GLBA Compliance Checklist: Key Requirements

Navigating the complex landscape of digital compliance and data privacy regulations requires diligence, organization, and expert guidance. Financial institutions face an added layer of complexity in the compliance landscape, as they must comply  with The Gramm-Leach-Bliley Act (GLBA) of 1999.

 GLBA substantially altered how financial institutions manage and protect private consumer data by requiring financial institutions to commit to upholding consumer financial privacy. Today, GLBA is a regulatory framework that provides a roadmap of how to go about securely collecting financial information from their customers.

GLBA focuses on privacy, transparency, and security, emphasizing the importance of protecting customer rights, safeguarding sensitive data, and establishing effective strategies for responding to security incidents. If a financial institution fails to comply with GLBA standards, it can face severe penalties including fines and legal action against the institution itself and its leaders. 

In this article, we provide a thorough GLBA requirements checklist that can guide your organization along the path toward GLBA compliance.

What kind of information does GLBA protect?

GLBA protects nonpublic personal information (NPI) related to consumers' financial transactions and interactions. It covers personally identifiable financial information (PIFI), such as:

• account balances
• payment history
• credit/purchase history
• credit reports
• Social Security numbers
• financial account details
• credit card numbers
• personal income
• tax information
• biometric data
• employment data
• Internet and other electronic information

GLBA extends to sensitive financial information including login credentials and authentication codes, which are often stolen or exploited by fraud and identity theft criminals. Customer lists including names and contact information are also protected under GLBA. The law requires financial institutions to enact strict privacy and security measures to safeguard this information from unauthorized access or misuse.

Complying with GLBA standards means reducing the risk of data breaches, a top priority for IT and cybersecurity teams across industries. In response to GLBA and other compliance frameworks’ guidelines, best practices for privacy and security incorporate internal risk assessments, periodic testing of internal controls, and ensuring third-party compliance by business partners and service providers.

What organizations need to comply with GLBA?

GLBA encompasses a wide array of organizations, extending beyond traditional financial institutions to include any entity that handles sensitive financial information as part of its services. According to 16 CFR 314.2(h), the following types of entities must comply with the GLBA Safeguards Rule:

• Retailers Issuing Credit Cards: Businesses that issue their own credit cards directly to consumers
• Automobile Dealerships: Dealerships that lease automobiles on a non-operating basis for longer than 90 days
• Property Appraisers: Personal property and real estate appraisers
• Career Counselors: Specializing in career services for people in finance-related sectors
• Check Printing Businesses: Companies that print and sell checks to consumers
• Money Transfer Services: Businesses that wire money to and from consumers regularly
• Check Cashing Businesses: Those that cash checks, participating in the exchange of money.
• Tax Preparation Services: Accountants or other services in the business of completing income tax returns
• Travel Agencies in Financial Services: Operating a travel agency in connection with financial services
• Real Estate Settlement Services: Entities providing real estate settlement services
• Mortgage Brokers: Involved in brokering loans, especially for real estate
• Investment and Credit Counseling Services: Advisory companies in investment or credit counseling
• Finders: Companies acting as intermediaries in transactions between buyers and sellers
• Title IV Higher Education Institutions: Schools that are eligible to administer federal student aid programs, which includes disbursing loans and grants to students

NOTE: Even if an organization aligns with the definition of a financial institution, it may be exempt from certain requirements if it maintains fewer than 5,000 consumer records.

Overview of GLBA Compliance Requirements

Under GLBA there are three main sets of regulations that institutions must follow to achieve compliance: the Financial Privacy Rule, Safeguards Rule and Pretexting Rule. These requirements focus on transparency, customer rights, and robust security measures to protect sensitive data from unauthorized access, misuse, or disclosure. 

Financial Privacy Rule

This rule regulates the ways in which financial organizations collect, handle, and disclose both personal and transactional data of customers. It mandates clear communication of the institution's information-sharing practices, ensuring customers are informed and their data is handled with integrity and security. To abide by this rule, institutions must provide a privacy notice issued to customers at least annually or whenever there is a change to the organization’s policies and practices.

Safeguards Rule

Serving as the backbone of data protection within the GLBA framework, this safeguards rule focuses on the actual security of the collected information. It encompasses a range of technical requirements, including robust data encryption, secure data storage, and stringent access management protocols, all aimed at upholding the highest level of data protection in line with current best practices.

Pretexting Rule

This rule is designed to combat and prevent the illicit acquisition of customer information through deceptive means. It addresses concerns around social engineering and pretexting, where individuals or entities attempt to obtain sensitive data under false pretenses through phishing emails/calls and other means. This rule requires financial services institutions themselves to take proactive steps to prevent pretexting.

Fulfilling GLBA Rule Requirements

Privacy Rule Guidelines

The GLBA Financial Privacy Rule requires institutions to share written information explaining what information the institution collects from customers, how it is used, and where or with whom it is shared. 

