A Guide to GLBA Compliance

Cybercrimes and human error can put a business at risk for legal repercussions when confidential information is stolen or corrupted. Companies are also susceptible to downtime when security issues occur, which can halt production and impact productivity.

IT security compliance aims to help organizations avoid fines and penalties while protecting customer information. This is usually accomplished by implementing technologies that safeguard consumer data privacy and prevent costly data breaches.

Adhering to applicable security requirements can also preserve a business's reputation and improve company culture. GLBA is one necessary security standard to be aware of.

What is GLBA?

GLBA stands for Gramm-Leach-Bliley Act or the Financial Services Modernization Act of 1999. The United States Congress passed it to safeguard consumer financial privacy due to the sensitive nature of such information.

Companies that act as "financial institutions"—companies that offer consumers financial products or services such as loans, financial or investment advice, or insurance—are required by GLBA to inform their customers about their information-sharing practices and protect sensitive data. 

The law restricts when a financial institution may release a customer's nonpublic personal information (NPI) to unaffiliated third parties. Customers must be informed about financial institutions' information-sharing practices and can opt-out if they do not want their information shared with certain nonaffiliated third parties.

Furthermore, any company that gets consumer financial information from a financial institution may be limited in its ability to reuse and re-disclose that information.

Importance of GLBA compliance

The GLBA's central objective is to broaden and tighten consumer data privacy protections and limits. The key priority of IT professionals and financial institutions regarding the GLBA is to secure and ensure the confidentiality of clients' private and financial data. GLBA compliance is essential for every financial institution, as noncompliance can be costly and destructive to the company's ability to continue operating.

If organizations take steps to secure NPI and comply with the GLBA, they will profit not only from enhanced security and the avoidance of penalties but also from greater consumer trust and loyalty.

Who is regulated by GLBA?

The Gramm-Leach-Bliley Act covers all businesses, regardless of size, that are "significantly engaged" in providing financial products or services to customers. 

Check cashing businesses, payday lenders, mortgage brokers, nonbank lenders, personal property or real estate appraisers, retailers who issue branded credit cards, professional tax preparers, and courier services are all examples of businesses that aren't traditionally considered financial institutions. 

The regulation also applies to organizations that obtain client information from other financial institutions, such as credit reporting agencies and ATM operators. Companies subject to the regulation must take steps to guarantee that their affiliates and service providers preserve client information in their care and create their own safeguards. 

These businesses must gather personal information from their consumers, such as names, addresses, phone numbers, bank and credit card account numbers, income and credit histories, and social security numbers, as part of their financial activities. 

Compliance with the GLBA is required. Regardless of whether a financial institution publishes NPI, it must have a policy to secure the data from foreseeable security and data integrity issues.

What are the three key rules of the GLBA compliance?

The Gramm-Leach-Bliley Act has three primary components: Financial privacy rule, safeguards rule, and pretexting protection. 

1. Financial privacy rule

The Financial privacy rule requires financial institutions to give each customer a privacy notice at the start of the relationship and every year after that. This privacy notice must describe the information acquired about the customer, where that information is shared, how it is used, and how it is safeguarded.

The consumer's right to opt out of having their information shared with unaffiliated parties must also be indicated in the notification. 

2. Safeguards rule

The Safeguards rule requires financial institutions to create a written information security plan that explains how they will prepare for and secure their customers' nonpublic personal information. The College has a Data Classification Policy in place to meet these requirements, and programme coordinators have been designated to oversee compliance with various forms of protected personal information. 

3. Pretexting protection

The Gramm-Leach-Bliley Act requires the financial institution to take reasonable precautions against pretexting, which occurs when someone tries to get access to personal nonpublic information without the proper authority. This rule's criteria are met by the College's Fair & Accurate Credit Transaction Act Policy, often known as Red Flag Rules. 

It comprises an annual risk assessment of the covered accounts' security and privacy threats and any necessary changes to security systems. In addition, the yearly examination of procedures for employees who have access to protected data and information is also part of the annual assessment. 

Requirements of GLBA

Financial institutions, or companies that give consumers financial products or services such as loans, financial or investment advice, or insurance, are required by the Gramm-Leach-Bliley Act to explain their information-sharing policies to their clients and to preserve sensitive data.

