The financial services industry has a vast global reach in the banking, investing, and insurance industries. In the US alone, this industry handled almost $6 trillion in annual revenue in 2022. As part of their operations, these companies collect and control vast amounts of sensitive data, including personal identity information, banking, and financial transaction data. All of this data is highly valuable to cybercriminals, which they sell on the dark web or use themselves for committing direct theft, fraud, and identity theft.
This data is why financial institutions are 300 times more likely to be targeted for cyber attacks. They are tempting targets for cybercriminals who continually poke at their infrastructure, looking for weaknesses. As a result, regulatory agencies have sought to improve security in this industry. They have implemented strict data handling, collection, and sharing requirements in the financial sector, with severe penalties for noncompliance.
GLBA, or the Gramm-Leach-Bliley Act, is one of these regulations imposed on US financial organizations, dictating how they collect and handle this sensitive data. This article delves into the essential requirements for GLBA and provides insights on how organizations can comply with them.
What is GLBA?
GLBA is a federal law regulating financial institutions’ handling of consumer personal information. It was enacted in 1999 to repeal Glass-Steagall Act’s provisions and modernize the financial services industry by promoting competition among banks, securities companies, and insurance firms. GLBA requires financial institutions to develop and implement a written information security program outlining administrative, technical, and physical safeguards to protect customer data.
The act also mandates that financial institutions provide their customers with privacy notices detailing their information-sharing practices and giving them the right to opt out of having their data shared with non-affiliated third parties. In summary, GLBA is critical to data security because it establishes standards and guidelines for safeguarding consumer information in the financial industry.
What are the three key rules of GLBA?
At the core of GLBA are the three rules of financial privacy, safeguarding, and pretexting. These rules outline the responsibilities and requirements that financial institutions must comply with to protect customer data. They set boundaries for limiting what data is collected, how it is protected, and manage risks.
Financial Privacy Rule
GLBA mandates the Financial Privacy Rule, requiring financial institutions to provide customers with a privacy notice explaining the types of information collected, how it is shared, and the measures to protect it. The rule requires institutions to provide this notice annually and when establishing a customer relationship.
This rule focuses on customer privacy, limiting the disclosure of nonpublic personal information to non-affiliated third parties unless the customer can opt out. In layperson’s terms, it gives customers control over whom financial organizations share data. Most organizations implement robust data security policies and procedures to accomplish this. They ensure customers understand their rights and limit data access to protect sensitive financial data from unauthorized access or disclosure.
The Safeguard Rule is a part of the Gramm-Leach-Bliley Act that requires financial institutions to establish a comprehensive information security program. This rule protects customers’ personal information from unauthorized access or use. The rule requires financial institutions to identify and assess the risks to customer information in each area of their operation, including employee training and management, information systems, and service providers.
Institutions must implement safeguards to control these risks and regularly monitor and test their effectiveness. Data security is crucial to compliance with the Safeguard Rule since institutions must protect their customers’ personal information using appropriate measures, such as encryption and access controls. The Federal Trade Commission (FTC) and other federal regulators enforce this rule.
The Pretexting Rule is a regulation aimed at protecting individuals’ personal information. The rule prohibits obtaining personal information under false pretenses. It makes it illegal for others to use deceptive tactics to get confidential information about another individual, such as their Social Security number or financial data. This rule directly targets social engineers who may attempt to trick employees into accidentally disclosing account information about someone else.
To comply with this rule, financial institutions must implement strong data security measures to protect their customers’ personal information from being accessed by unauthorized individuals who may use it for pretexting. This requires implementing policies and procedures that limit access to confidential data, monitoring systems for unauthorized access, and training employees on the importance of safeguarding personal information.
Complying with the Pretexting Rule and implementing effective data security measures are crucial for financial institutions to implement as they help prevent fraudulent activity and protect their customers’ sensitive data.
Why Managing Insider Threats is Crucial for GLBA Compliance
Managing insider threats is critical to GLBA compliance in the financial industry. There is a significant risk of insider threats, causing severe financial and reputational damage to an organization.
Potential insider threats include employees with access to sensitive customer data who may intentionally or unintentionally leak or use this information for personal gain. Financial institutions need to implement effective strategies to mitigate and manage these risks, such as conducting thorough background checks on employees, monitoring employee activity, limiting access to sensitive data, and implementing regular training and awareness programs.
What is GLBA Compliance & How Does Sotero Help?
Adhering to GLBA is crucial not only for compliance purposes but also for maintaining customers’ trust and confidence by protecting their sensitive information.
Sotero is a data security platform that helps financial institutions achieve GLBA compliance by providing various tools and strategies to keep data private and limit access.
Sotero starts with a foundation of in-use encryption and tokenization technology to protect data throughout its lifecycle, at rest, in motion, and in use. This technology ensures that even if cybercriminals steal data, it remains useless to them without the keys to decipher it.
The encryption layer is augmented by real-time monitoring and anomaly detection features to detect any unusual activity that could indicate a security breach or data misuse. Sotero’s anomaly detection aids GLBA protection as it identifies both external attackers and internal threats.
Sotero also streamlines the GLBA security and compliance processes by automating tasks and generating reports, making it easier for institutions to manage compliance requirements.
Try Sotero today and see how their data security platform can help your organization easily meet complex compliance mandates like GLBA.