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GLBA Compliance Requirements – A Complete Checklist

By Anas Baig | Reviewed By Omer Imran Malik
Published February 14, 2024

Achieving compliance is a complex task, especially when navigating the intricate landscape of data privacy regulations. The Gramm-Leach-Bliley Act (GLBA) of 1999 adds to this complexity, particularly for financial institutions.

GLBA serves as a regulatory framework for financial institutions, guiding them in the collection of sensitive financial information from customers. It emphasizes transparency in data collection and processing, safeguards customer rights, protects sensitive data, and outlines measures for mitigating and responding to security incidents.

Failing to comply with the provisions of GLBA can spell serious trouble for covered entities. But don’t worry. This quick GLBA compliance requirements checklist is designed to help you understand the intricacies of GLBA and ensure compliance.

GLBA Compliance Requirement Checklist

The GLBA compliance checklist is categorized into three primary categories as provided under the GLBA. The three primary categories include the Financial Privacy Rule, Safeguards Rule, and Pretexting Provisions. Each category comes with a certain set of provisions and compliance requirements. Let’s discuss them further:

The Financial Privacy Rule

The Financial Privacy Rule is the first and foremost category of GLBA that promotes transparency, customer rights, and data protection, i.e., customers' nonpublic personal information (NPI). Here are some GLBA compliance requirements covered entities must consider to comply with this rule.

Provide Clear Privacy Notices

GLBA requires financial institutions to provide their customers and, in some cases, their consumers with clear and concise privacy notices that precisely reflect the organization’s privacy policies and practices to ensure the security and confidentiality of NPI. These notices must cover important information like the types of data collected, the purpose of collection, data sharing practices, and customers’ rights, to name a few. The notice to a customer must be provided no later than the time at which the customer relationship is established and at least annually thereafter for as long as the customer relationship continues.

Similarly, privacy notices should be reviewed periodically and updated to ensure ongoing compliance with the Privacy Rule.

Communicate Opt-out Right

It is important for financial organizations to present their customers and consumers with a reasonable opportunity to exercise their right to opt-out before sharing customers’ NPI with any non-affiliated third parties. The notice should be clear and readily available. Covered entities may present the opt-out notice separately along with the privacy notice or as a part of the notice as well.

Ensure the Purpose of Collection

When one financial institution receives a customer’s NPI from a non-affiliated financial organization, its ability to disclose or reuse that information is limited. It must ensure that it does not use or disclose the NPI for purposes other than the initial purpose for which the data is collected and shared. The provision aims to safeguard the privacy of the customers’ data at different stages of data sharing with third parties.

Avoid Account Information Sharing

The GLBA strictly prohibits covered financial institutions from sharing customers’ account numbers or similar information for various marketing purposes, such as telemarketing, electronic mail, or direct marketing. For instance, a non-affiliated financial institution may not share a customer’s account number, credit card number, deposit account number, etc., for such practices.

The Safeguards Rule

GLBA’s Safeguards Rule requires financial institutions to develop and implement security policies and controls to protect customers’ data. It aims to safeguard the data against unauthorized access, destruction, and loss.

Information Security Program

Financial institutions are required to develop, implement, and maintain a comprehensive information security program to safeguard the confidentiality and integrity of customer information.

Appoint a Qualified Individual

GLBA’s Safeguards Rule requires covered financial entities to appoint a capable individual to oversee the information security system and implement the rules mentioned herein. Financial institutions must ensure that the appointed qualified individual has the authority and resources to smoothly and effectively carry out his duties.

Identify & Assess Risks

Financial organizations must effectively identify and assess the risks associated with financial information. The organization should conduct risk assessments regularly to identify the type of information they have, the external and internal risks to the data’s confidentiality and integrity, and the current security controls established to mitigate those risks or prevent security breaches.

Implement Safeguards to Control Threats

Organizations shall periodically review their safeguard measures to keep up with new risks and threats. They shall prepare an inventory of data stored in any form in the organization. Moreover, adequate measures shall be implemented to protect the applications that store, collect, and transmit customer information.

Monitor and Test the Safeguard Measures

The Safeguards Rule requires organizations to test the safeguard measures continuously. Moreover, the organizations shall conduct annual penetration tests and vulnerability assessments every six months to figure out reasonably foreseeable threats and risks.

Training of Staff

Organizations shall arrange security awareness training and regular refresher sessions for their staff. The security of any organization is as effective as its least vigilant staff member.

Establish Robust Vendor Management

It is also imperative for covered entities to ensure that they have effective vendor management and control mechanisms in place. This system enables entities to monitor vendors (service providers) and ensure that they maintain appropriate safeguards to protect customers’ NPI shared by covered entities to the vendors.

Keep Updating the Security Program

The Safeguards Rule requires organizations to keep updating their information security program on the basis of previous assessment risks and threats.

Incident Response Plan

GLBA requires covered organizations to conduct a thorough investigation to determine the possibility of any harm to customers’ NPI after a security incident. To achieve that objective, it is recommended that organizations should develop a robust data breach impact analysis and response framework. With an efficient framework, organizations can get insights into the scope and impact of the breach and, if the incident is likely to result in any harm or misuse of data, send notifications to affected customers in a timely manner.

Report to Board of Directors

The designated qualified individual shall regularly or at least annually provide a written report to the board of directors or governing body. The report shall contain details about the overall information security program, its compliance with the law, risk assessment, risk management, and recommended security measures by the qualified individual.

The Pretexting Provisions

Social engineering attacks have grown exponentially over the past few years, causing billions of dollars in damages worldwide. The Pretexting Provisions aim to prevent the unauthorized acquisition and use of customer information through false pretenses. To meet the GLBA compliance requirements for this provision, entities may consider the following recommendations:

Establish Effective Data Access Controls

To prevent social engineering or similar attacks, entities must first strive to implement effective data access policies and controls. For instance, organizations may implement role-based access controls, monitor user activity, etc.

Conduct Awareness Sessions for Employees

To err is human. It is a common adage in the data security sphere that humans are the weakest link to cybersecurity. Therefore, it is crucial for organizations to educate their employees about the risks associated with pretexting via awareness sessions or training.

Implement Strict Authentication Mechanisms

For robust access controls, entities should establish strong authentication mechanisms to verify authorized employees, requiring access to customers' sensitive information. These authentication methods may include multi-factor authentication, role-based access controls (RBAC) policies, or strict password policies.

Achieve GLBA Compliance with Securiti

Failure to comply with the GLBA can result in hefty fines, lawsuits, and reputational damage for covered financial institutions. Hence, understanding GLBA compliance requirements and automating privacy operations is crucial for financial institutions for timely compliance.

Securiti PrivacyOps, an integration of the Data Command Center, is the leader in data privacy management. PrivacyOps enables financial institutions to effectively discover customers' financial data across all on-premise and multi-clouds and use integrated regulatory intelligence and controls to streamline security, governance, and compliance efforts.

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