EU-US Privacy Shield

EU-US Privacy Shield invalidation business implications follow-up

Since the Court of Justice of the European Union (CJEU) invalidated the EU-US Privacy Shield in their Schrems II judgement delivered two weeks ago, many questions have arisen around international data transfers to the US.

After the invalidation of the EU-US Privacy Shield by the CJEU two weeks ago, as reported by Aphaia, data transfers to the US require another valid safeguard or mechanism that provides an adequate level of data protection similar to the one granted by the GDPR.

European Data Protection Board guidelines

With the aim of clarifying the main issues derived from the invalidation of the EU-US Privacy Shield, the European Data Protection Board (EDPB) has published Frequently Asked Questions on the Schrems II judgement. These answers are expected to be developed and complemented along with further analysis, as the EDPB continues to examine and assess the CJEU decision.

In the document, the EDPB reminds that there is no grace period during which the EU-US Privacy Shield is still deemed a valid mechanisms to transfer personal data to the US, therefore businesses that were relying on this safeguard and that wish to keep on transferring data to the US should find another valid safeguard which ensures compliance with the level of protection essentially equivalent to that guaranteed within the EU by the GDPR.

What about Standard Contractual Clauses?

The CJEU considered the SCC validity depends on the ability of the data exporter and the recipient of the data to verify, prior to any transfer, and taking into account the specific circumstances, whether that level of protection can be respected in the US. This seems to be difficult though, because the Court found that US law (i.e., Section 702 FISA and EO 12333) does not ensure an essentially equivalent level of protection.

The data importer should inform the data exporter of any inability to comply with the SCCs and where necessary with any supplementary measures and the data exporter should carry out an assessment to ensure that US law does not impinge on the adequate level of protection, taking into account the circumstances of the transfer and the supplementary measures that could be put in place. The data exporter may contact the data importer to verify the legislation of its country and collaborate for the assessment. Where the result is not favourable, the transfer should be suspended. Otherwise the data exporter should notify the competent Supervisory Authority.

What about Binding Corporate Rules (BCRs)?

Given that the reason of invalidating the EU-US Privacy Shield was the degree of interference created by the US law, the CJEU judgement applies as well in the context of BCRs, since US law will also have primacy over this tool. Likewise before using SCCs, an assessment should be run by the data exporter and the competent Supervisory Authority should be reported where the result is not favourable and the data exporter plans to continue with the transfer.

What about derogations of Article 49 GDPR?

Article 49 GDPR comprises further conditions under which personal data can be transferred to a third-country in the absence of an adequacy decision and appropriate safeguards such as SCCs and BCRs, namely:

  • Consent. The CJEU points out that consent should be explicit, specific for the particular data transfer or set of transfers and informed. This element involves practical obstacles when it comes to businesses processing data from their customers, as this would imply, for instance, asking for all customers’ individual consent before storing their data on Sales Force.
  • Performance of a contract between the data subject and the controller. It is important to note that this only applies where the transfer is occasional and only for those that are objectively necessary for the performance of the contract.

What about third countries other than the US?

The CJEU has indicated that SCCs as a rule can still be used to transfer data to a third country, however the threshold set by the CJEU for transfers to the US applies for any third country, and the same goes for BCRs.

What should I do when it comes to processors transferring data to the US?

Pursuant to the EDPB FAQs, where no supplementary measures can be provided to ensure that US law does not impinge on the essentially equivalent level of protection as granted by the GDPR and if derogations under Article 49 GDPR do not apply, “the only solution is to negotiate an amendment or supplementary clause to your contract to forbid transfers to the US. Data should not only be stored but also administered elsewhere than in the US”.

What can we expect from the CJEU next?

The EDPB is currently analysing the CJEU judgment to determine the kind of supplementary measures that could be provided in addition to SCCs or BCRs, whether legal, technical or organisational measures.

ICO statement

The ICO is continuously updating their statement on the CJEU Schrems II judgement. The latest version so far dates 27th July and it confirms that EDPB FAQs still apply to UK controllers and processors. Until further guidance is provided by EU bodies and institutions, the ICO recommends to take stock of the international transfers businesses make and react promptly plus they claim that they will continue to apply a risk-based and proportionate approach in accordance with their Regulatory Action Policy.

