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Financial Institution Letters
The Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision are jointly proposing the attached guidelines establishing standards for safeguarding customer information as required by the Gramm-Leach-Bliley Act (GLBA). The agencies are also seeking comment on the rescission of Year 2000 standards for safety and soundness. Comments are due by August 25, 2000.
The National Credit Union Administration has proposed essentially the same guidelines as part of its security program requirements.
GLBA requires the banking agencies to establish appropriate standards for financial institutions relating to the administrative, technical and physical safeguards of customer records and information. The standards' objectives are to:
Information Security Program
The proposed guidelines describe the agencies' expectations for creating, implementing and maintaining an information security program. This program must include administrative, technical and physical safeguards appropriate to the size and complexity of the institution and the nature and scope of its activities.
The proposal describes the oversight role of the institution's board of directors in this process as well as management's continuing duty to evaluate and report to the board on the program's overall status. Institutions will be required to:
The guidelines describe the elements of a comprehensive risk-management plan designed to control identified risks and achieve the overall objective of ensuring the security and confidentiality of customer information. They identify the factors an institution should consider in evaluating the adequacy of its policies and procedures to effectively manage these risks commensurate with the sensitivity of the information, as well as the complexity and scope of the institution and its activities. The agencies intend that these elements accommodate institutions of varying sizes, scopes of operation and risk-management structures.
The agencies invite comment on the degree of detail that should be included in the guidelines regarding the risk-management program, which elements should be specified in the guidelines, and any other components of a risk-management program that should be included.
Involvement of the Board of Directors and Management
The guidelines describe the responsibilities of the board of directors and management in developing and implementing an information security program. The board's responsibilities are to:
Management's three responsibilities in developing an information security program are to:
The agencies specifically invite comment on the appropriate frequency of reports to the board, as well the designation of a Corporate Information Security Officer or other individual responsible for developing and administering the institution's information security program.
An institution should exercise appropriate due diligence in managing and monitoring its outsourcing arrangements to confirm that its service providers have implemented an effective information security program to protect customer information and customer information systems consistent with these guidelines. The agencies welcome comments on the appropriate treatment of outsourcing arrangements.
The agencies invite comment on how this proposal would impact community banks. The agencies recognize that community banks operate with more limited resources than larger institutions and may present a different risk profile. Therefore, the agencies specifically request comment on the impact of this proposal on community banks' current resources and available personnel with the requisite expertise. Comments should address whether the standards are reasonable and realistic for community banks, and whether the proposed regulation's goals could be achieved for community banks through an alternative approach.
For more information, please contact Jeffrey M. Kopchik (202-898-3872) or Thomas J. Tuzinski (202-898-6748) in the FDIC's Division of Supervision, or Robert A. Patrick (202-898-3757) in the FDIC's Legal Division.
NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (800-276-6003 or (703) 562-2200).
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