The Statewide Title Newsletter and Legal Memorandum

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Issue  72  Article  141
Published:  7/1/2001

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Gramm-Leach-Bliley Act
Bonnie Windom, Easter Operations Director

The Gramm-Leach-Bliley Act ("GLB") allows financial institutions (banks, securities firms and insurance companies) to form affiliations and controlled business arrangements that were previously prohibited by law. In order to protect personal privacy, amendments were incorporated, before passage, that restricts financial institutions from disclosing information that is not otherwise public to unaffiliated third parties if it is gained from its customers. This is accomplished by requiring these institutions to provide each customer an annual written disclosure of its privacy policy and an opportunity to deny any third party disclosure of such information. The initial privacy notice must be provided to existing customers by July 1, of this year.

The Federal Trade Commission has adopted interpretive regulations that provide that the definition of a financial institution also includes any person "providing tax planning and tax preparation services" and "an entity that provides real estate settlement services" to consumers "primarily for personal, family, or household use." It is rapidly becoming the consensus among the Bar that this applies to attorneys doing individual estate planning and firms closing residential real estate. Some are arguing for reading wider applicability into this interpretation out of a sense of due caution.

Members of the ABA and NCBA are looking into this issue, and hope to be communicating recommendations to the membership soon. Reportedly, the ABA is organizing an effort to secure legislation that will exempt attorneys from this requirement. The North Carolina Bar Association’s web site can be found at www.ncbar.org. Various list servers and bar organizations are beginning to promulgate forms of notice tailored to law practice. Until change is effected, it would be wise to prepare for sending notice to all applicable current clients and providing it to new ones with your initial contact.


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