These are a few tips on how to adhere to the Privacy Rule:

• Develop a set of privacy policies that are straightforward and easy to understand. These policies should clearly outline the types of data you collect, the reasons for collecting it, and the circumstances under which this data will be shared, including who it will be shared with.
• Before collecting any personal information, make sure that your customers have reviewed the privacy notices and given their consent to the terms outlined.
• Implement an automated system to notify customers whenever their personal data is shared with another financial institution or third party, particularly when it's necessary to complete a transaction.
• Provide customers with the option to opt-out of sharing their personal data with non-affiliated third parties. It's important to note that financial institutions must honor opt-out requests within 30 days.
• Regularly review your privacy policies—at least once a year—to ensure they remain up-to-date and effective.
• Communicate any changes to your privacy policies to all customers and relevant stakeholders, ensuring they are fully informed of any updates.

Safeguards Rule Guidelines

By following the Safeguards Rule, financial institutions stringently control and report on the current security controls they employ to protect the data that they collect and store. These measures usually come in the form of policies and controls that safeguard sensitive data from unauthorized access, loss, and accidental disposal. 

The following GLBA Safeguards Rule checklist can help organizations stay organized when approaching this rule’s requirements:

• Information Security 

Financial institutions must implement and develop a robust Information Security Program, which is a structured set of policies, procedures, and practices that are put in place to protect the confidentiality, integrity, and availability of sensitive information and information assets. If your organization pursues GLBA compliance, BD Emerson can assist your team in developing a GLBA information security checklist to ensure that you are meeting all necessary requirements.

• Designated Information Security Coordinator(s)

In order for an Information Security program to be effective, the institution must appoint an employee or several employees to manage the program depending on the size of the company. With an effective Information Security leader/team, the institution can rely on the Infosec team to regularly update and fine-tune policies and controls as needed and schedule compliance audits and employee trainings.

• Risk Assessment

Performing a comprehensive risk assessment is crucial for institutions handling personal and financial information. It is important to identify and assess risks to customer information across all areas of the organization, including employee management, information systems, and detection/prevention of attacks. This process is essential for developing a specialized risk management information security program.

• Design and Implement Safeguards

Financial institutions must establish and implement safeguards to control the identified risks, ensuring that the safeguards are appropriate to the size and complexity of the institution, the nature of its activities, and the sensitivity of the customer information.

• Monitor and Test Safeguards

Though it can be an arduous process, it is critical that institutions regularly monitor and test the effectiveness of the safeguards to ensure they are functioning as intended. Once the testing is complete, the institution’s Information Security team can adjust the safeguards based on the results of these tests and changes in operations.

• Employee Training

When it comes to preventing data breaches and unauthorized access, the human element is always one of the most important, because employees can make mistakes that lead to much bigger problems. The Information Security team must plan trainings and meetings on the topic of properly handling private and sensitive data as well, so that employees can become a crucial line of defense for institutions.

• Vendor Management

A key requirement of GLBA compliance is extending an institution’s own Information Security policies and controls to their vendors. By requiring vendors to adhere to strict security policies, institutions minimize the risks associated with sharing information with third-parties. It is essential for financial institutions to include contractual obligations for these providers to maintain the security of their information.

• Continuous Updating of Information Security Program

Maintaining GLBA adherence means that Information Security controls and policies must be continuously updated and adapted by financial institutions following monitoring and tests and so that they apply to the institution’s current business operations, evolving threats, and changes to laws/regulations.

• Incident Response Plan

The GLBA mandates that covered institutions conduct a comprehensive investigation to assess the potential harm to customers' NPI in the aftermath of a security incident. To do so, institutions need a robust data breach impact analysis and response framework. By implementing such a framework, institutions can accurately gauge the scope and consequences of the breach and, if the incident poses a risk of harm or data misuse, promptly notify affected customers.

Pretexting Rule Guidelines

The Pretexting Rule’s purpose is to safeguard customers from identity fraud by preventing unauthorized access to their private information. Pretexting involves deceiving employees or customers into divulging sensitive data under false pretenses. To combat this, institutions must employ measures including access controls to detect and counteract social engineering tactics that target their organization’s data.

Here are a few ways your institution can prevent pretexting:

• Train all employees to thoroughly verify the legitimacy of any request for information, teaching them to recognize the methods attackers use to extract NPI through seemingly innocent interactions. 
• Leverage advanced spam protection and email filtering technologies, utilizing AI and Natural Language Processing (NLP) to detect common pretexting language, spot email anomalies, and identify domain spoofing attempts.
• Regularly conduct mock phishing exercises to keep employees alert to potential threats and help the security team uncover vulnerabilities in your systems

Taking a proactive approach to pretexting attempts is a key way organizations can protect sensitive customer data and employee information.

GLBA Compliance Checklist

Achieving GLBA compliance is essential for covered institutions to protect customer information and maintain trust. Below is a detailed guide of the steps required to become GLBA compliant. This list of requirements can even act as a GLBA audit checklist if your organization is preparing for a compliance audit.

1. Understand GLBA Applicability and Scope

• Identify Your Organization's Status: Determine if your business is classified as a financial institution under GLBA, which includes entities that offer loans, insurance, financial advice, and other related services.
• Classify Covered Information: Pinpoint the NPI  your organization handles, such as Social Security numbers, financial data, and transaction histories.

