FTC Proposes Significant and Sweeping Changes to COPPA and Requests Public Comment
On January 11, 2024, the Federal Trade Commission (“FTC”) published its Notice of Proposed Rule Making (“NPRM”) seeking to update the FTC’s Children’s Online Privacy Protection Act (“COPPA”) Rule in the Federal Register. Among other things, the proposed changes would require more granular privacy notices, require fairly detailed identification of, and parental consent to, third-party data sharing (including targeted advertising), expand the scope of personal information subject to COPPA, make it easier for parents to provide consent via text message, clarify various requirements around EdTech, including school authorization for parental consent, and impose significant new programmatic information security and data retention requirements.
Unofficial Final Text of EU AI Act Released
On 22 January 2024, an unofficial version of the (presumed) final EU Artificial Intelligence Act (“AI Act”) was released. The AI Act reached political agreement early December 2023 (see our blog post here) and had undergone technical discussions to finalize the text since. It was reported that the document was shared with EU Member State Representatives on 21 January 2024, ahead of a discussion within the Telecom Working Party, a technical body of the EU Council on 24 January 2024, and that formal adoption at the EU Member State ambassador level (i.e. COREPER) will likely follow on 2 February. On Friday 26 January 2024, the Belgian Presidency of the Council officially shared the (analysis of the) final compromise text of the AI Act with Member State representatives – clearly indicating that this text will be put forward for adoption.
Federal and State Regulators Fine Foreign Bank for Unauthorized Disclosure of Confidential Supervisory Information
On January 17, 2024, the New York Department of Financial Services (NYDFS) entered into a consent order with Industrial and Commercial Bank of China Ltd. (ICBC or the Bank), resolving a matter in which ICBC’s New York branch disclosed confidential supervisory information (CSI) without authorization. The order includes a civil monetary penalty of $30 million. Two days later, the Board of Governors of the Federal Reserve System (Federal Reserve) entered into a consent cease-and-desist order with ICBC and its New York branch that includes a fine of approximately $2.4 million for the unauthorized disclosure of CSI. The Federal Reserve specifically noted that its action was taken in conjunction with the prior action of NYDFS.
EU Reaches Political Agreement on Cyber Resilience Act for Digital and Connected Products
On 30 November 2023, the EU reached political agreement on the Cyber Resilience Act (“CRA”), the first legislation globally to regulate cybersecurity for digital and connected products that are designed, developed, produced and made available on the EU market. The CRA was originally proposed by the European Commission in September 2022. Alongside the recently adopted Data Act, Digital Operational Resilience Act (“DORA”), Critical Entities Resilience Act (“CER”), Network and Information Systems Security 2 Directive (“NISD2”) and Data Governance Act, the CRA builds on the EU Data and Cyber Strategies, and complements upcoming certification schemes, such as the EU Cloud Services Scheme (“EUCS”) and the EU ICT Products Scheme (“EUCC”). It responds to an increase in cyber-attacks in the EU over the last few years – in particular the rise in software supply chain attacks which have tripled over the last year –as well as the significant rise in digital and connected products in daily life which magnifies the risk of such attacks.
EU Reaches Historical Agreement on AI Act
On 8 December 2023 — following three days of lengthy and intensive negotiations — EU legislators reached political agreement on the world’s first stand-alone law regulating AI: the EU’s AI Act. The EU considers the AI Act as one of its key pieces of legislation and fundamental to ensuring the EU becomes the world’s leading digital economy.
Agreement Reached on the EU’s Data Act
On 27 November 2023, the Council adopted the final text of the Data Act which facilitates (and in certain cases, mandates) the access to (personal and non-personal) data. The Data Act was originally proposed by the European Commission in 2022. Alongside the EU Data Governance Act (which came into force in June 2022) the Data Act forms part of the EU’s Data Strategy which aims to “make the EU a leader in a data-driven society”. (more…)
Insights from the IAPP Europe Data Protection Congress: Regulatory Convergence on AI and Sidley’s Women in Privacy Networking Lunch
The International Association of Privacy Professionals (IAPP) held its annual Europe Data Protection Congress in Brussels on November 15 & 16, 2023. Whilst the Congress covered a wide range of topics related to privacy, cybersecurity and the regulation of data more broadly, unsurprisingly a recurring theme throughout was the responsible development, commercialization and use of AI. In this regard panelists explored (amongst other things) what practical and effective AI governance may look like, the role of a Digital Ethics Officer, how to strike a balance between enabling innovation and safeguarding individual rights, and how AI may be used to automate data breach detection and response.
UK Information Commissioner’s Office Publishes Toolkit for Data Sharing with Law Enforcement
The Information Commissioner’s Office (“ICO”) has introduced a toolkit on data sharing with law enforcement (“Toolkit”) which supplements the ICO’s existing guidance on sharing personal data with law enforcement authorities. The Toolkit is intended to function as a tool for smaller organisations to make an informed decision about whether to share personal data with law enforcement. Larger organisations with expertise in data protection are encouraged to refer to the ICO’s data sharing code of practice but in any event, the Toolkit is intended to help provide clarity for all organisations in making decisions relating to this type of sharing.
U.S. SEC Division of Exams Announces 2024 Examination Priorities
On October 16, 2023, the U.S. Securities and Exchange Commission (SEC) Division of Examinations (EXAMS or Division) issued its annual examination priorities, which, for the first time, was published at the start of the SEC’s fiscal year to “better inform investors and registrants of key risks, trends, and examination topics” the Division intends to focus on in the coming year.1
Latest Wave of SEC Off-Channel Communications Enforcement Actions: Five Takeaways
On September 29, 2023 — the last business day of its fiscal year — the U.S. Securities and Exchange Commission (SEC) issued the latest in a series of actions charging 10 firms with recordkeeping failures in connection with employees’ use of unapproved applications on personal devices to engage in communications relating to the firms’ business (known as “off-channel communications”).1 The firms charged included broker-dealers, investment advisers, and dually registered broker-dealers and investment advisers as well as one family of firms that self-reported conduct to the SEC. To date, the SEC has charged over 40 registrants and leveled over $1.6 billion in penalties as part of its off-channel communications matters. Other regulators, including the Commodity Futures Trading Commission (CFTC), have brought similar cases.
