Gramm-Leach-Bliley Act (GLBA)

What is GLBA?

The GLBA, or Gramm-Leach-Bliley Act, is a United States federal law enacted in 1999 regulating the handling of personal data by financial institutions. (The act is also known as the Financial Services Modernization Act of 1999.)

The GLBA includes provisions to protect consumers’ personal financial information held by financial institutions and requires that these institutions communicate their information-sharing practices to their customers.

The GLBA consists of three main pillars:

• The Financial Privacy Rule. This rule requires financial institutions to provide each consumer with a privacy notice when the consumer relationship is established and annually after that. The privacy notice must explain the following:

  • The information collected about the consumer;
  • Where that information is shared;
  • How that information is used;
  • How that information is protected; and
  • How the consumer can opt out of having their information shared with unaffiliated parties under the provisions of the Fair Credit Reporting Act.

• The Safeguards Rule. This rule requires that financial institutions must implement security programs to protect such information. These programs must:

  • Be regularly monitored and updated to ensure the security and confidentiality of customer records and information;
  • Protect against any threats or hazards to the security or integrity of the data; and
  • Protect against unauthorized access to the records.

• Pretexting Protection. Pretexting occurs when someone tries to gain access to personal nonpublic information without proper authority to do so. This section of the GLBA requires financial institutions to implement measures to protect consumers from individuals and entities that may attempt to obtain their personal financial information fraudulently.

Who Does GLBA Apply To? 

The GLBA applies to financial institutions, which include banks, securities firms, insurance companies, and companies providing financial products and services such as lending, brokering, or servicing any type of consumer loan; transferring or safeguarding money; preparing individual tax returns; providing financial advice or credit counseling; providing residential real estate settlement services; collecting consumer debts; and an array of other activities.

What Are The Consequences of Non-Compliance?

Failure to comply with GLBA can result in severe consequences for financial institutions, including:

1. Monetary Penalties:

   • Civil penalties can amount to $100,000 for each violation.
   • Individuals, including officers and directors, may be fined up to $10,000 for each violation.

2. Reputational Damage:

   • Non-compliance can lead to a loss of consumer trust and significant damage to an institution's reputation.
   • Negative publicity can result in the loss of customers and business opportunities.

3. Legal Actions:

   • Non-compliant institutions may face lawsuits from customers whose information was mishandled.
   • Regulatory bodies, such as the Federal Trade Commission (FTC), can bring enforcement actions against violators.

4. Operational Impact:

   • The need to address compliance failures can divert resources and focus away from core business activities.
   • Remediation efforts may require significant time and investment to bring security measures up to standard.

How Finite State Helps You Comply with the Gramm-Leach-Bliley Act

Finite State offers a comprehensive solution to support compliance with GLBA by strengthening your data security capabilities, particularly by: 

• Enforces Secure Coding Practices: Seamless integrations into existing CI/CD pipelines automatically analyze source code and compiled binaries for common security vulnerabilities and coding errors. This allows engineers to identify vulnerabilities hidden deep within legacy code and third-party libraries and detect and address issues early in the development process.
• Offers Real-Time Threat Detection: Integrations with vulnerability databases provide up-to-date information on the latest threats and exploits, allowing for the proactive identification of potential risks before they can be exploited.
• Automates Vulnerability Identification: Using our advanced binary and source code SCA, vulnerabilities can be identified as they’re introduced across the SDLC to help teams keep applications secure.
• Provides Comprehensive SBOM Solutions: Automatically generate Software Bill of Materials throughout the SDLC and easily compile detailed information on all components in your products, including open-source libraries, third-party dependencies, and custom code to improve transparency and identify potential security risks in your software supply chain.

Strong cybersecurity requires a collective effort. Talk to the team today to discover how Finite State can help you comply with the GLBA.