The Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 did several things. It permitted banks to provide financial, investment and insurance services to its customers. It significantly broadened the definition of "financial institution" to include not just banks, credit unions, and securities brokers, but also real estate appraisers, insurance companies, automobile leasing companies, companies that operate travel agencies in connection with financial services, retailers that issue their own credit cards directly to consumers, and any other entity that is "significantly involved in financial activities." For such companies, there are two key rules under the Act:

The Financial Privacy Rule governs the collection and disclosure of customers’ personal financial information by financial institutions. It also applies to companies, whether or not they are financial institutions, who receive such information.

The Safeguards Rule requires all financial institutions to design, implement and maintain safeguards to protect customer information. The Safeguards Rule applies not only to financial institutions that collect information from their own customers, but also to financial institutions – such as credit reporting agencies – that receive customer information from other financial institutions.

The Act enjoined several federal agencies, notably the Federal Trade Commission (FTC), to clarify and enforce these rules. Recently, the FTC has begun to prosecute companies who have violated these rules. With identity theft increasing, the FTC will undoubtedly become more vigilante not only with respect to prosecution but also with respect to the type of company it calls a "financial institution". The FTC recently asserted that mortgage brokers, automobile dealers, and any retail establishment that issues its own credit cards must comply with the Safeguards Rule.

The BSI Sentinel Services provides all companies, and financial institutions in particular, with products and services designed to assist in the compliance with the FTC's Safeguards Rule. Please email bristolsystems.com, username solutions, for more information.