On June 20, 2019, the Federal Energy Regulatory Commission (“FERC”) approved a North American Electric Reliability Corp. (“NERC”) petition to adopt Reliability Standard CIP-008-6 to strengthen the reporting requirements for attempts to compromise the operation of the United States’ bulk electric system. The prior Critical Infrastructure Protection (“CIP”) Reliability Standards only required reporting where an incident compromised or disrupted one or more reliability tasks. The new standard applies to all registered entities subject to the CIP Reliability Standards.
Just a day after the ICO provided notice of its intention to fine British Airways £183m ($228m) over a separate breach (please see our blog post here), on Tuesday, July 9, 2019, the ICO released another statement of its intention to fine Marriott International, Inc. (“Marriott”) over £99m ($123m) in relation to a security incident affecting the Starwood reservation database which Marriott had acquired in 2016 and discovered in November 2018. The statement came in response to Marriott’s filing with the US Securities and Exchange Commission that the ICO intended to fine it for breaches of the GDPR.
The Chinese government is proposing heightened requirements on cross-border transfers of personal information from China, recently publishing draft Measures on Security Assessment of Cross-border Transfer of Personal Information (the “Draft Measures”). This comes less than a month after the Chinese government issued another draft Measures for Data Security Management which require network operators to conduct a security assessment for any transfer of important data (i.e. any data that may directly affect China’s national security, economic security, social stability, or public health and security if leaked) to overseas. The Draft Measures now focus on the cross-border transfer of personal information by network operators and are viewed as a continuous effect of the Chinese government to strengthen the data protection in China.
The SEC’s Office of Compliance Inspections and Examinations (OCIE) released two Risk Alerts, on April 16, 2019 and May 23, 2019, highlighting the importance of privacy and cybersecurity compliance for SEC-registered investment advisors and broker-dealers under Regulation S-P. As previously covered on Data Matters, OCIE has consistently identified cybersecurity as one of its main areas of focus for examinations.
Indeed, cybersecurity was once again identified by OCIE in its 2019 National Exam Program Examination Priorities (2019 Exam Priorities), which placed a particular emphasis on proper configuration of network storage devices, information security governance, and policies and procedures related to retail trading information security. With the issuance of the April 16 and May 23 Risk Alerts, OCIE has provided additional detail regarding specific issues that SEC-registered entities should focus on to mitigate privacy and cybersecurity risk, as well as to prepare for examinations.
The 25th of May, 2019 marked a year since the EU General Data Protection Regulation (“GDPR”) came into force. For most in privacy, involvement with the GDPR has been ongoing for well over this year, but on the first anniversary of the GDPR we take an opportunity to look back and reflect on where we are now in relation to some key areas of interest including enforcement action, privacy litigation, breach notification and developing guidance from the European Data Protection Board (“EDPB”).
On May 15, 2019, President Donald Trump signed an executive order (EO) declaring a “national emergency” related to certain threats against information and communications technology and services (ICTS) in the United States and authorizing the Department of Commerce to block transactions that involve ICTS with a “foreign adversary.” The EO provides for the possibility of a licensing regime that could allow transactions that would otherwise be blocked. The EO is available here.
The EO itself does not mention any particular countries or companies that would be subject to its prohibitions. However, the EO is widely reported to be aimed at China. Indeed, tensions between the United States and China have intensified over the past week, after negotiations between the two governments to resolve their trade dispute stalled.
As the legislative session drew to a close, what once seemed like an inevitability suddenly looked unlikely. The Washington Privacy Act, SB 5376/HB1854, failed to make its way through the legislative process. The Bill’s sponsor, Sen. Reuven Carlyle, called the game on April 17, tweeting that despite the “unprecedented 46-1 vote” in the Senate, “[u]nfortunately, House failed to pass privacy legislation this year. We’re committed to 2020.” Nevertheless, the State of Washington did pass notable privacy legislation, albeit on a more narrow topic.
Singapore may soon mandate data breach notifications and data portability via amendments to the Singapore Personal Data Protection Act, or PDPA. The PDPA applies to all organizations that collect, use and disclose data in Singapore, and the PDPA has extraterritorial effect as it applies to all organizations collecting, using or disclosing personal data from individuals in Singapore (whether or not the company has a physical presence in Singapore).
Over the last few years, States have enacted increasingly aggressive legislation concerning data privacy and security, raising concerns that companies will be subject to a patchwork of different standards. Congress has recently taken notice, convening hearings on potential federal privacy legislation, with the possibility of preemption a hot topic during the hearings. Last week, the Federal Trade Commission (“FTC”) got into the act as well, releasing two notices of proposed rulemaking (“NPRM”) on potential changes to its the Standards for Safeguarding Customer Information (“Safeguards Rule”) and Privacy of Consumer Financial Information Rule (“Privacy Rule”) under the Gramm-Leach-Bliley Act. The proposed amendments – and particularly the proposed changes to the Safeguard Rule – signal the FTC’s desire to align its rules with those of key states and to further protect customer information held by financial institutions.
The UK Financial Conduct Authority (“FCA”) has carried out a multi-firm review of cybersecurity practices with a sample of 20 firms in the wholesale banking and asset management sectors (the “Report”). The review aimed to look more closely at how wholesale banking and asset management firms oversee and manage their cybersecurity, including the extent to which firms identify and mitigate relevant cyber risks and their current capability to respond to and recover from data security incidents.