Key steps in achieving GLBA compliance

The Gramm-Leach-Bliley Act (GLBA) sets out strict rules that financial institutions must follow when handling nonpublic personal information (NPI). Compliance is more than just a legal obligation, though. It protects customers and builds trust. It also prevents serious breaches and severe penalties.

‍

But what is GLBA, and what are the best ways to comply and avoid violations? Let’s explore how you can overhaul your data systems to secure NPI and meet the law’s requirements while remaining dynamic and agile to combat threats from malicious outsiders and sudden regulatory shifts. 

What is GLBA compliance? 

The Gramm-Leach-Bliley Act (or GLB Act) is a United States federal law that requires financial institutions to disclose how they use and share consumers' private data and take preventative measures to protect it. The law, also known as the Financial Modernization Act of 1999, is enforced by the Federal Trade Commission (FTC).

‍

It applies to companies that provide financial products or services such as loans and insurance and any enterprises that facilitate financial operations or process personal information.

‍

The penalties for non-compliance can be significant; companies can be fined $100,000 for each violation, and individuals charged and imprisoned for up to five years. That’s why leaders and key decision-makers must prioritize GLBA compliance.

‍

The GLBA has three main components: the Financial Privacy Rule, the Safeguards Rule, and Pretexting Provisions, which are often known as the “three rules.”

Financial Privacy Rule

The Financial Privacy Rule is a set of requirements governing customers' data and their rights over that data. Central to the requirements are privacy notices: clear and concise statements that outline exactly how non-personal information (NPI) is collected, used, shared, and protected and communicate a customer’s entitlement to access, rectify, and withdraw consent.

‍

You need to serve privacy notices when a relationship with a customer is established and then at least annually to provide updates on any changes to your policies and practices. The NPI protected by this rule covers most personal data that:

‍

• Identifies or locates an individual: Full name, date of birth, email address, phone number, home or work address, social security number and driver’s license number.
• Relates to a consumer’s financial status or history: Debit and credit card account numbers, bank account numbers, mortgage records, and income.
• Details a consumer’s private transactions: Recent purchases, credit report, and service usage history.

Safeguards Rule

The Safeguards Rule concerns data security and the infrastructure that protects the confidentiality and integrity of NPI. It states that financial institutions must deploy administrative, technical, and physical safeguards to shield personal data from internal and external threats. These processes must also be enshrined in a documented information security program.

‍

To ensure that safeguards mitigate risks in the long term, you must adopt a proactive approach that combats evolving threats. This involves continually monitoring and testing vulnerabilities, conducting employee training, and vetting third-party service providers to ensure everyone connected to your business adheres to strict data security standards.

Pretexting Provisions

The GLBA also counters the growing threat of deception with Pretexting Provisions. Pretexting — or social engineering — is a technique fraudsters use to obtain customer data via email spoofing, phishing campaigns, and other nefarious schemes. 

‍

The Pretexting Provisions aim to prevent unauthorized access by enhancing security protocols. For example, financial institutions are mandated to train employees to spot and prevent pretexting.

Regulatory Updates

The GLBA continues to evolve with regulatory updates designed to address emerging data privacy challenges. Recent changes to the act include stronger protocols for cybersecurity and streamlined incident response plans. The FTC also lowered the threshold for security breach notifications to incidents involving 500 customers. It was previously set at 1,000.

‍

Regulatory agencies offer comprehensive guidance to support financial institutions' quest to achieve and maintain GLBA compliance. They also provide tools such as step-by-step frameworks and educational programs.

What's the best way to achieve GLBA compliance? 

Achieving GLBA compliance requires a diligent and systematic approach tailored to the size of your business and the scope of its data collection practices. Let’s explore the steps you can take to comply with GLBA. 

1. Identify NPI and evaluate security measures

You first need to identify what financial information you have and where it’s stored. Where possible, we recommend cataloging NPI in a secure and scalable cloud-based data inventory so you can effectively monitor and protect it. While this is challenging for complex data environments, creating a structured repository can be transformative for compliance and security. 

‍

Next, evaluate your existing security measures. Do you already have a system for safeguarding NPI, and are your current policies and technologies capable of supporting GLBA compliance? 

2. Assess your organization’s risk

Fully comprehending the scope of your data sets will allow you to conduct a risk assessment and identify vulnerabilities. These could include outdated systems and software, unsecured networks, inadequate data encryption, and weak access controls. 

‍

Evaluating potential threats based on these vulnerabilities will enable you to gauge the likelihood and impact of unauthorized access and data loss. Threats include but are not limited to cyberattacks and social engineering (external), and employee negligence and data mishandling (internal). 

3. Develop a written information security program

Now that you understand your GLBA obligations and have a holistic view of where your data resides and the risks posed to your business, you can start developing a written information security plan. As part of the plan, you should:

‍

• Appoint a qualified expert or security team to oversee the program and compliance.
• Document the findings from your risk assessments and list any other threats to the integrity of NPI. 
• Outline safeguards to mitigate these risks.
• Create an incident response plan with written instructions for responding to a security event such as a data breach.
• Select secure third-party vendors and contractually obligate them to process data at the highest level of security.
• Outline security awareness training for employees.
• Detailed policies for the program to provide clarity, minimize risk, and build a culture around data security.

4. Provide privacy notices

GLBA requires you to serve privacy notices to customers. The notices should explain how and why you are collecting their data and include instructions for them to exercise their right to “opt-out” of certain data-sharing practices, such as disclosure to nonaffiliated third parties. Opt-out rights are also governed by the Fair Credit Reporting Act (FCRA).

‍

Try to make privacy notices concise and easy to understand - avoid technical jargon and use plain language. They also need to be delivered as soon as a customer relationship is established, and annually thereafter.

‍

5. Implement safeguards

Putting safeguards in place will enable you to mitigate risks and keep sensitive information protected from unauthorized access. Key safeguards include:

‍

• Access controls: Use cybersecurity principles to regulate who can access NPI  and verify their legitimate need for it.
• Data encryption: Implement encryption techniques that comply with the GLBA and ensure data is secure at rest and transit.
• Secure disposal: Outline the process you will use for securely disposing of NPI when it’s no longer needed, or when a customer has requested for it be deleted or destroyed.
• Multi-Factor Authentication: Implement multi-factor authentication (MFA), the “gold standard” for security access, for employees attempting to access data.
• Inventory management security: Use cloud-based solutions to identify, classify, and label NPI, so you have a complete understanding of how data is collected, stored, and used.

6. Monitor and update your program

Protecting customers and your business is paramount. The threat and regulatory landscape is always evolving. To stay agile and compliant, you need to test, monitor, and update your information security program. 

‍

Remember to adopt a proactive rather than reactive mindset; conducting regular penetration tests and risk assessments is the best way to prevent breaches, respond faster to incidents, minimize downtime, and protect sensitive data.

What technology solutions can help with GLBA compliance? 

Technology solutions are fundamental to cataloging data, combatting security threads, and achieving compliance with the GLBA. Let’s look at some of the tools you can leverage to enhance and streamline your efforts.

‍

• Data discovery and classification: Inspect and audit your current systems using automated records management software to discover and classify sensitive data and then apply appropriate security controls.
• Access management: Secure your cloud environment using security posture management (CSPM) and control and monitor who accesses data with identity and access management (IAM) and privileged access management (PAM) solutions.
• Encryption: Consider implementing strong encryption standards to protect sensitive data. For example, AES-256 can be used to encrypt files and databases, ensuring that only authorized users can access the information. For elliptic curve cryptography (ECC), consider using it for secure key exchange protocols in applications such as secure messaging or online transactions.
• Data loss prevention: Prevent data from being exfiltrated by installing a data loss prevention system (DLP). These can be deployed on-premise or in the cloud.
• Incident response management: Rapidly respond to incidents with a centralized software platform, which gives you the power to track breaches, investigate the root cause, and isolate affected systems.
• Network security: Use hardware and software firewalls, VPNs, network access controls, and anti-malware software to protect your IT infrastructure and keep data safe.

