The Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (GLBA), is a significant piece of federal legislation in the United States that was enacted to oversee the ways that financial institutions handle the private information of individuals. The Act was designed to allow consolidation among financial institutions across the banking, securities, and insurance sectors, while setting rules to protect customers’ personal financial information held by financial institutions.
The GLBA primarily seeks to "modernise" financial services—specifically, it allows banks to affiliate with insurance companies and securities firms but also establishes a series of privacy provisions that require financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. While it enables financial services modernisation by allowing affiliations between banks, securities firms, and insurance companies, it also imposes strict privacy and security obligations on these entities.
The GLBA has been in effect since 1999 and continues to govern the privacy practices of financial institutions in the United States. Compliance with this act is crucial for financial institutions to maintain consumer trust and avoid penalties for privacy violations.
