On January 26, 2017 Sidley hosted “Data Protection in Finance 2017: GDPR Readiness – Strategies and Practice” in association with DataGuidance. The interactive conference provided opportunities for networking with industry peers, as well as a full day of informative panel discussions focused on practical steps to achieve compliance with the EU General Data Protection Regulation’s (“GDPR”).
2016 was a year of seismic changes in the global data protection and privacy landscape. Here, we look back at the top ten events and issues that shaped 2016, and are poised to shape the year ahead as well.
Year In Review
1. GDPR Adoption
On April 14, the European Parliament voted to adopt the long-awaited EU General Data Protection Regulation (GDPR), formally completing adoption of the GDPR. The GDPR was published in the Official Journal of the EU on May 25, 2016, giving companies and Member States until the May 25, 2018 effective date to implement the Regulation fully. In the wake of its adoption, businesses should have planning under way for implementation of the significantly expanded Regulation by evaluating whether they are subject to the expanded jurisdiction, and if so, completing an internal gap analysis of current data protection practices as compared with the new requirements and rights under the Regulation. Some of the key aspects to consider include data breach response planning under the new 72-hour notice requirement, reviewing existing data protection notices and consents for the more robust obligations, identifying current profiling activities and existing data protection and retention policies and procedures, ensuring privacy impact assessments are carried out where required, and evaluating whether there is an obligation to appoint a data protection officer. Despite the time until the effective date, the extensive preparation necessary to comply presents a challenge as companies around the world refocus resources to develop compliance plans.
2. Political Cyber Warfare
There is a new front in geopolitical battles. (more…)
The third edition of The Privacy, Data Protection and Cybersecurity Law Review appears as the world is converging on more privacy laws that cover more areas of business and are subject to more enforcement. Several Sidley lawyers in the Privacy, Data Security and Information Law practice have contributed to this publication.
After having received over 150 comments on proposed cybersecurity regulations, the New York Department of Financial Services will delay implementation and initiate a new round of notice and comment on a further revised version of cybersecurity regulations. As we reported previously, NYDFS proposed new cybersecurity regulations for the financial sector in September of this year, and the comment period closed mid-November. NYDFS previously announced that the new rules would be effective January 1, 2017 and that covered entities would have 180 days to comply. Reuters reports that NYDFS will now publish a further revised version of proposed regulations on December 28 for public comment with a new effective date of March 1, 2017.
On December 13, 2016 at its plenary meeting, the EU’s Article 29 Working Party (“WP29”) adopted guidance on the EU-US Privacy Shield Framework for businesses and individuals in Europe. Since the U.S. Department of Commerce began accepting certifications to the Privacy Shield in August 2016, almost 1,300 companies have self-certified to the Privacy Shield and we understand many more are awaiting approval from the Department of Commerce.
On December 19, 2016 the Joint Committee of the European Supervisory Authorities (“ESAs”) launched a public consultation (the “Consultation”) on the potential benefits and risks of Big Data for consumers and financial firms to determine whether any regulatory or supervisory actions will be required. The ESAs are three EU-wide supervisory authorities, the European Banking Authority (“EBA”), European Securities and Markets Authority (“ESMA”) and the European Insurance and Occupational Pensions Authority (“EIOPA”).
On 15 December 2016 the Article 29 Working Party (“WP29”) released draft guidelines and FAQs on key provisions in the EU’s General Data Protection Regulation (“GDPR”). The guidelines cover the right to data portability, data protection officers and the lead supervisory authority. The WP29 has invited comments from stakeholders on the draft guidelines and FAQs. The deadline for comments is January 31, 2017. Although this invitation for comment is directed at the new guidance, some members of the WP29 have expressed interest in comments on additional issues for the WP29 2017 work plan, for which guidance has not been issued.
The U.S. Court of Appeals for the Eleventh Circuit has ordered the FTC to halt enforcement of its data security order against LabMD while LabMD challenges the action.
To recap the events leading up to this stay, a data security company allegedly obtained sensitive data from LabMD via a peer-to-peer file-sharing program. Allegedly, after LabMD refused to purchase the company’s security products, it reported the alleged data security vulnerability to the FTC. The FTC accused LabMD of unfair practices in failing to provide reasonable and appropriate security for customers’ personal information, which was allegedly likely to cause harm to customers. In 2015, an Administrative Law Judge dismissed the case, finding that the FTC failed to prove LabMD’s practices were likely to cause substantial customer injury. In July 2016, upon appeal to the full Commission, the FTC reversed the ALJ decision. Although LabMD stopped operating in 2014, the FTC nevertheless ordered LabMD to implement several information security compliance measures because the Lab still maintains medical records. LabMD appealed to the Eleventh Circuit and filed a motion to stay the FTC’s order.
The Bavarian State Commissioner for Data Protection (“BayLDA“) announced on October 20, 2016, that it had fined a company for appointing an IT manager as its data protection officer (“DPO“). Germany’s strict data protection laws mean that appointing a DPO has long been a requirement for some companies in Germany, whereas in most other EU Member States there will be no such requirement until the General Data Protection Regulation (“GDPR”) takes effect.
Ten state German data protection authorities announced on 3 November 2016 that they would be conducting a review of approximately 500 companies in respect of their international transfers of personal data. Under EU data protection laws, there is a general prohibition on transfers of personal data to countries outside the European Economic Area (“EEA“), which do not ensure an adequate level of protection, such as the US, unless certain exemptions apply. Exemptions include, for example, consent of the data subjects, EU-US Privacy Shield certification, Binding Corporate Rules and EU data transfer agreements known as “Model Contracts.”