With whom can financial institutions share customer data?

With whom can financial institutions share customer data?

• A. Anyone who requests it
• B. Others who need to know about the customer
• C. Only other financial institutions
• D. With the public for transparency

Answer: (B)

Financial institutions can share customer data with those who have a legitimate need to know, often referred to as "need-to-know" criteria. This typically includes parties involved in transactions, regulatory authorities, or other financial institutions that are taking part in activities related to customer transactions, compliance, or risk assessment. Sharing customer data in this manner is essential for preventing fraud, money laundering, and other financial crimes, as it allows relevant parties to have the information necessary to make informed decisions. The need-to-know basis ensures that customer information is protected and used appropriately, adhering to regulations such as the Gramm-Leach-Bliley Act in the U.S., which outlines the circumstances under which sharing customer information is permitted. This action is guided by principles of confidentiality and the aim to secure personal customer data while allowing essential information sharing that contributes to the broader financial system's integrity.

Financial institutions can share customer data with those who have a legitimate need to know, often referred to as "need-to-know" criteria. This typically includes parties involved in transactions, regulatory authorities, or other financial institutions that are taking part in activities related to customer transactions, compliance, or risk assessment. Sharing customer data in this manner is essential for preventing fraud, money laundering, and other financial crimes, as it allows relevant parties to have the information necessary to make informed decisions.

The need-to-know basis ensures that customer information is protected and used appropriately, adhering to regulations such as the Gramm-Leach-Bliley Act in the U.S., which outlines the circumstances under which sharing customer information is permitted. This action is guided by principles of confidentiality and the aim to secure personal customer data while allowing essential information sharing that contributes to the broader financial system's integrity.