Regulatory Compliance and the Gramm-Leachy Bliley Act

The Gramm-Leachy Bleley Act or the GLBA was passed ten years ago, in 1999 by the United States Senate.  This was an act that was created in order to facilitate a reform of financial institutions and the services in which they provide.  This was the brainchild of the Texas Senator, Phil Gramm.  Gramm set out to ensure that the services that were, and now are, being offered by the banking industry had a framework, a regulatory compliance guideline, from which to work.

This act extends to the firms and other financial providers along with the business conducted by the banks themselves.  The goal was to modernize the world of financial transactions and services and to put and end to the merger of insurance companies, banks and stock broker firms.  The removal of the policies and the regulations was considered risky, in that the availability of customers personal information would now become available to new institutions without the restrictions that protect the use of that information.  It is noted that the Act does not specifically reference the requirements placed upon the financial institutions of the protection and the privacy of the information of their customers, there were three different provisions regarding the issue of privacy.

Federal agencies where given authority to enforce and to administer the provisions of the Safeguards Rule and the Financial Privacy Rule.  These two rules applied to the securities firms, to the banks and insurances companies that provide services or product to consumers.  Services included are the preparation of taxreturns, the servicing of loans, and the counseling or advice provided by such institutions regarding credit issues.  The CEOs of the institutions are held accountable for the misuse of personal information and can be charged and prosecuted should that misuse of the information occur.  The institutions are also held responsible and face penalties and fines for the leakage or distribution of the personal records of their customers and clients.

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Filed under: Legal, Security

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