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Data protection and a “no deal” Brexit: guidelines for businesses

Posted: 25/03/2019

The possibility of the United Kingdom (UK) leaving the European Union (EU) without a deal, even at the end of any extended period agreed with the EU, is a real risk for businesses to consider. This note explains key issues and preparatory steps to be taken in relation to personal data protection in the event of a “no deal” Brexit. Several of these compliance steps are likely to be required whether or not a deal is reached between the EU and the UK.

What happens in the event of a “no deal”?

In a “no deal” scenario, the EU’s General Data Protection Regulation (GDPR) will form part of UK domestic law by virtue of the EU (Withdrawal) Act 2018 (EUWA) with some amendments made to it, alongside the UK’s Data Protection Act 2018 (DPA) and the UK Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR).

The Data Protection, Privacy and Electronic Communications (Amendments etc) (EU Exit) Regulations 2019 (Exit Regulations) that will come into force on exit day will replace references to EU laws and institutions with references to UK equivalents, so that the UK’s legal framework for data protection can continue to function correctly after exit day.

The Exit Regulations also provide that the UK GDPR will have extra-territorial effect in the same way as the EU GDPR. This means that the UK GDPR will apply to controllers and processors outside the UK (including EU entities) whose processing activities relate to offering goods or services to individuals in the UK or to the monitoring of the behaviour of individuals in the UK.

As far as possible it will be business as usual

There would be no immediate change in the UK’s data protection standard because the DPA will continue to apply and the provision of the GDPR will be incorporated directly into UK law. The UK government has also confirmed that transfers of personal data from the UK to the EEA will not be restricted.

From a UK perspective, no immediate steps need to be taken if an organisation has appointed a data protection officer (DPO), who is either based in the UK or EEA, provided that such DPO is easily accessible to all and is sufficiently skilled in both EU and UK data protection laws. However, this should be kept under review.

What needs to be addressed?

Six key points to consider in case of a “no deal” Brexit from a data protection perspective are as follows:

  • EU to UK personal data transfers

The UK becomes a third country. This means that, unless the EU issues an adequacy decision for the UK, new safeguards will need to be considered for the transfer of personal data from the EU to the UK as well as onward transfers of that data from the UK to third countries.

  • Selecting an alternative lead supervisory authority (LSA) from the UK

As organisations will no longer be able to appoint the UK’s regulator, the Information Commissioners’ Office (ICO), as their lead supervisory authority for EU GDPR compliance, they will need to consider appointing a new lead supervisory authority from an EU member state.

  • US Privacy Shield participants to extend Privacy Shield commitment to UK personal data

US Privacy Shield participants who rely on the Privacy Shield framework to receive personal data from the EU must update the Privacy Shield public commitment to cover personal data received from the UK, and update any necessary privacy policies accordingly.

  • Appointment of EU representative

Organisations that are bound by the EU GDPR and required to appoint a representative in the EU will not be able to rely on a UK representative and may need to appoint a different EU representative.

  • Appointment of UK representative

Organisations that are based outside the UK but bound by UK data protection laws by virtue of their extra-territorial impact (including organisations in the EU) will need to consider appointing a UK representative.

  • Updating records on international data flows

Controllers and processors who are obliged to keep records under Article 30 of the EU GDPR on transfers to “third countries” will now need to update their records to identify transfers from EU to the UK and the compliance mechanism being used for such transfers. UK controllers and processors should also record transfers from the UK to the European Economic Area (EEA).

In light of the above, it is important for UK organisations to plan ahead to ensure that personal data will not only continue to flow but that they can also continue to process personal data of data subjects based in the EEA - especially if they wish to continue offering services and goods to such data subjects or to monitor their behaviour. Likewise, organisations outside the UK that wish to continue offering goods or services to UK data subjects or to monitor their behaviour will also need to consider their compliance steps.

Transferring personal data to the UK

As mentioned above, once the UK has left the EU, it becomes a third country from an EU perspective. This means that the GDPR requirements for transferring data to third countries will apply and that personal data transferred to the UK from the EU must have adequate levels of protection. For example:

  • an adequacy decision is made by the European Commission confirming that the UK has adequate protections in place to safeguard personal data
  • binding corporate rules (BCRs) are entered into to ensure that personal data can easily be transferred between group companies or
  • standard contractual clauses (SCCs) are adopted by the European Commission.

The UK government is planning on seeking an adequacy decision from the European Commission for the UK. This means that the UK’s data protection regime would be recognised by the European Commission as “essentially equivalent” to those in the EU. As a result, data will be able to flow from the EEA without the need for organisations to adopt any other specific measures to allow the international transfer of personal data.

This arrangement will not be in force immediately post-Brexit as the European Commission’s assessment as to whether the UK’s data protection regime is “essentially equivalent” will only start when the UK has left the EU and become a third country.

Without an adequacy decision regarding the UK at the point of the UK leaving the EU, UK organisations that want to receive personal data from organisations established in the EU should work with their EU partners to identify a legal basis for those transfers such as the BCRs and SCCs mentioned above.

