Certified Information Privacy Professional (CIPP) Practice Questions 2025 – All-in-One Guide to Exam Success!

The correct answer highlights an important aspect of the Right to Financial Privacy Act (RFPA) concerning how financial institutions handle disclosures. Under the RFPA, the requirement for customer notification generally applies whenever a financial institution discloses a customer's financial records to third parties. However, when it comes to submitting a suspicious activity report (SAR), financial institutions are exempt from notifying customers about such disclosures.

These SARs are critical tools used by financial institutions to report suspicious transactions that may indicate money laundering or fraud. The protection of this type of disclosure is vital for law enforcement and regulatory efforts in detecting and preventing financial crimes. The nature of SARs is such that notifying the customer could potentially alert them to investigations, allowing them to take steps that could hinder law enforcement's ability to investigate the suspicious activity.

Other circumstances, such as disclosures made in response to a judicial subpoena or to regulatory agencies, also typically require customer notification unless specific exceptions apply. Nonetheless, the context surrounding SARs illustrates a unique and necessary exception designed to promote the integrity of financial systems and safeguard against illicit activities.