The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, is a United States federal law that repealed portions of the Glass-Steagall Act of 1933. The GLBA was signed into law by President Bill Clinton on November 12, 1999. The primary purpose of the GLBA is to enhance competition in the financial services industry while ensuring the privacy and security of consumers’ personal financial information.

Key provisions of the Gramm-Leach-Bliley Act include:

1. **Financial Privacy Rule:** The GLBA introduced the Financial Privacy Rule, which governs the collection and disclosure of nonpublic personal information by financial institutions. Financial institutions are required to provide consumers with privacy notices explaining their information-sharing practices and give them the option to opt-out of having their information shared with non-affiliated third parties.

2. **Safeguards Rule:** The Safeguards Rule mandates that financial institutions establish security programs to protect the confidentiality and integrity of nonpublic personal information. These programs should include measures to protect against unauthorized access, use, or disclosure of customer information.

3. **Pretexting Provisions:** The GLBA prohibits pretexting, which involves obtaining consumers’ personal financial information under false pretenses. This provision aims to prevent deceptive practices in obtaining sensitive financial information.

4. **Exceptions and Permissible Sharing:** The GLBA outlines certain exceptions that allow financial institutions to share customer information without providing an opt-out option. These exceptions include sharing information with affiliates, service providers, and for routine purposes related to the customer’s account.

5. **Enforcement:** Various federal agencies, including the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and banking regulators, have authority to enforce the GLBA. Violations of the GLBA can result in penalties and other regulatory actions.

6. **Consumer Protections:** The GLBA includes provisions to protect consumers from fraudulent access to their financial information and requires financial institutions to establish procedures for identifying and responding to signs of identity theft.

The Gramm-Leach-Bliley Act aimed to modernize and streamline regulations in the financial services industry, allowing for greater integration between banking, securities, and insurance services. However, it also sought to balance this integration with measures to protect consumers’ privacy and data security.

Financial institutions subject to the GLBA include banks, credit unions, securities firms, insurance companies, and other entities engaged in financial activities. Compliance with the GLBA is crucial for these institutions to safeguard customer information and maintain consumer trust.