The European Court of Justice ruling of the Max Schrems vs. Facebook case has determined that the current Safe Harbor agreement between the U.S. and Europe on data transfers is invalid.
Safe Harbor is an agreement drawn up between Europe and the U.S. allowing the transfer of data on users individuals between the two regions. The Safe Harbor agreement harmonises the different data rules either side of the Atlantic and and allows for smooth transfers without worrying about differing legal frameworks.
Mark Thompson, Privacy practice leader at KPMG, said: “The ratification of the Advocate General’s opinion on Safe Harbor is a clear demonstration of Europe taking a strong stance in ensuring that European citizens are provided the same level of protection no matter where the processing of their personal information takes place.
“At the foundation of this is the need for global organisations to take privacy seriously, creating an environment which respects the rights of the individuals whose personal information they process regardless of the mechanism used to legitimise the transfer.
“Global companies will be looking towards regulators for a sensible solution in the near future. There is a risk that if rules around data transfers aren’t handled pragmatically this will result into a restriction on the flow of personal information across global organisations which could have a detrimental impact on their business models. This could potentially impact global trade as organisations would likely be required to re-structure business functions, outsourcing arrangements, business partnerships and re-locate IT assets to ensure processing of personal information does not take place inside the USA. For global organisations this would be a substantial undertaking and the associated costs and practicalities involved could be very significant.
“In the short term we expect to see the Federal Trade Commission (“FTC”) to continue to be the enforcer of Safe Harbor. The FTC has taken additional action against various companies in the last 30 days requiring them to change their privacy practices to bring them into line with Safe Harbor requirements. In addition, the U.S. Department of Commerce will continue to negotiate proposed revisions to Safe Harbor to address the EU’s concerns over the broader transfer of personal information of EU citizens to the USA.”
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