United States: "No Deal" Brexit May Bring Practical Problems For Privacy And Data Protection

With a "No Deal" Brexit seeming more likely than ever after the UK Parliament voted down a proposed deal in January 2019, concerns are rapidly multiplying about the effects of such a withdrawal from the EU for organizations doing business in the UK, and how those organizations will address numerous practical issues, privacy and data protection among them.

In recently released updates to its post-No-Deal Brexit guidance, the UK's Information Commissioner's Office (ICO) clarifies several privacy-related implications and addresses some common concerns while urging organizations to start preparing now, before the looming March 29, 2019, effective date of a No Deal Brexit.

Will the GDPR Still Apply to Personal Data of UK Data Subjects After a No-Deal Brexit?

According to the ICO, the UK government intends to bring the General Data Protection Regulation (GDPR) directly into UK law upon Brexit (referred to herein as the UK GDPR), to sit alongside the Data Protection Act 2018 as part of the UK's data protection scheme. Therefore, organizations that have implemented GDPR compliance programs should continue to apply those protections to personal data of UK individuals. Despite this continuity, however, the ICO guidance makes clear that data controllers and processors will still need to make significant changes to their data privacy and protection practices before a No Deal Brexit. In particular, organizations will have to address the issues discussed below.

Data Transfers

Data transfers are likely to be the most challenging and burdensome issue that will arise from a No Deal Brexit. Because the European Commission has the power to determine whether a country outside the EU offers an adequate level of data protection, transfers of personal data to countries not deemed "adequate" can be made only subject to certain protections, such as Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs). (Transfers from the European Economic Area (EEA) to the U.S. can also be made subject to the EU-US Privacy Shield; transfers from the U.S. to either the UK or the EEA do not require safeguards.) Although the UK intends to seek an adequacy determination from the European Commission, there is no assurance that such a determination will be forthcoming; even if the UK is eventually deemed to be an adequate jurisdiction, the process may be lengthy. To prepare to implement appropriate safeguards, organizations will first have to understand their data flows and whether they carry out any of the following personal data transfers: (1) from the EEA to the UK, (2) from the UK to the EEA and (3) from the UK to countries outside the EEA. They will then need to adopt appropriate transfer mechanisms.

Transfers from the EEA to the UK. If your organization transfers EEA personal data to the UK, you will need to make sure that there are adequate safeguards in place or that one of the exceptions in GDPR Article 49 applies. For many organizations, the only available data transfer mechanism will be SCCs. You should begin identifying all such data transfers now, and begin the process of entering into SCCs with entities to which your organization transfers data, such as vendors, customers and even internal corporate affiliates, so these agreements are in place before Brexit.

For large multinational organizations that use BCRs as their data transfer mechanism, the ICO guidance indicates that BCRs already in place are likely to permit the transfer from the EEA to the UK, provided that they have been properly updated to show the UK as a third country, although this guidance has not been confirmed by the European Data Protection Board (EDPB).

Transfers from the UK to the EEA. If your organization transfers personal data from the UK to the EEA, the UK government has stated that post-Brexit transfers from the UK to the EEA will not be restricted; however, such transfers will remain under review. No additional action is required at this time with respect to such transfers.

Transfers from the UK to the countries outside the EEA. The ICO's guidance regarding transfers from the UK to countries outside the EEA indicates that the rules will likely not change much. In particular, the ICO expects the UK government to confirm that the UK will accept existing adequacy decisions and European Commission-approved SCCs and BCRs.

Article 27 Representatives

The GDPR requires, subject to certain exceptions, that any controller or processor not established in the EU must appoint a legal representative within the EU. The ICO has issued clear guidance that after a No Deal Brexit, the UK GDPR will require that a controller or processor not established in the UK also appoint a UK representative. As a result, organizations may have to appoint two representatives – one in the UK if they are subject to the UK GDPR but not established in the UK, and another in the EEA if they are subject to the GDPR but not established in the EEA.

Lead Supervisory Authority

Under the GDPR, organizations with at least one establishment (i.e., a physical presence) in the EU, and that engage in "cross-border processing," are permitted, but not required, to choose a lead supervisory authority (LSA). The LSA, or the "one-stop-shop," coordinates "cross-border processing" issues across the EEA, and has primary responsibility for conducting investigations into the organization's data processing activities and responding to its compliance inquiries. An organization's LSA is the Member State in which its "main establishment" is located; the "main establishment" is the central administrative location where "decisions about the purposes and means of the processing of personal data are taken and [that] has the power to have such decisions implemented." After Brexit, organizations whose "main establishment" is in the UK will no longer be able to designate the ICO as their LSA. Moreover, unless those organizations physically move the operations where their decisions about processing of personal data are made to an EEA country, they may, in certain scenarios, lose the ability to designate an LSA altogether, leaving them subject to regulation by multiple EEA data protection authorities.

Data Protection Officers

The ICO's guidance states that Data Protection Officers (DPOs) appointed by a company may continue in that role, and combine their future UK responsibilities with any ongoing EU responsibilities, so long as "they have expert knowledge of both UK data protection law and the EU regime, and are 'easily accessible' from both locations." Because the UK GDPR mirrors the GDPR, your DPO who already possesses knowledge of the GDPR will also necessarily possess knowledge of the UK GDPR. Your DPO should also possess knowledge of the Data Protection Act 2018, which took effect at the same time as the GDPR.

Privacy Notices

ICO guidance suggests that the information required in your privacy notice is unlikely to change.  To the extent that your privacy notice refers to "Union law" or other GDPR-specific terminology, updates will need to be made, and reference to your organization's UK representative, if applicable (as discussed above), will need to be added. If your U.S.-based organization participates in the EU-U.S. and Swiss-U.S. Privacy Shield Frameworks for data transfers from the EU or Switzerland, respectively, to the U.S., you will need to update your privacy notice by March 29, 2019, to affirm that your commitment to the Privacy Shield extends to UK personal data, as we discussed in a recent blog post.

Article 30 Records of Processing

Changes to the information you are required to document are not likely. You may need to review certain of your processing activities involving data transfers to the UK and update your records accordingly. For example, you may now have to classify certain personal data as being subject to international transfer rules and document under which adequate safeguards it was transferred.

Data Protection Impact Assessments

Existing assessments may need to be reviewed to determine whether they cover international data flows that become restricted after Brexit.

Conclusion

If your organization does business in the UK, you should begin to address these issues promptly, certainly in advance of the No Deal Brexit date of March 29, 2019, and continue to monitor any updates and further ICO guidance on this topic.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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