Compliance glossary
Definition

Financial Institution (FTC Definition)

Any business significantly engaged in providing financial products or services to consumers, which includes CPA firms, tax preparers, and bookkeepers.

What it means.

The FTC Safeguards Rule defines financial institution broadly under the Gramm-Leach-Bliley Act to include any business significantly engaged in providing financial products or services. CPA firms, tax preparation services, bookkeeping firms, enrolled agents, financial advisors, and similar professionals all qualify, regardless of firm size. Solo practitioners are covered to the same extent as 200-person firms. The definition turns on activity, not formal licensure.

Why it matters for CPA firms.

Many CPA firms still believe the Safeguards Rule is for banks or large brokerages and that tax preparation does not count. The FTC has been explicit that it does. The IRS has reinforced this through PTIN attestation requirements. Believing you are not covered does not change your obligations. If your firm prepares returns or provides any financial advisory service, you are a financial institution under federal law.

Relevant regulations.

  • 16 CFR 314.2(h)
  • Gramm-Leach-Bliley Act (GLBA)

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