Financial institutions are required to create suitable standards linked to the administrative, technical, and physical safeguards of customer records and information under Section 501 of the GLBA, "Protection of Nonpublic Personal Information." The GLBA Data Protection Rule defines the extent of these measures, stating that financial institutions must: 

• Ensure the security and privacy of consumer information. 
• Protect against any dangers or hazards to the data's security or integrity that could be reasonably anticipated. 
• Protect against unauthorized access to or use of such data that could cause a customer significant harm or annoyance.

GLBA also mandates that financial institutions use encryption to reduce the risk of sensitive data being disclosed or altered while in storage or transit. Implementations of encryption should include: 

• Encryption strength is adequate to shield the information from exposure until there is no serious risk of revelation 
• Key management principles that work 
• Reliability that is strong 
• Endpoints of encrypted communication must be adequately protected.

GLBA compliance checklist

The Gramm-Leach-Bliley Act (GLBA) mandates that financial institutions protect consumer financial information. With the rise of mobile applications, ensuring compliance with GLBA regulations through proper mobile app security is critical.

Below is a comprehensive checklist that CTOs and CISOs should follow to secure mobile applications while ensuring GLBA compliance:

Data in transit and at rest encryption

• Ensure sensitive financial data is encrypted when stored on mobile devices (data at rest) and when transmitted over networks (data in transit).
• Use strong encryption protocols like AES-256 for encryption and TLS 1.2/1.3 for secure transmission.
  
  

Secure API communication

• Implement secure, authenticated APIs for data exchange between mobile applications and backend systems.
• Use OAuth 2.0 or OpenID Connect for API authentication.
  
  

Multi-Factor Authentication (MFA)

• Enforce MFA for all users, especially for those accessing sensitive data or performing financial transactions.
• Use strong authentication methods, such as biometrics (e.g., fingerprint, facial recognition) or time-based one-time passwords (TOTP).
  
  

Role-Based Access Control (RBAC)

• Implement RBAC to limit access to sensitive data based on the user’s role within the organization.
• Review and update roles and permissions regularly to ensure minimal access to sensitive data.
  
  

Session management

• Securely manage user sessions to prevent session hijacking or unauthorized access. Set short session timeouts and use token-based authentication.
• Ensure sessions are invalidated upon user logout or inactivity.
  
  

Limit data collection

• Only collect and store the minimum amount of personal financial data necessary for app functionality.
• Regularly review data collection practices to ensure no unnecessary sensitive information is being collected.
  
  

Regular vulnerability scanning

• Continuously scan mobile applications for vulnerabilities, and immediately patch any discovered weaknesses.
• Leverage mobile-specific vulnerability scanners that focus on both platform and app vulnerabilities.
  
  

Prompt security updates

• Implement an automated process for deploying security patches and updates to mobile apps.
• Regularly review mobile operating system and third-party software for updates and apply patches promptly.
  
  

Privacy policy disclosure

• Provide a clear and transparent privacy policy within the app that discloses what personal data is collected and how it is used.
• Ensure the policy complies with GLBA requirements for consumer privacy disclosures.
  
  

User consent and data usage

• Obtain explicit user consent for data collection, especially for sensitive information like financial data.
• Provide users with the ability to opt out of data collection where appropriate.
  
  

Regular GLBA audits

• Conduct regular internal audits to ensure that mobile app security measures align with GLBA requirements.
• Ensure proper documentation and reporting for all security measures and incidents, maintaining compliance with GLBA’s Safeguards Rule.
  
  

Stay informed of GLBA updates

• Continuously monitor regulatory changes to the GLBA and adjust security practices to ensure ongoing compliance.
• Keep mobile app security practices aligned with both GLBA and emerging regulations (e.g., CCPA, GDPR).

Penalties of GLBA Non-Compliance

Gramm-Leach-Bliley Act applies to all penalties for noncompliance, including fines and imprisonment. If a financial institution breaks the GLBA standards: 

• Each breach will result in a civil penalty of up to $100,000 for the institution. 
• For each infraction, the institution's officers and directors will be subject to and personally accountable for a civil penalty of not more than $10,000. 
• Fines or imprisonment for not more than five years, or both, will be imposed on the institution and its officials and directors under Title 18 of the United States Code.