audit trail

The tool must demonstrate that no unauthorized persons can access content during or after translation. Ideally, the architecture prevents even the vendor's own employees from accessing client data.

Why it matters for finance: The concept of "need to know" is fundamental in financial services. A translation vendor's support engineer having access to client portfolio data is a confidentiality breach, regardless of whether they actually read it.

5. DPA and subprocessor transparency

The tool must provide a signed DPA and a published list of subprocessors. Any change to subprocessors must be notified.

Why it matters for finance: Regulatory expectations for third-party risk management in financial services are explicit. The firm must know every entity that touches client data and must have contractual control over how it's handled.

Tool evaluation with a compliance lens

Criterion	Free tools (Google, DeepL Free)	Paid tiers (DeepL Pro, Google Cloud API)	Zero-retention (noll)
No training	No	Yes (API tier)	Yes
Retention window	Indefinite/unclear	Short (unspecified)	30 min hard delete
Data residency	Uncontrolled	Configurable	EU-only default
Access controls	Minimal	Vendor-managed	Zero-access architecture
DPA available	No	Yes	Yes
FCA/MiFID compliant	No	Requires configuration	By default

Bottom line: free tools are categorically unsuitable for financial services. paid enterprise tiers require careful configuration and verification. zero-retention tools provide the strongest default posture for sensitive financial documents.

Procurement checklist for financial services

When evaluating a translation tool for your firm, bring this to the vendor conversation:

DPA: provide a signed DPA before we begin evaluation
Training policy: confirm in writing that no customer content is used for training
Retention: specify the exact retention window in hours or minutes
Deletion: confirm hard deletion (not soft delete, not backup retention)
Residency: confirm all processing occurs within [jurisdiction]. specify data center locations
Subprocessors: provide the current subprocessor list. confirm notification process for changes
Access: describe who can access customer content during and after translation
Incident response: describe the breach notification process and timeline
Audit rights: confirm the firm's right to audit or request SOC 2/ISO 27001 reports
Termination: confirm all customer data is deleted on contract termination

If the vendor cannot answer all ten points clearly, they are not ready for financial services.

Internal policy template

Beyond choosing the right tool, firms should implement an internal translation policy:

Classification rule: any document containing client data, financial data, or regulatory information must be translated using an approved tool only.

Approved tool list: maintain a list of translation tools that have been evaluated and approved by compliance. update annually or when vendor terms change.

Prohibited tools: explicitly name tools that are not approved (free tiers of consumer translation services, ChatGPT, general-purpose LLMs).

Escalation path: if a team member needs to translate something and isn't sure which tool to use, they should escalate to compliance rather than defaulting to the fastest option.

Monitoring: consider whether your DLP (Data Loss Prevention) tools can detect when employees paste content into unapproved translation services. many DLP solutions can flag browser-based access to specific URLs.

Takeaways

Financial services firms have specific regulatory obligations (FCA, MiFID II, GDPR, SOX) that affect translation tool choice
Free translation tools are categorically unsuitable for any document containing client or financial data
The five minimum criteria: no training, defined retention, data residency, access controls, and DPA with subprocessor transparency
Procurement should use the 10-point checklist for every vendor evaluation
Implement an internal policy that classifies documents and directs teams to approved tools

Best Secure Translation Tools for Financial Services (2026 Compliance Guide)

Why financial services need specialized translation controls