15 March 2019

Data Protection Post Brexit

Data protection post Brexit, Compliance, Subject Access, Fines and Guidance…

‘No deal’ Brexit and personal data flows – Don’t panic

Sadly among the concerns regarding a ‘no deal’ Brexit is the potential impact it may have on flows of personal data between the UK and the EU. Well – don’t panic! Contrary to many doomsayers, there are minimal issues and they are easily resolved with use of the model clauses for data protection agreements.

If the UK leaves the EU with no deal, there would be no immediate change in UK data protection standards: the Data Protection Act (DPA) 2018 remains in place, and the EU Withdrawal Act would in any event incorporate the GDPR into UK law, even if the DPA had not already done this. In this situation, data flows from the UK to the EU would remain unchanged.

For some countries outside the scope of EU data protection law, the European Commission has issued ‘adequacy decisions’ which allow for the transfer of personal data to those countries from the EU. An adequacy finding means the non-EU country has data protection standards equivalent to those under EU law. The UK will preserve the effect of adequacy decisions of the EU regarding third-party countries, allowing for data flows from the UK to the countries deemed adequate.

As the UK DPA 2018 implemented the GDPR into UK law, it is highly likely the UK will receive a positive adequacy decision from the EU. Indeed save in regard to some concerns about future divergence of investigatory powers, it is hard to see how the EU cannot agree the UK is adequate – it has the same law as the EU!

In the interim, if you assess you have a risk over data transfer, then incorporating standard contractual clauses into agreements between EU data controllers and UK data controllers and/or processors can ensure that such data transfers can continue seamlessly. For larger organisations, Binding Corporate Rules may also be appropriate. Also in exceptional circumstances where available safeguards are not in place and data transfer is ‘necessary,’ a limited number of derogations are provided for in article 49 of the GDPR, including obtaining explicit consent from data subjects.

Basic steps for compliance with GDPR and DPA 2018

Almost a year has passed since the GDPR came into effect, and since then serious data breaches have resulted in several high profile companies facing both large fines and bad publicity. With this in mind, we’ve listed 4 basic steps to that will help companies maintain GDPR compliance.

  1. Ensure Privacy Policies and procedures are up to date and compliant: Policies must identify what personal data is being collected, how it is being processed, and the legal basis for such processing.
  2. Prepare a Subject Access Request (SAR) procedure: Companies that fail to respond to SARs may face both fines and criminal charges. Deploying a system for fast identification of an individual’s personal data, as well as a simple means for withdrawing consent for data processing, is vital for GDPR compliance.
  3. Record and monitor all personal data processing: GDPR compliance requires developing and maintaining a data map, in order to allow for rapid identification of third-party processors and controllers.
  4. Conduct Annual Impact Assessments: The GDPR requires that companies identify processing activities that may impact data subjects’ rights and freedoms. This assessment should be conducted annually.
  5. Ensure those within your organisation understand their responsibilities with respect to personal data and compliance. Consider annual training, at least for key individuals within your organisation, such as the DPO and their team.

Real estate firm fined for failing to act on subject access request

On February 6th 2019, a real-estate development firm was fined £1,500 by the ICO for failing to respond to a subject access request (SAR).

A SAR allows a person to request that an organisation provide all of the personal data they hold on that person, and the Data Protection Act affords companies 40 days (under the DPA 1998, now one month under the DPA 2018) to respond to such requests. However, Buckinghamshire-based Magnacrest failed to respond within the 40 day window after receiving an SAR in April 2017.

The requesting individual included a £10 cheque alongside the request, representing the fee organisations were allowed to charge for processing SARs prior to the GDPR, and subsequently complained to the ICO when Magnacrest failed to respond in time. The GDPR, which was brought into effect in May 2018, removed the £10 SAR fee, and decreases the 40 day window to one month.

Upon receiving the complaint, the ICO requested Magnacrest respond to the individual’s request multiple times. When the company failed to do so, the ICO issued an enforcement notice to comply in January 2018. However, Magnacrest still failed to act despite the notice, at which point the ICO brought criminal proceedings against the company.

When the case was heard on February 6th, Magnacrest pleaded guilty to an offence under section 47(1) of the Data Protection Act 1998 for failing to comply with the notice. They were fined £300 for failing to comply, and ordered to pay over £1,100 towards the ICO’s legal fees.

This case serves as a reminder to all companies that process personal data to respond promptly to individual SARs and ICO notices. While Magnacrest’s fines were not considerable, in different circumstances a continued failure to act may result in substantial fines, as well as criminal prosecution.

Facebook may face multi-billion dollar fine over FTC investigation

On February 14th, the Washington Post reported that the US Federal Trade Commission (FTC) has been investigating Facebook, and that the two are currently in negotiations over a record multi-billion dollar fine to settle the investigation.

The investigation focuses on Facebook’s possible violation of a 2011 settlement agreement with the FTC, under which Facebook was required to obtain express consent before changing user privacy settings and was prohibited from misrepresenting information about user data.

The investigation began in March 2018, when it was revealed that the information of roughly 87 million users was shared with Cambridge Analytica, who were engaged by the Donald Trump presidential campaign. The FTC has been investigating Facebook’s relationship with Cambridge Analytica, as well as other more recent problems confronting Facebook, including making public millions of users’ private photos and exposing user accounts to hackers.

The 2011 settlement was the result of complaints filed by the Electronic Privacy Information Center (EPIC), who have urged structural penalties as a result of the Cambridge Analytica scandal, including the divesture of WhatsApp and Instagram. According to EPIC the FTC is authorised to fine Facebook $70 billion, but such a large fine is very unlikely.

Given the ongoing legal battles Facebook faces in several EU jurisdictions, the result of the FTC investigation and current negotiations may provide an insight into how Facebook plans to deal with their related enforcement actions in the EU.

EDPB to issue GDPR-compliance guidelines regarding FATCA

On February 25th 2019, the European Data Protection Board (EDPB) issued a statement regarding personal data transfers from the EU to the US made under the US Foreign Account Tax Compliance Act (FATCA).

Enacted in 2010 to combat tax evasion by US individuals holding non-US bank accounts and assets, FATCA requires non-US financial institutions to provide the US Internal Revenue Service (IRS) with information pertaining to any such accounts or assets. Under FATCA, these institutions must either register directly with the IRS or comply with agreements between the US government and foreign countries.

The statement was made in response to a 2018 European Parliament Resolution concerning FATCA’s adverse effects on EU citizens, specifically ‘accidental Americans’, meaning persons who inherited US citizenship by birth and who have no connection with the US. The Resolution required the EDPB to consider whether, in complying with FATCA, any EU Member States have broken EU data protection laws, and to initiate infringement procedures against any Member States that may have done so.

The EDPB also announced that it is developing guidelines on GDPR data transfer safeguards outlined in Article 46, specifically relating to guarantee provisions included in legally binding and enforceable instruments between public authorities and bodies (Art. 46(2)(a)) and those inserted into administrative arrangements between public authorities and bodies which include enforceable and effective data subject rights (Art. 46(3)(b)).

The guidelines will prove interesting, as they will assess whether intergovernmental agreements between the US and EU Member States implementing FATCA obligations are in fact GDPR compliant.