Effective 1999. Revised 2004.
The Gramm-Leach-Bliley Act, also known as the Financial Modernization Act of 1999, requires financial institutions – companies that offer consumers financial products or services like loans, financial or investment advice, or insurance – to explain their information-sharing practices to their customers and to safeguard sensitive data.
The GLBA repealed large portions of the Glass-Steagall Banking Act of 1933 and the Bank Holding Company Act of 1956. It amended the rules to permit banks, brokerage houses and insurance firms to merge. This created a new structural framework whereby a bank holding company could acquire full-service investment banks and insurance companies, while allowing the latter types of firms to form holding companies to acquire banks. As a consequence of GLBA, the U.S. Federal Reserve was granted expanded supervisory power to regulate these new types of financial structures.
§6801. Protection of nonpublic personal information
(a) Privacy obligation policy
It is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information.
(b) Financial institutions safeguards
In furtherance of the policy in subsection (a), each agency or authority described in section 6805(a) of this title, other than the Bureau of Consumer Financial Protection, shall establish appropriate standards for the financial institutions subject to their jurisdiction relating to administrative, technical, and physical safeguards-
(3) to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer.