Guarding the Gate
Data Privacy and Information Sharing in Financial Compliance
Compliance professionals in the U.S. financial sector must navigate a complex landscape where data privacy obligations intersect with regulatory expectations around transparency and information sharing. Financial institutions are not only bound by federal laws such as the Gramm-Leach-Bliley Act (GLBA) and the Right to Financial Privacy Act (RFPA), but increasingly, by state and international data protection laws like the California Privacy Rights Act (CPRA) and the EU’s General Data Protection Regulation (GDPR).
The CPRA expands on California’s earlier consumer privacy laws, giving residents more control over their personal information, including the right to opt out of data sharing and to limit the use of sensitive personal information. While it primarily applies to California residents, financial institutions with national reach must assess their data practices accordingly. Similarly, GDPR—although a European regulation—impacts U.S. financial institutions that process the personal data of EU citizens, especially those with global client bases or operations.
At the federal level, Section 314(b) of the USA PATRIOT Act allows voluntary information sharing between financial institutions to detect and prevent money laundering and terrorism financing, but this sharing must comply with privacy and data security requirements.
To stay compliant, institutions must develop comprehensive data governance programs that include:
Clear policies on data access, retention, and sharing
Secure methods for information transmission and storage
Risk assessments addressing cross-border data exposure
Staff training on privacy laws and consent management
Keeping up with regulatory trends and best practices
Technology solutions such as data loss prevention (DLP), encryption, and audit trail software support compliance, but they must be complemented by strong governance and cultural awareness.
Ultimately, compliance professionals must strike a balance—facilitating essential information sharing while upholding data privacy rights, maintaining regulatory compliance, and protecting institutional trust in a globally interconnected financial ecosystem.
