Compliance and Electronic Signatures: What You Need to Know

In today's digital world, electronic signatures have become a popular way of conducting business transactions without the need for physical signatures on documents. Such electronic signatures have many benefits, including the convenience of signing documents from anywhere at any time, faster execution of agreements, and reduced paper waste. However, electronic signatures also present compliance challenges, particularly in regulated industries where both data protection and legal compliance requirements are a priority.

What is an electronic signature?

An electronic signature, also known as an e-signature, is a digitized form of an individual's handwritten signature that is used to indicate a person's approval or consent to a document or agreement. In simple terms, an electronic signature is a digital representation of a pen and paper signature. As long as the electronic signature process complies with the laws and regulations governing the use of electronic signatures, it is considered legally binding, just as a physical signature would be.

Electronic Signatures and Compliance

Before utilizing electronic signatures, you need to ensure that your business is compliant with relevant laws and regulations. The use of electronic signatures can increase efficiency and reduce the risk of errors or misplaced documents. However, it is important to ensure that the electronic signature process follows compliance standards to maintain its legal validity. In general, businesses must comply with two key components of electronic signature use: data protection and legal requirements.

Data Protection

Data protection is a critical aspect of electronic signature use. When implementing electronic signature solutions, businesses must ensure that they comply with data protection regulations. These regulations, such as General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), aim to safeguard the privacy rights of individuals. To comply with these regulations, businesses must make sure that the equipment used for secure electronic signature capture and storage meets data protection standards.
Additionally, electronic signature solutions implemented must secure data storage of signature records. This storage will be audited regularly to ensure that sensitive data is protected. Proper security measures must be implemented to guarantee the security and privacy of electronic signature records. Regular reviews are essential to evaluate electronic signature providers to ensure their compliance with data protection standards.

Legal Requirements

Legal requirements for electronic signatures involve the application of digital signatures in various contexts such as contracts and agreements. Also, it involves enforcing the validity, acceptance, and legal standing of electronic signatures in all core operating jurisdictions.
Various laws and regulations govern the use of electronic signatures. The laws vary from country to country, and many countries have different rules for different types of documents. For instance, the US Electronic Signature in Global and National Commerce (ESIGN) Act 2000 and the Uniform Electronic Transactions Act (UETA) have laid out some provisions for electronic signatures in the U.S. Similarly, the European Union's Electronic Identification, Authentication, and Trust Services (eIDAS) Regulation sets out rules for electronic signatures that apply across the EU.
In addition to these laws, specific regulations apply to certain industries, such as finance and healthcare, to ensure compliance with regulatory requirements.

Best Practices for Using Electronic Signatures for Compliance

To maintain compliance with regulatory requirements, businesses can follow some best practices to stay secure and avoid potential legal issues. Some of the best practices to consider include:

1. Record Keeping

Businesses should keep a detailed record of the electronic signature process for each document or agreement. This record keeping practices provide evidence that the process has occurred correctly and in compliance with legal and regulatory requirements. It also helps to assert legal standing in case of any future legal disputes. The record must be readily accessible at all times.

2. Choice of Providers

One of the key things to consider when implementing electronic signature solutions is choosing the right provider. The provider must comply with relevant data protection regulations and be audited regularly. Businesses must implement regular reviews to assess the providers' compliance with standards and evaluate the provider's security and privacy practices.

3. Document Verification

Businesses must verify the identity of any person signing the agreement or document, and this can be achieved through the capture of biometric or digital data. Such data is recognized as official identification when authenticated. The process of verification provides extra security and reduces the risk of data fraud.

4. Keystroke Data

Besides biometric or digital data, businesses can also use keystroke tracking systems to gain additional insights into the signing process. The keystroke tracking process records data, which helps to identify any fraudulent actions during the electronic signature process.


Electronic signatures have made business processes more convenient, efficient, and streamlined. However, businesses need to ensure that they comply with applicable laws and regulations to maintain the legal standing of electronic signatures. To achieve this, businesses must develop best practices that promote proper record keeping, the selection of compliant providers, document verification, and the use of keystroke tracking systems. By following these best practices, businesses can confidently utilize electronic signatures to improve compliance, productivity, and agility.

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