GDPR: From the EU to US
U.S. businesses with a presence in the EU need to be aware of the GDPR law and its implications on data storage.
I have been reading a lot about GDPR in European publications. Although GDPR is focused on citizens of the European Union (EU), it will affect companies in the U.S. doing business in the EU and storing information relative to citizens in the EU.
What Is GDPR?
It stands for General Data Protection Regulation. This is a law passed by the European Union in 2016 to protect EU private citizens' identity rights and reduce identity theft. GDPR applies to any business operating in the EU, no matter where the organization is located. All sensitive, personal information relating to EU subjects must be stored securely and protected according to the law's requirements.
Every country that does business in the EU must conform to the GDPR standards. When the EU GDPR goes into effect next year, organizations will have 72 hours to report detected breaches to the relevant authorities. Failure to do so could result in a significant fine up to €20 million, or 4 % of total annual sales, whichever is greater. Non-compliance is equal to a data breach. Also the actual location of the data, in the EU or outside, does not change the enforcement of GDPR regulations.
To learn more, I contacted Gary Southwell, GM & VP Security Products Division at CSPi. He delivered a presentation on GDPR at the recent Cyber Security Chicago conference. CSPi delivers a portfolio of cyber security solutions and services focused on rapid data breach response, enterprise-wide breach prevention and critical asset protection.
Why Was GDPR created?
The European Commission felt that companies were not doing enough to protect the rights of its citizens, particularly in light of numerous, never-ending data breaches within enterprises that are exposing this information and putting its citizens at risk. It also helps these citizens to have their information removed by a company or ported to another entity upon written notification. This better allows citizens control of the use of their information.
What Countries Does GDPR Cover? It directly covers all EU counties and the U.K. which has agreed to abide by it -- 26 countries in total. Indirectly, it has impact on other countries under treaty who have companies collecting EU citizen data, including the U.S.
When Is It Going to be Enforceable, and Why at That Time?
It goes into enforcement on May 28, 2018. The law was passed in 2016, providing approximately two years for companies to be ready for its enforcement.
What Kinds of Organizations Does It Affect?
It effects all commercial entities that are housing EU citizen data.
Is This Primarily for the European Union?
Its protections only cover EU citizens but its intent is to protect their data no matter where it's stored -- within or outside the EU.
How Does GDPR Affect US-Based Organizations?
It directly affects any U.S. organization which has a presence in the EU -- those companies are subject to fines if the law is violated. Other U.S. companies are also affected because of Privacy Shield and the Judicial Readiness Act. EU citizens can individually or through class action law suit sue any U.S. company that exposes their citizen's data through a breach or unintentional act.
Who in U.S. Organizations Should Be Most Concerned about the Implementation of GDPR?
C-level executives should all be concerned, as it impacts the way companies collect, store, and treat Personally Identifiable Information (PII) data. CIOs and CSOs are typically the ones who end up with direct accountability, but CEOs also must deal with it to set proper strategy across the organization.
The Deadline is May 2018. What Should U.S. Companies Do to Prepare?
- Understand their level of exposure -- Do they have a presence in the EU or the U.K.? Do they collect EU citizen data?
- Understand how such data is collected and where it is stored.
- Understand how to protect that data. If it is properly encrypted and proven, fines can be avoided.
- Have a system in place that helps detect if critical data has been breached within hours. We recommend they record the conversations with the database servers and file servers that house this data so it can be searched when a breach is suspected.
- Automate the process so that if security equipment picks up a potential intruder, these searches happen automatically. If so, a detailed file of the conversation with the Personally Identifiable Information (PII) asset and the intruder should be produced. This will tell which records were exposed and if they were encrypted. It will also tell if the data was exfiltrated.
I discovered that there is a requirement to create the position of a data protection officer (DPO) whenever the organization's core business involves processing personal data that involves regular and systematic monitoring of large amounts of sensitive personal data. EU member countries will have discretion to enact national provisions that impose further requirements concerning the appointment of DPOs. You cannot avoid the regulations by outsourcing the data storage. If you are a US-based organization, then you should consider the appointment of a DPO.