the PRIVATE BANK of CALIFORNIA

Bank Regulations and Customer Protection

American Bankers Association article republished: 

08.14.12

Banks have strict regulations regarding data security:

Unlike other industries, banks have a strict regulatory system in place to address security and consumer notification.  In fact, every bank in the U.S. is audited on a regular basis to make sure they are in compliance with these rules. 

The rules were issued in March 2005 by federal financial institution regulators including the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency.  They require that:

• Banks immediately investigate breach incidents and determine if any fraud has occurred or even if it is "reasonably possible."  If so, customers must be notified as soon as possible, unless law enforcement tells the bank that an investigation would be endangered by the notice.
• Regardless of the likelihood of misuse, banks must always notify their regulator when illegal access occurs so that they can monitor the situation.
• If misuse of the data is unlikely, no notice is required.  This is intended to minimize customer inconvenience and prevent undue alarm. Unnecessary warnings could run the risk of creating a "cry wolf" attitude to future notices.