Best practices to avoid GLBA violations 

The penalties for violating GLBA can be seismic. Consumer credit reporting agency, Equifax, paid a $575m-$700m settlement in 2019 due to a series of network security failures. Fortunately, following a documented plan and adopting best practices will significantly reduce the serious financial and legal risk of GLBA violations.

1. Use robust measures to prevent unauthorized access

Data breaches are not grounds for an automatic violation. However, if you fail to implement adequate security measures or respond quickly to an internal or external attack, you will have failed to meet the law’s compliance requirements. 

‍

That’s why it’s vital to do everything you can to secure NPI. This means focusing on creating an excellent safeguard infrastructure. An extension of this is your incident response plan, which needs to outline ways to contain a breach, assess its severity, and notify anyone affected.

2. Ensure privacy notices are relevant and complete

Insufficient privacy notices can violate the Financial Privacy Rule. A notice can be deemed insufficient when you:

‍

• Fail to provide a notice promptly.
• Include misleading policies or omit critical details.
• Fail to provide clear opt-out instructions.
• Fail to deliver annual privacy notices or when your data-handling policies and procedures are updated.

3. Only share data with authorized vendors

You are allowed to share NPI with third parties, but only under specific circumstances. Some of the “permitted purposes” include transaction processing, legal disclosure, and joint marketing with other financial institutions. 

‍

To reduce the risk of violations, conduct due diligence on vendors and have written contracts in place to ensure confidentiality and compliance. You also need to disclose the full extent of these sharing practices to customers and give them the chance to withdraw consent where applicable.

4. Be vigilant of pretexting scams

Neglecting prevention and training protocols for pretexting can also be grounds for a violation. Under the Pretexting Provisions, companies are mandated to prevent pretexting actively. Employees must also be made aware of the risks and receive training to detect and report them. 

5. Always review and update security measures

A GLBA compliance program is not a “one-and-done” process. It requires constant care and attention. Failing to properly assess risks or adapt to new threats can leave your data vulnerable and at the mercy of malicious third parties. 

‍

To avoid breaches and violations, we recommend regularly reviewing your plan, running monthly audits to identify issues and gaps in your strategy, and routinely testing and monitoring your security protocols. It’s the only way to stay ahead of the curve.

‍

How RecordPoint can help support GLBA compliance? 

Compliance starts with high-quality data handling and management. Recordpoint’s cloud-native solution gives you the power to find, store, and protect your sensitive data, all in one place. 

‍

Our data solutions are extensive and can be tailored to your requirements. You can use our data migration service to move your data to the cloud and then catalog it using our categorization tools. Classifying and labeling NPI this way is the first step to compliance.

‍

With full control over your data sets, you can then prioritize data privacy and implement measures that shield sensitive information. Our platform can automatically classify NPI to minimize risks and set up rules to ensure data is always protected and compliant.

‍

Recordpoint can help you build a robust system suitable for the demands of a data-driven world, ensuring compliance and the safety of your assets and your business. Contact us today to schedule a demo. 

FAQs

What’s the difference between the Financial Privacy Rule and the Safeguards Rule?

The Financial Privacy Rule and Safeguards Rule are two sides of the same coin; both work in tandem to secure data from unauthorized access and breaches. 

‍

The Financial Privacy Rule is about accountability and transparency. It mandates provisions to inform customers about their data. Meanwhile, the Safeguards rule is about the infrastructure that monitors and protects that data.

Does the GLBA apply to B2B companies?

The GLBA requires financial institutions that offer consumers a financial product or service to comply to protect NPI. These include bank holding companies, credit unions, mortgage brokers, investment firms, and account servicers. 

‍

However, the act generally does not apply to B2B companies unless there is an indirect relationship with consumers or state-specific laws that set out specific data protection laws beyond GLBA. We recommend consulting with legal counsel if you are unsure.

Can I outsource GLBA compliance to a third-party vendor?

Yes, you can outsource aspects of GLBA compliance to reduce the burden of the task internally. However, it’s vital that you prioritize vendor management and effectively monitor third-party activities to ensure compliance.