Financial Privacy

On February 24, Congressman Patrick McHenry (NC-10) formally introduced his bill to modernize the Gramm-Leach-Bliley Act (“GLBA”) in the House as H.R. 1165.  The bill was first released as a discussion draft in June 2022, although the latest version reflects a number of updates as compared to the initial…

Continue Reading McHenry Introduces Data Privacy Act of 2023

On November 22, 2022, the Grand Chamber of the Court of Justice of the European Union (“CJEU”) issued its judgment in joint cases C‑37/20 and C‑601/20, holding that provisions of an EU anti-money laundering directive relating to the publication of beneficial ownership registers were incompatible with the EU Charter of Fundamental Rights (“CFR”). The Court found that while deterring money laundering was a valid objective, making data available to the general public was neither a necessary nor proportionate way to achieve this objective, so contravened the CFR. The judgment demonstrates the Court’s view that sharing a person’s personal data with a third party is a serious intrusion, and that the Court will carefully scrutinize any such sharing.

Although the case concerned the CFR, it sheds light on how the Court approaches similar principles that apply in other contexts, including in the context of the GDPR.Continue Reading CJEU Invalidates Public Anti-Money Laundering Registers on Privacy Grounds

On June 23, Congressman Patrick McHenry released a discussion draft of new legislation to modernize federal financial data privacy law. The draft legislation would amend and build on the Gramm-Leach-Bliley Act (“GLBA”). The draft includes notable provisions on consumer rights, data minimization, and disclosures. It also updates the definition of…

Continue Reading Congressman McHenry Releases Discussion Draft of Financial Data Privacy Bill

In Part 1 of this blog series (see here), we discussed recent data protection developments in China’s e-commerce sector.  In this post, we discuss recently issued rules aimed at improving data governance in China’s financial sector that could also have data protection implications.  These rules can be categorized as falling into two groups: the first group focuses on general data governance requirements applicable to all financial institutions, and the second group regulates specific types of financial services.

These new rules were published by the China Banking and Insurance Regulatory Commission (“CBIRC”) and People’s Bank of China (“PBOC”) during the first quarter of 2021, and include:

  • Guidelines for Data Capacity-Building in the Financial Industry (“Guidelines”) (official Chinese version available here);
  • Financial Data Security – Data Life Cycle Security Standard (“Standard”) (official Chinese version available here); and
  • Draft Credit Reporting Management Measures (“Draft Measures”) (official Chinese version available here).

Both the Guidelines and Standard provide detailed criteria for financial institutions on the proper collection, use and protection of “financial data,” while the Draft Measures introduce data-related requirements for licensed credit reporting agencies.  All of these new rules include data security requirements for both personal and non-personal data.Continue Reading Privacy Updates from China: Proliferation of Sector-Specific Rules As Key Legislation Remains Pending – Part 2: Data Protection in the Financial Sector

Covington experts on issues as varied as supply chain and other commercial contracts, employment, and insurance are supporting companies on the commercial implications of Coronavirus COVID-19.  But this blog post provides a brief overview of some of the key issues that privacy and cybersecurity professionals should have top of mind in dealing with response efforts.  We describe below both privacy implications of disclosing data to government authorities and commercial partners and strategies to manage COVID-19 risk by collecting additional information about employees and visitors, as well as the cybersecurity implications of these outbreak prevention and management efforts.

  • Our professionals around the globe have been advising clients on the privacy risks of disclosing health and other personal data to public health authorities and other government agencies.  As we blogged about here, regulators at many different levels of the Chinese government have been actively collecting personal data to monitor and mitigate the spread of the virus, and that’s now happening across the globe.  Other public health agencies worldwide are requesting information from private companies to assist with containing or mitigating the spread of the virus.  For example, they may seek information about a person’s contacts in order to conduct contract tracing of an infected person.  Although public health agencies generally have broad information-gathering authorities, these laws typically do not overcome privacy laws that restrict disclosures of personal or other sensitive information.  Companies may need to consider how to mitigate these legal risks before responding, particularly where more detailed information is requested.
    Continue Reading Key COVID-19 Issues for Privacy and Cybersecurity Professionals

In December 2019, the People’s Bank of China (“PBOC”) issued the draft Measures for the Protection of Financial Consumers’ Rights and Interests for public comment (“draft Financial Consumer Measures”) (an official Chinese version is available here).  Although the draft Financial Consumer Measures focus more broadly on consumer rights in the financial sectors, they imposes upon financial institutions privacy and cybersecurity obligations that—in certain instances—extend beyond the requirements stipulated in China’s Cybersecurity Law (“CSL”).