2. Appoint a Compliance/Information Security Coordinator

• Assign Responsibility: Designate a specific individual or team to manage the implementation and oversight of your GLBA compliance program. This individual or team will be responsible for ensuring that all compliance controls and policies are executed effectively.

3. Conduct a Risk Assessment

• Identify Potential Risks: Analyze your institution’s operations to reveal vulnerabilities that could jeopardize the security and confidentiality of NPI. Consider risks related to employee behavior, technology, and external threats.
• Evaluate Current Security Measures: Review your existing security systems to determine whether they are adequate to protect sensitive information. Identify any gaps that need to be addressed.

4. Develop a Written Information Security Program

• Create a Comprehensive Security Plan: Draft a written information security program that details the administrative, technical, and physical safeguards your organization will implement to protect NPI. This program should address the specific risks identified in your assessment.
• Specify Security Measures: Include concrete steps, such as encryption protocols, access controls, and secure data disposal methods, to mitigate risks and protect customer information.

5. Employee Training and Awareness

• Train Your Team: Educate all employees on their responsibilities under GLBA, with training security programs focused on recognizing and avoiding social engineering tactics, properly handling NPI, and responding to potential security incidents.
• Promote a Culture of Security: Encourage continuous awareness and vigilance among employees, reinforcing the importance of security in everyday tasks.

6. Ongoing Monitoring and Testing

• Implement Continuous Monitoring: Regularly monitor your security measures to ensure they are functioning as intended. This includes reviewing system logs, monitoring access to sensitive data, and conducting periodic audits.
• Test Security Measures: Perform regular tests, such as vulnerability scans and simulated phishing attacks, to identify weaknesses in your defenses and areas for improvement.

7. Manage Third-Party Service Providers

• Select Service Providers Carefully: Vet service providers thoroughly to ensure they have the capacity to protect NPI in compliance with GLBA requirements. Conduct due diligence before entering into any agreements.
• Contractual Security Obligations: Include clauses in your contracts with service providers that require them to maintain appropriate safeguards for NPI. Periodically review these agreements to ensure continued compliance.

8. Develop a Data Breach Response Plan

• Prepare for Incidents: Establish a detailed data breach response plan that outlines the steps to be taken if NPI is compromised. This plan should include procedures for identifying, containing, and mitigating the impact of the breach.
• Notify Affected Individuals: Ensure that your plan includes a clear protocol for notifying affected customers and relevant authorities promptly if a breach occurs.

9. Provide Privacy Notices to Consumers

• Draft Concise and Transparent Privacy Notices: Create privacy notices that transparently explain your information-sharing practices, detailing what data is collected, how it is used, and with whom it may be shared.
• Distribute Notices Regularly: Provide initial privacy notices when a customer relationship is established, and follow up with annual notices to keep customers informed of any changes to your practices.
• Offer Opt-Out Options: Include a straightforward opt-out mechanism in your privacy notices, allowing customers to prevent the sharing of their information with non-affiliated third parties.

10. Regularly Review and Update Your Security Program

• Annual Reviews: Conduct an annual review of your information security program to verify that it remains effective and up-to-date with the latest threats, regulatory changes, and business practices.
• Adapt to Changes: Stay informed about new risks, technologies, and regulatory developments, and update your compliance program accordingly to maintain ongoing adherence to GLBA requirements.

11. Document Compliance Efforts

• Keep Comprehensive Records: Maintain detailed documentation of all your compliance activities, including risk assessments, employee training sessions, security tests, and incident response actions. This documentation will be critical in the event of a regulatory audit.

12. Prepare for Audits

• Ensure Audit Readiness: Make sure your organization is prepared for potential audits by maintaining up-to-date records, conducting internal reviews, and ensuring that all compliance measures are well-documented and effective.

Following this checklist will not only help your organization achieve GLBA compliance but also strengthen your overall security posture. By proactively addressing these requirements, you can protect your customers' sensitive information, avoid legal penalties, and build trust in your financial services.

Summary

Navigating GLBA compliance demands an organized, structured approach, as outlined in the GLBA checklist above. This checklist provides a list of key steps your organization can follow as it pursues and maintains GLBA compliance. Start by figuring out if your organization is a GLBA covered institution. If it is, assign a dedicated compliance coordinator to oversee the process of achieving GLBA compliance. Conduct a thorough risk assessment to identify gaps in security and other vulnerabilities, then develop a comprehensive information security program with comprehensive policies and controls. Move onto implementing employee training and ongoing monitoring while managing third-party service providers. Prepare a robust data breach response plan so that you have an action plan in case a breach occurs. Finally, don’t forget to regularly review and update your security measures and document all compliance efforts in preparation for future audits. Don’t forget to use the GLBA audit checklist above or make your own! By following these steps, your organization can protect sensitive data, avoid legal penalties associated with non-compliance, and deepen customer trust.

Need guidance?

If the prospect of achieving GLBA compliance independently is too daunting, BD Emerson’s compliance experts can provide practical advice and guidance, helping you determine if your organization should be GLBA compliant, and if so, how to get there.

Schedule a Consultation.