Other European Data Protection Authorities’ statements

Some European data protection supervisory authorities have provided guidance in response to the CJEU Schrems II judgement. While most countries are still considering the implications of the decision, some other are warning about the risk of non-compliance and a few of them like Germany (particularly Berlin and Hamburg) and Netherlands have openly stated that transfers to the US are unlawful.

In general terms, the ones that are warning about the risks claim the following:

  • Data transfers to the U.S. are still possible, but require the implementation of additional safeguards.
  • The obligation to implement the requirements contained in the CJEU’s decision is both on the businesses and the data protection supervisory authorities.
  • Businesses are required to constantly monitor the level of protection in the data importer’s country
  • Businesses should run a previous assessment before transferring data to the US.

The data protection supervisory authority in Germany (Rhineland-Palatinate) has proposed a five-step assessment for businesses. We have prepared the diagram below which summarizes it:

Can the level of data protection required by the GDPR be respected in the US?

The CJEU considered that the requirements of US domestic law and, in particular, certain programmes enabling access by US public authorities to personal data transferred from the EU, result in limitations on the protection of personal data which do not satisfy GDPR requirements. Furthermore, the CJEU stated that US legislation does not gran data subjects actionable rights before the courts against the US authorities. 

In this context, it seems difficult that a company could be able to demonstrate that they can provide an adequate level of data protection to personal data transferred from the EU, because basically it would have to bypass US legislation.

Latest moves in the US Senate does not shed light in this issue, because the “Lawful Access to Encrypted Data Act” was introduced last month. It mandates service providers and device manufacturers to assist law enforcement with accessing encrypted data if assistance would aid in the execution of a lawfully obtained warrant.

Do you make international data transfers to third countries? Are you affected by Schrems II decision? We can help you. Aphaia provides both GDPR and Data Protection Act 2018 consultancy services, including data protection impact assessments, and Data Protection Officer outsourcing. We also offer CCPA compliance servicesContact us today.

BCR Changes for Brexit

BCR Changes for Brexit: EDPB releases statement guiding enterprises.

The European Data Protection Board (EDPB) released a statement of guidance on Binding Corporate Rules (BCRs), for groups of undertakings, or enterprises which have the UK ICO as their lead supervisory authority (BCR Lead SA).

 

The EDPB released a statement of guidance on Binding Corporate Rules (BCRs), for groups of undertakings, or enterprises which have the UK ICO as their lead supervisory authority (BCR Lead SA). As shifts are made towards the official implementation of Brexit, many structural and procedural changes are being made for businesses. One such change, adopted on July 22, 2020, based on the analysis currently undertaken by the EDBP on the consequences of the CJEU judgment,  Data Protection Commissioner v Facebook Ireland, and Schrems, regarding BCRs as transfer tools. The EDPB recently released a statement outlining BCR changes for Brexit implementation, complete with a table guide regarding the criteria for a BCR Lead SA change, how and why, and referencing the legislation for each criteria. 

 

Procedural Changes for Authorized BCR Holders

 

Enterprise holders with the ICO as their competent Supervisory Authority (BCR Lead SA) will need to arrange for a new BCR Lead in the EEA, according to Article 29 Working Party, Working Document Setting Forth a Co-Operation Procedure for the approval of BCRs for controllers and processors under the GDPR, WP263 rev.01, endorsed by the EDPB. This change in BCR Lead will need to take place before the end of the Brexit transition period. For BCRs already approved under the GDPR, the new BCR Lead SA in the EEA will have to issue a new approval decision following an opinion from the EDPB. However, no approval by the new BCR Lead SA is necessary for BCRs for which the ICO acted as their BCR Lead SA under Directive 95/46/EC. 

 

Content Changes for Authorized BCR Holders.

 

Before the end of the Brexit transition period, BCR holders with the UK’s ICO as their BCR Lead SA will need to amend their BCRs, referencing the EEA legal order. Without these changes (or a new approval, where applicable), by the end of the transition period, these enterprises or groups of undertakings will no longer be able to use their BCRs for transfers of data outside the EEA beyond the transition period.

 

Procedural Changes for BCR Applications Before the ICO.

