Welcome back to Continuous Improvement, the podcast where we explore the world of finance, technology, and innovation. I’m your host, Victor, and in today’s episode, we’re diving into the fascinating world of virtual banking regulations in the United States.

As a FinTech consultant, I’ve been studying the security and regulation landscape in the US financial sector, specifically in relation to virtual banking. The US operates under a unique “dual banking system,” which means banks can be chartered by either one of the 50 states or by the federal government. But regardless of who charters the bank, there are regulations that virtual banks must adhere to.

Let’s start with the Gramm-Leach-Bliley Act, commonly known as the GLBA. This act mandates that financial institutions inform their customers about their information-sharing practices and protect sensitive data. The GLBA is enforced by the Federal Trade Commission (FTC), federal banking agencies, other regulatory bodies, and state insurance oversight agencies.

Under the GLBA, financial institutions must have safeguards in place to protect client information. These safeguards extend to their affiliates and service providers as well. Additionally, financial institutions must issue specific notices and adhere to limitations on the dissemination of nonpublic personal information.

Now, let’s move to the California Consumer Privacy Act, or CCPA. This act grants consumers more control over their personal data collected by organizations. It provides rights such as knowing what data is collected and how it is used, requesting the deletion of personal information, opting out of the sale of personal information, and non-discriminatory treatment.

California voters also approved the California Privacy Rights Act, or CPRA, which expands existing privacy rules further. However, some exemptions will expire on January 1, 2023, making the full range of CPRA standards applicable.

Moving on, the NYDFS Cybersecurity Regulation imposes strict cybersecurity standards on financial institutions in New York. Banks, mortgage companies, and insurance providers must implement comprehensive cybersecurity plans and maintain reporting systems for cybersecurity events.

When it comes to outsourcing technology services, there are guidelines outlined in the Information Technology Examination Handbook. Financial regulators have the authority to oversee all activities and records, ensuring compliance with federal consumer financial regulations.

And let’s not forget the Consumer Financial Protection Bureau, which has its own guidelines for information technology examination procedures. While aspects of a product or service can be outsourced, the responsibility for compliance with regulations cannot be delegated.

To summarize, virtual banks operating in the US must comply with various regulations related to data protection, privacy, cybersecurity, and financial operations. This includes the Gramm-Leach-Bliley Act, the California Consumer Privacy Act, NYDFS Cybersecurity Regulation, outsourcing guidelines from the Information Technology Examination Handbook, and more.

Understanding and adhering to these regulations is crucial for virtual banks to protect their customers’ information, maintain compliance, and build trust in the financial sector.

That’s it for today’s episode of Continuous Improvement. I hope you found this overview of virtual banking regulations in the US insightful. Stay tuned for more episodes where we explore the latest trends, challenges, and innovations in the world of finance and technology.

As always, I’m your host Victor, and thank you for listening to Continuous Improvement.