What Does Financial Modernization Act of 1999 Mean?
The Financial Modernization Act of 1999 is a federal law that requires ensured consumer data security by all organizations, financial institutions and services, including banking, securities, insurance, lending, brokerage, tax preparation and credit counseling. Per the Act, privacy requirement components are as follows: Financial Privacy Rule, Safeguards Rule and Pretexting Protection.
Introduced to the Senate by Senator Phil Gramm, the Financial Modernization Act of 1999 was signed by President Clinton and became law on November 11, 1999.
The Financial Modernization Act of 1999 is also known as the Gramm-Leach-Bliley Act or GLB Act.
Techopedia Explains Financial Modernization Act of 1999
The Financial Privacy Rule, which addresses the collection process and disclosure of personal consumer financial data, applies to all institutions – even those that do not provide financial services. This Rule focuses on informational transactions, rather than the nature of an organization’s activities.
The Safeguards Rule deals strictly with financial institutions and requires safeguard implementation and maintenance to prevent consumer data theft. Pretexting Protection prevents the unauthorized exchange and theft of a consumer’s personal and financial data.