 

Any groups of undertakings of enterprises with BCRs at the review stage with the ICO are encouraged to identify a new BCR Lead SA according to the guidance of the WP263 rev.01 before the end of the Brexit transition period. They will need to contact the new SA and provide the necessary information to apply to have the SA considered as the new BCR Lead SA. The new BCR Lead SA will then take over the application process and begin the aproval procedure, subject to an opinion of the EDPB. 

 

Groups of undertakings or enterprises may choose to transfer their application to a new BCR Lead SA after approval by the ICO, in which case, the new BCR Lead SA will need to approve this new application before the end of the transition period, as the new competent SA, according to Article 47.1 GDPR.

 

Content Changes for BCR Applications Before the ICO.

 

Groups of undertakings or enterprises with BCRs in the process of approval by the ICO must make sure that their BCRs refer to the EEA legal order with information on expected changes, before the end of the Brexit transition period. 

 

General Changes for BCR Applications 

 

Any Supervisory Authority in the EEA, approached to act as the new BCR Lead SA, will consider whether it is indeed the appropriate SA on a case by case basis, based on the criteria of the WP263 and in collaboration with any other concerned Supervisory Authorities. The EDPB has provided a checklist of elements for Controller and Processor BCRs which need to be changed due to Brexit, as part of this statement released last month. 

 

Does your company have the UK ICO as their lead supervisory authority? If so, you may be required to make significant changes before the end of the Brexit transition period. Aphaia’s data protection impact assessments, GDPR and Data Protection Act 2018 consultancy services and Data Protection Officer outsourcing will assist you with ensuring compliance.

Trustworthy Artificial Intelligence

Assessment List for Trustworthy Artificial Intelligence Overview.

Early this month the High-Level Expert Group on Artificial Intelligence (AI HLEG) presented their final Assessment List for Trustworthy Artificial Intelligence.

As reported in our blog, the piloting process of the Ethics Guidelines for Trustworthy AI was launched in the first EU AI Alliance Assembly, which took place on 26th June 2019. The results have been published now and they aim to support AI developers and deployers in implementing Trustworthy AI.

Background

Following the publication of the first draft in December, on 8 April 2019 the AI HLEG presented the Ethics Guidelines for Trustworthy AI, which addressed how a trustworthy AI should be, that is: ‘lawful’, ‘ethical’ and ‘robust’ and the requirements it should meet, namely: human agency and oversight, technical robustness and safety, privacy and data governance, transparency, diversity, non-discrimination and fairness, societal and environmental well-being and accountability.

While the theoretical requirements and principles set up the bases for achieving Trustworthy AI, there was still a need for operationalization that allowed businesses and companies to implement them in practice. This is the goal pursued by the Assessment list for Trustworthy AI, which is deemed to be the operational tool of the Guidelines.

The piloting process

The piloting process, where Aphaia has participated, involved more than 350 stakeholders.

Feedback on the assessment list was given in three ways:

  • An online survey filled in by participants registered to the process;
  • The sharing best practices on how to achieve trustworthy AI through the European AI Alliance and
  • A series of in-depth interviews.

How should I use the Assessment List for Trustworthy AI (ALTAI)?

If you are developing, deploying or using AI you should make sure that all your AI systems comply with AI Trustworthy requirements and principles before effectively implement them.

Goal: identifying the risk for people’s fundamental rights derived from the use of your AI systems and applying the relevant mitigation measures to minimise those risks while maximizing the benefit of AI.

Steps: Self-evaluation through the ALTAI is the first step to check the gaps and design an action plan. The ALTAI is intended for flexible use, by which organisations can draw on elements relevant to the particular AI system from the list or add elements to it as they see fit, taking into consideration the sector they operate in. According to the AI HLEG, for this purpose you should: 

  • Perform a Fundamental Rights Impact Assessment (FRIA) prior to self-assessing any AI system;
  • actively engage with the questions the list raises; 
  • involve all relevant stakeholders, either within and/or outside your organisation;
  • seek outside counsel or assistance where necessary and
  • put in place appropriate internal guidance and governance processes.

The seven requirements

1.Human agency and oversight

“AI systems should support human agency and human decision-making, as prescribed by the principle of respect for human autonomy”. In this section, organisation should reflect on how to deal with the affects AI systems can have on:

  • Human behaviour, in a broad sense.
  • Human perception and expectation when confronted with AI systems that ‘act’ like humans.
  • Human affection, trust and (in)dependence.