Following up on the draft Financial Consumer Measures, PBOC issued the Personal Financial Information Protection Technical Specification (“Financial Information Specification”) on February 13, 2020 setting forth additional privacy and cybersecurity requirements applicable to the life cycle of personal financial information collected and processed by regulated financial entities and other entities that process personal financial information (“Financial Industry Entities”). While the Financial Information Specification follows the general personal information protection principles under the Cybersecurity Law (“CSL”) framework, some specific requirements are worth highlighting, as explained below.
Continue Reading China Releases Personal Financial Information Protection Technical Specification

On March 5, 2019 the Federal Trade Commission (“FTC”) published requests for comment on proposed amendments to two key rules under the Gramm-Leach-Bliley Act (“GLBA”).  Most significantly, the FTC is proposing to add more detailed requirements to the Safeguards Rule, which governs the information security programs financial institutions must implement to protect customer data.

In addition, the FTC is proposing to expand the definition of “financial institution” under the Safeguards Rule and the Privacy Rule to include “finders.”  Finally, the FTC is proposing to amend the Privacy Rule to make technical and conforming changes resulting from legislative amendments to GLBA in the Dodd-Frank Act and FAST Act of 2015.

Proposed Revisions to the Safeguards Rule’s Information Security Program Requirements

The Safeguards Rule establishes requirements for the information security programs of all financial institutions subject to FTC jurisdiction.  The Rule, which first went into effect in 2003, requires financial institutions to develop, implement, and maintain a comprehensive information security program.  As currently drafted, the Safeguards Rule has few prescriptive requirements, but instead generally directs financial institutions to take reasonable steps to protect customer information.

The FTC’s proposed revisions would add substantially more detail to these requirements.  Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, explained that the purpose of the proposed changes is “to better protect consumers and provide more certainty for business.”  The new requirements are primarily based on the cybersecurity regulations issued by New York Department of Financial Services (“NYSDFS”), and the insurance data security model law issued by the National Association of Insurance Commissioners.
Continue Reading FTC Proposes to Add Detailed Cybersecurity Requirements to the GLBA Safeguards Rule

On October 18, 2018, the Dutch Supervisory Authority for data protection adopted guidance on the second Payment Service Directive (“PSD2”).  The PSD2 intends to open the financial services market to a larger scale of innovative online services.  To that effect, the PSD2 sets out rules for obtaining access to the…
Continue Reading Dutch Supervisory Authority releases guidance on the interaction between the GDPR and PSD2

Blockchain technology has the potential to revolutionise many industries; it has been said that “blockchain will do to the financial system what the internet did to media”.  Its most famous use is its role as the architecture of the cryptocurrency Bitcoin, however it has many other potential uses in the financial sector, for instance in trading, clearing and settlement, as well as various middle- and back-office functions.  Its transformative capability also extends far beyond the financial sector, including in smart contracts and the storage of health records to name just a few.

A blockchain is a shared immutable digital ledger that records transactions / documents / information in a block which is then added to a chain of other blocks on a de-centralised network.  Blockchain technology operates through a peer network, where transactions must be verified by participants before they can be added to the chain.

Notwithstanding its tremendous capabilities, in order for the technology to unfold its full potential there needs to be careful consideration as to how the technology can comply with new European privacy legislation, namely the General Data Protection Regulation (the “GDPR”) which came into force on 25 May 2018.  This article explores some of the possible or “perceived” challenges blockchain technology faces when it comes to compliance with the GDPR.
Continue Reading The GDPR and Blockchain