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”).
A recent speech by the Financial Conduct Authority (“FCA”) Director of Specialist Supervision, Nausicaa Delfas, delivered at the Financial Times’ Cyber Security Summit, shows that the FCA, which is the leading financial services regulator in the United Kingdom, is taking the issue of cyber security seriously and that it believes new approaches are needed to combat the threat to financial services firms.
The FCA’s concerns are consistent with those being expressed by US banking regulators and the Group of Seven (G-7) industrial nations who agreed on a set of guidelines to combat cyber risks affecting global financial institutions.
On November 7, 2016, the Standing Committee of the National People’s Congress of China promulgated the Cyber Security Law of the People’s Republic of China (the “Cyber Security Law”) after three rounds of readings in June 2015, June and October 2016, respectively. The Cyber Security Law will enter into force on June 1, 2017. As early as July 1, 2015, the National Security Law of the People’s Republic of China was promulgated, expressly providing that the state shall “safeguard sovereignty and security of cyberspace in the state,” a theme that is reiterated and emphasized in Article 1 of the Cyber Security Law. The introduction of the concept of “cyber space sovereignty” in the Cyber Security Law echoes the views of President Xi Jinping, who is also the head of the Office of the Central Leading Group for Cyberspace Affairs, and who has stated in February 2014 that “[n]o cyber safety means no national security.” Critically, the Cyber Security Law may have global implications, as the Law applies to both Chinese and international businesses engaging in the construction, operation, maintenance or use of information networks in China.
The future of privacy and cybersecurity under President-elect Trump – with a Republican-controlled House and Senate – is far from certain, but his campaign comments indicate an emphasis on robust cybersecurity, perhaps with more openness to both offensive as well as defensive initiatives.
The EU Data Protection Directive requires that data be processed fairly, which includes providing individuals with certain information about how a business uses their data, for example, by way of a privacy notice. These information requirements will be enhanced under the new EU Data Protection Regulation (“GDPR“), which will require many companies to review and amend their employee and customer notices, consents and policies (including privacy notices).
As the financial services sector becomes ever more reliant on new technologies to decrease costs and create more efficient systems, it becomes more vulnerable to cyber attacks. On October 11, 2016, the Group of Seven (“G7”) industrial nations agreed on a set of guidelines to combat the cyber risks that are “growing more dangerous and diverse, [and] threatening to disrupt our interconnected global financial systems and the institutions that operate and support those systems.” These issues have been particularly visible following a number of high profile cybersecurity attacks at financial institutions.
On Sept. 6, the Hong Kong Monetary Authority (the HKMA) announced two initiatives targeted at raising Hong Kong’s profile as a fintech hub: the setting up of the Fintech Innovation Hub (the Hub) and the Fintech Supervisory Sandbox (the Sandbox).
*Updated on September 8, 2016
Earlier this year, German data protection authorities issued guidance (in German) for companies regarding monitoring employees’ work email account and Internet usage. The guidance establishes a framework based on the German Federal Data Protection Act (“FDPA”) and whether the employer allows employees to use their work email and Internet services for personal use. Where personal use is prohibited, the data protection recognize a greater scope for monitoring. The guidance also recognizes that employers may randomly check employees’ Internet use to ensure it is being used only for business purposes. Further, employers may access an employees’ sent and received emails during a long absence if required for business purposes.