The questions derived from the topics above will help organisations to decide necessary oversight measures and governance mechanisms or approaches, such as:

  • Human-in-the-loop (HITL) or the capability for human intervention in every decision cycle of the system.
  • Human-on-the-loop (HOTL) or the capability for human intervention during the design cycle of the system and monitoring the system’s operation.
  • Human-in-command (HIC) or the capability to oversee the overall activity of the AI system and the ability to decide when and how to use the AI system in any particular situation.

Questions in this part mainly arise around AI systems interaction with end-users and their learning and training process. 

2.Technical robustness and safety

“Technical robustness requires that AI systems are developed with a preventative approach to risks and that they behave reliably and as intended while minimising unintentional and unexpected harm as well as preventing it where possible”. In this section, organisations should reflect about the following issues:

  • Resilience to attack and security.
  • Safety.
  • Accuracy.
  • Reliability, fall-back plans and reproducibility.

There are two key requirements to obtain positive results on the above:

  • Dependability, which comprises the ability of the AI systems to deliver services that can justifiably be trusted.
  • Resilience, which means the robustness of the AI systems when facing changes, either in the environment or due to the presence of other agents, human or artificial, that may interact with the AI system in an adversarial manner.

Questions in this part mainly arise around AI systems undesirable and unexpected behaviour, certification mechanisms, threats prevision, documentation procedures and risk metrics.

3.Privacy and data governance

“Closely linked to the principle of prevention of harm is privacy, a fundamental right particularly affected by AI systems”. In terms of data protection, the principle of prevention of harm involves:  

  • Adequate data governance that covers the quality and integrity of the data used.
  • Relevance of the data used  in light of the domain in which the AI systems will be deployed.
  • Data access protocols.
  • The capability of the AI system to process data in a manner that protects privacy.

Questions in this part mainly arise around the type of personal data used for training and development, the implementation of GDPR mandatory measures and requirements and AI systems alignment with relevant standards such as ISO.

4.Transparency

“A crucial component of achieving Trustworthy AI is transparency which encompasses three elements: 1) traceability, 2) explainability and 3) open communication about the limitations of the AI system”:

  • Traceability: the process of the development of AI systems should be properly documented.
  • Explainability: this item refers to the ability to explain both the technical processes of the AI system and the reasoning behind the decisions or predictions that the AI system makes, which should be understood by those directly and indirectly affected.
  • Communication: AI system’s capabilities and limitations should be communicated to the users in a manner appropriate to the use case at hand and this could encompass communication of the AI system’s level of accuracy as well as its limitations.

Questions in this part mainly arise around traceability measures such as logging practices, users surveys, information mechanisms, and the provision of training material and disclaimers.

5.Diversity, non-discrimination and fairness

“In order to achieve Trustworthy AI, we must enable inclusion and diversity throughout the entire AI system’s life cycle”. When it comes to AI systems, either when training or operating, discrimination may derive from:

  • Inclusion of inadvertent historic bias.
  • Incompleteness.
  • Bad governance models.
  • Intentional exploitation of consumer biases.
  • Unfair competition.

Questions in this part mainly arise around the strategies or procedures to avoid biases, educational and awareness initiatives, accessibility, user interfaces, Universal Design principles and stakeholder participation.

6.Societal and environmental well-being 

“In line with the principles of fairness and prevention of harm, the broader society, other sentient beings and the environment should be considered as stakeholders throughout the AI system’s life cycle”.

The following factors should be taken into account:

  • Environmental well-being.
  • Impact on work and skills.
  • Impact on society at large or democracy.

Questions in this part mainly arise around the mechanisms to evaluate the environmental and societal impact, the measures to address this impact, risk of de-skilling of the workforce and the promotion of new digital skills.

7.Accountability

“The principle of accountability necessitates that mechanisms be put in place to ensure responsibility for the development, deployment and/or use of AI systems”. Closely linked to risk management, there are three elements that should be considered in this regard:

  • Measures to identify and mitigate risks.
  • Mechanisms for addressing the risks.
  • Regular audits.

Questions in this part mainly arise around audit mechanisms, third-party auditing processes, risk training, AI ethics boards and due protection for whistle-blowers, NGOs, trade unions.

