What must a financial institution do before sharing personal information with nonaffiliated third parties?

Before sharing personal information with nonaffiliated third parties, a financial institution must provide a notice prior to disclosure. This requirement is rooted in privacy regulations that aim to protect consumer information. Specifically, the notice serves to inform consumers about what data is collected, how it is used, and under what circumstances it may be shared with third parties. This disclosure is crucial because it gives consumers the opportunity to understand their rights and allows them to make informed choices about their personal data.

By providing this notice, the financial institution ensures transparency and builds trust with consumers, which is a foundational aspect of privacy compliance. This obligation aligns with the principles established under regulations like the Gramm-Leach-Bliley Act (GLBA), which mandates that financial institutions disclose their privacy policies and practices.

In contrast, other options do not align with the fundamental requirement to notify consumers prior to the sharing of their information and may not fulfill the transparency and consent principles necessary for maintaining compliance with privacy laws.