For most organisations, the most relevant alternative legal basis would likely be the SCCs which are still in their pre-GDPR form as they have not yet been updated. While this mechanism would allow UK-based organisations to continue to receive personal data from the EU, it will not be sufficient to allow UK organisations to transfer EU personal data to a third country that does not have an EU adequacy decision without further measures being put in place. However, transfers of personal data from countries outside the EU to the UK are likely to remain the same.

Depending on the size of the organisation, it may decide that putting BCRs in place will ensure that personal data can easily be transferred within the organisation. To date, only a limited number of international organisations have put BCRs in place as they are very time-consuming but this may change in the future. Organisations that use approved BCRs or have applied for BCRs with the ICO for their approval of their BCRs will need to identify a new EU/EEA supervisory body as their LSA. Any existing BCRs will also need to be updated to list the UK as a third country.

A transfer from the UK to the EU/EEA - for example, to an EU group company acting as a controller or a processor - where the personal data is then transferred back to the original data exporter in the UK does, in theory, need to be considered as a transfer of data from the EU/EEA entity to the UK entity.

Where the EU entity is a processor and the UK entity is a controller, there are no specific “processor-to-controller” clauses which neatly cover this scenario and further guidance from the European Data Protection Board (EDPB) would be welcomed on this point.

How to continue transferring personal data from the UK

Transfers of personal data from the UK to the EEA will not be restricted.

In addition, transfers of personal data from the UK to countries outside the EEA are likely to remain similar to the pre-Brexit position. This is because the UK government has confirmed that there will be transitional arrangements to recognise most existing EU adequacy decisions, the SCCs and the BCRs.

If an organisation is relying on BCRs, they will need to be updated to reflect that the UK is a third country and, if such BCRs have been authorised by the ICO, they will need a new LSA within the EU/EEA.

Extending EU-US Privacy Shield framework to cover UK personal data

The UK Information Commissioner is preserving the availability of the Privacy Shield for UK personal data flows to the US. However, to take advantage of this, Privacy Shield-certified companies will need to expressly state in their Privacy Shield policies their commitment to applying the Privacy Shield principles to UK personal data. They will also need to make this commitment clear in their human resources (HR) privacy policies if importing HR data from the UK.

Establishing the new lead supervisory authority (LSA)

Under the GDPR, the LSA co-ordinates cross-border processing across the EEA. This is not only important for organisations that have establishments in more than one EEA member state but also for organisations that deal with data subjects based in more than one EEA member state.

The LSA is responsible for conducting investigations into the organisation’s data processing activities and responding to its compliance enquiries. After the UK has left the EU, the ICO will no longer qualify as an LSA under the GDPR, which means that organisations will have to deal with both the ICO and the relevant EU LSA.

The ICO will collaborate with European supervisory authorities regarding any breaches of GDPR that affect individuals in the UK and other EU and EEA member states. The ICO recommends that UK organisations should consider the following:

  • whether their processing of personal data involves cross-border processing under the GDPR
  • whether to carry out cross-border processing after the exit date
  • which other EU and EEA supervisory authority will become lead authority on exit date - if any. You may want to consider the EDPB guidelines for identifying a controller or processor’s lead supervisory, which you can find here.

Appointing a representative in the EU

Under article 27 of the GDPR, irrespective of whether they are data controllers or data processors, organisations which are not established in the EU but are either offering goods or services to data subjects or monitoring the behaviour of data subjects based within the EU will be required to appoint a representative within the EU.

The purpose of this obligation is to ensure that supervisory authorities and data subjects have a point of contact within the EU. It is important that the representative is appointed in one of the EU member states where the data subjects affected by the processing are located but it is not necessary to appoint one for each member state.

The following should be taken into account when appointing a representative:

  • the appointment must be in writing
  • as there are no specific obligations or requirements in respect of the representative’s qualifications or their connection with the organisation, a third party representative can be appointed
  • the representative must have authority to act on behalf of the organisation but this does not affect the liability of the organisation appointing the representative.

After the UK has left the EU, organisations that do not have a presence in the EU or the UK but intend to offer goods and services and/or monitor individuals located in the UK and the EU/EEA may require both a UK representative under the UK GDPR and an EU/EEA representative under EU GDPR.

For example, a company in the United States which has no EU offices currently has to have an EU representative if it intends to sell goods to individuals located in the EU. After Brexit, this US company would need to have both an EU and a UK representative if it wishes to continue to sell goods to individuals in the EU and the UK.

Summary of key actions for a “no deal” Brexit

In the event of a “no deal” Brexit, organisations should focus on the following six actions:

  • review their data flows and transfer mechanisms to ensure that they will not be in breach of their data operations and that their business partners in the EU can continue to share personal data with them
  • if personal data is transferred from the UK to the US in reliance of the EU-US Privacy Shield framework, US recipients should check that they have taken the necessary steps to ensure that UK personal data is protected under this framework. UK entities transferring personal data to any US recipient in reliance of the Privacy Shield should likewise check that these steps have been taken
  • consider which safeguards such as SCCs, BCRs, etc are best suited to their needs
  • update their records regarding international data transfers to include UK/EU data transfers
  • establish which EU supervisory authority will become the new LSA for cross- border transfers within the EU
  • consider appointing an EU representative and/or UK representative and update privacy notices to ensure that they are transparent about the organisation’s processing.

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