Do you need assistance with the Assessment List for Trustworthy AI? We can help you. Our comprehensive services cover both Data Protection Impact Assessments and AI Ethics Assessments, together with GDPR and Data Protection Act 2018 adaptation and Data Protection Officer outsourcing.

European Commission on Transition

European Commission Released Communication on transition between EU and UK.

The European Commission released a statement detailing the implications of the transition between the EU and UK. 

 

As the UK comes to the end of its transitory period from the EU to the end of this year, the European Commission has released communication assessing the country’s readiness for separation from the region. The withdrawal agreement which was entered into on February 1st, 2020 secured the UK’s departure, and stated that the laws of the Union would continue to apply until the end of the transition period ending on December 31st, 2020. The UK continues to participate in Union programmes, the EU’s single market and Customs Union and to abide by Union policies and any international agreements which include the EU. All of this is due to change come January 1st, 2021 when the transition period has ended and the Withdrawal Agreement comes into effect. The transition period therefore serves as a period of continuity to ensure readiness for the implementation of all necessary measures and arrangements and to facilitate negotiation of a new partnership between the EU and the UK by January 1st, 2021. 

 

Negotiations pick up momentum this summer as the EU and the UK seek to reach an agreement on a future partnership before the January 1st 20201 implementation date.

 

While negotiations have been slow in moving during the earlier part of this year, as of June they have picked up, as the UK’s government has made a decision not to extend the transition period. The aim is to reach an agreement on an ambitious partnership covering all areas agreed with the United Kingdom in the Political Declaration by the end of 2020. The resulting agreement would create a relationship very different from the current UK participation in the EU single market and Customs Union, and in the VAT and excise duty area. It is expected that there will be resulting barriers to trade in goods and services and to cross-border mobility and exchanges. All this, compounded by the pressure that businesses are already under due to the COVID-19 pandemic, are expected to cause some disruptions as of January 1st 2021. 

 

Businesses are advised to revisit their existing preparedness plans which were drawn up in the event that the UK’s withdrawal from the Union happened without a withdrawal agreement. While negotiations are still underway, those preparedness plans may still be relevant for the changes at the end of the transition period.

The European Commission released information on the effects of those changes specific to various industries, and implores companies to implement actions to ensure readiness.

 

The European Commission communicated an outline of changes to be expected whether there is an agreement on a future partnership between the EU and the UK or not. As of 1 January 2021, the transition period allowing for the temporary participation of the United Kingdom in the EU Single Market and Customs Union will end, thereby putting a stop to the free movement of persons, goods and services. As a result there will be several automatic changes 

 

The European Commission, since March 2020, has been publishing notices of readiness specific to various industries. To date, there are 59 notices spanning a wide range of industries, and this list will be updated on a regular basis as new notices become available. The Commission calls on all national and European consumer, business and trade associations to ensure that their members are fully aware of the expected changes. The changes being implemented as of January 1st 2020 will be automatic, far reaching and unavoidable. Both logistical and legal changes are to be expected, the effects of which should not be underestimated. Ultimately, businesses still need to undergo their own risk assessments and implement actions to ensure their own readiness. 

 

What does this mean for data protection?

 

As we published in our blog in January, the ICO released an statement on the implications of Brexit on data protection, where they provided some guidance on this matter. That is:

 

During the transition period

  • The GDPR continues to apply in the UK.
  • There is no need for a European representative.
  • ICO GDPR guidance is still relevant.
  • Transfers of data from the UK to the EU and from the EU to the UK are not restricted.

After the transition period

  • The GDPR will be brought into UK law as the ‘UK GDPR’ but the UK will have the independence to keep the framework under review.
  • A European representative may be necessary from the end of the transition period.
  • The ICO will not be the regulator for any European-specific activities caught by the EU version of the GDPR.
  • The DPA 2018 will continue to apply.
  • The ICO will remain the independent supervisory body regarding the UK’s data protection legislation.
  • Data transfers between the UK and the EU may be restricted and adequate safeguards may be necessary.

 

Does your company process  personal information in the UK or transfer personal information between the EU and the UK? If so, Brexit may affect the way you process personal data. Aphaia’s data protection impact assessments, GDPR and Data Protection Act 2018 consultancy services and Data Protection Officer outsourcing will assist you with ensuring compliance.