Understanding data privacy and cloud computing
Understanding the Risks of Data Privacy in Cloud Computing
As a corporate general counsel responsible for managing risks associated with a multinational corporation, it is crucial to comprehend the legal landscape related to your company’s activities. With the widespread use of electronic communication and the high costs of maintaining an internal IT infrastructure, cloud computing has emerged as a solution for storing and transferring electronic data efficiently and cost-effectively. However, cloud computing introduces challenges related to data privacy and protection, particularly when data is dispersed across servers located worldwide. This article provides an extensive overview of the factors that corporate counsel must consider before engaging cloud computing services and allowing data to be stored and accessed across international borders.
Data privacy and protection laws primarily aim to safeguard personal information within a country’s jurisdiction. These laws govern how entities and individuals can process data, including collection, preservation, organization, storage, and usage. When utilizing mobile devices for business purposes, scenarios may arise where data from a Mexican citizen working in Canada is stored by a cloud computing provider based in Brazil. In such cases, the data privacy statutes of all three countries become relevant. Corporate counsel must actively track the movement of electronic data across borders to ensure compliance with these laws.
Consent is a central focus of most data privacy regulations. Generally, employers (data users) must obtain explicit consent from employees or customers (data owners) before processing their personal information. It is important to understand when and how to obtain consent from data owners, as requirements vary by jurisdiction. For instance, Spanish law mandates written express consent from data owners, which can be revoked at any time. If your company has employees in Spain or another country with stringent data privacy laws, consent from each individual should be obtained, and caution exercised when storing personal information in the cloud.
Certain data privacy statutes provide exceptions to the consent requirement for the processing of personal data during judicial proceedings or to fulfill legal obligations. For example, Argentina’s data privacy law permits cross-border transfers of personal data only to countries that offer similar data protection, unless specific conditions are met, such as obtaining express consent or executing a data transfer agreement with regulatory guidance. Understanding these exceptions is crucial to ensure compliance.
In addition to consent, it is essential to comprehend the security and reporting requirements imposed by data privacy regimes. For example, Mexico’s data protection law mandates adherence to industry-standard security measures and requires prompt notification to data owners in the event of a data breach. Similar reporting obligations exist in other jurisdictions, emphasizing the need for effective communication processes to inform employees or data owners of potential security breaches when utilizing cloud computing services.
Different countries may have varying requirements for the registration and authorization of data users and databases. Argentina’s data protection law, enacted before the widespread use of cloud services, lacks clear guidance on the extent of its registration requirements for cloud-based systems reaching into the country. Understanding these obligations is crucial when establishing cloud services that may extend beyond national borders.
Certain countries, such as Uruguay, permit cross-border transfers of personal data within a group of companies without additional authorization if a code of conduct is registered with the relevant data protection authority. For multinational corporations, it is essential to research such requirements before storing electronic data in the cloud.
Finally, understanding the enforcement mechanisms and potential penalties associated with data privacy regulations is crucial. Mexico, for instance, has established the Instituto Federal de Acceso a la Información (IFAI) to enforce data protection regulations. IFAI has the authority to monitor compliance, respond to data owner complaints, and impose sanctions for non-compliance. Compliance with data privacy regimes and proactive measures to mitigate risks are crucial to avoid significant penalties.
To ensure prudent decision-making regarding cloud computing services and the storage of electronic data, four core issues should be carefully examined: data security, data location, data oversight, and data control. Evaluating the sensitivity of the data being stored,
understanding legal jurisdiction and data protection laws based on the cloud provider’s servers and primary users, examining the provider’s policies for intrusion detection and security audits, and identifying who has access to the corporation’s data are critical steps. Additionally, establishing processes for gathering and processing responsive data in legal proceedings or investigations, including consent forms and consultation with outside counsel, is crucial for compliance.
By comprehensively considering these four core issues and gaining a deep understanding of the data privacy and protection laws applicable to your corporation’s data, the risk of non-compliance and severe consequences can be mitigated.