Canada: Outsourcing By Canadian Companies After The USA PATRIOT Act

Last Updated: June 15 2015
Article by Richard Stobbe

Wondering about outsourcing your data to the U.S.? What follows is an update to one of our most popular posts: Outsourcing by Canadian Companies: Another Look at the USA PATRIOT Act, originally written in January 2013.

In that post, we discussed the concern that U.S. government authorities may use the provisions of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act ("PATRIOT Act") to access the personal information of Canadians where that information is stored in the United States in the context of outsourcing or cloud-computing.

We also noted that for private sector businesses there are no specific legal prohibitions on outsourcing to the United States in light of the PATRIOT Act, provided (1) reasonable safeguards are built into the outsource contract (including confidentiality, use-restrictions, security, and provisions to meet monitoring and audit requirements), and (2) customers are notified in a clear way when their personal information will be stored or handled outside Canada. The only exceptions to this are within the public sector, as reviewed in our earlier post.

What Has Changed and What Remains the Same

This is a complicated area of law. Starting in June 2013, Edward Snowden's revelations about N.S.A.'s pervasive warrantless surveillance programs triggered a broader debate about privacy, as well as the specific risks of outsourcing to U.S. companies.

Certain provisions of the PATRIOT Act expired under a sunset clause on June 1, 2015. The U.S. Congress passed the USA FREEDOM Act on June 2, 2015 (in keeping with the American penchant for legislative acronyms, the full name is "Uniting and Strengthening America by Fulfilling Rights and Ending Eavesdropping, Dragnet-collection and Online Monitoring Act").

The USA FREEDOM Act restores many of the expired provisions of the PATRIOT Act through 2019. Some provisions of the Foreign Intelligence Surveillance Amendments Act will expire in 2017 (including Section 702, a provision which underpins some of the N.S.A.'s bulk surveillance of online communications). Under the FREEDOM Act, certain sections of the Foreign Intelligence Surveillance Act of 1978 were amended in an effort to delimit the NSA's mass data collection programs. However, the restrictions on bulk data collection don't take effect for 6 months after the USA FREEDOM Act is enacted. There is also a carve-out to permit the government to obtain FISA orders during this 180-day period. The effect of this is unclear, but commentators have speculated that during this 6-month grace period the N.S.A. can continue bulk collection, and obtain FISA orders which are not constrained by the requirement for a "selection term".

Furthermore, bulk collection of phone data is not necessarily coming to an end - arguably, it is merely being delegated to the telecoms: "The Freedom Act does take the bulk collection of Americans' telephone records out of the hands of the National Security Agency and leaves those records with the phone companies; it sets up procedures for the NSA to get access to those records when it wants to."

The new law does introduce reforms for oversight of government surveillance. In a nod to transparency, some FISA Court opinions may become available, and technology companies will have the ability to publicly report the number of government surveillance requests or investigation inquiries they receive. Previously, companies were prohibited from reporting that such requests had been received.

Generally, under the FREEDOM Act, indiscriminate bulk data collection is to be reformed by requiring the use of "specific selection terms". In other words, government agencies such as the NSA must use a search term - the name of a specific person, account, address, or personal device, or any other specific identifier - to limit the scope of data collection "to the greatest extent reasonably practicable".

In 2004, after the initial flurry of anxiety about US government surveillance under the PATRIOT Act, the Privacy Commissioner of Canada noted: "The [PATRIOT] Act is simply one example of a law that can give the United States government or its agencies access to personal information about Canadians that has been transferred to the United States. Research done by the Office of the Privacy Commissioner and discussions with the Department of Justice suggest that the USA PATRIOT Act is not likely in the normal course of events to be used to obtain personal information held in the United States about Canadians." (Emphasis added)

In light of the 2013 Snowden revelations (and the 2007 Mark Klein disclosures), we now know that, in fact, the bulk collection of phone and internet data by the N.S.A. would have resulted in a lot of personal information about Canadians being collected by the N.S.A. in the United States through the N.S.A.'s PRISM, ECHELON and related surveillance programs.

Data access by Canadian or American government authorities in the course of investigations is not new. Don't forget that the PATRIOT Act itself was merely an amendment and expansion to a series of existing government investigation tools which were already part of U.S. law, such as the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, Foreign Intelligence Surveillance Act, Money Laundering Control Act and the Bank Secrecy Act. Going back even further, NSA's cooperation and information-sharing with Canadian security agencies actually dates to the 1940s (see: the UK-USA Agreement). However, the sheer scope, breadth and depth of surveillance was new.

The Americans are not the only ones who carry on surveillance. There are a number of Canadian laws that enable police, security agencies and government investigators to obtain access to information held in Canada in the course of an investigation. And as in the U.S., Canadian security agencies have also been caught exceeding the legal limits on their online surveillance (see X (Re), 2013 FC 1275; aff'd 2014 FCA 249, where the Federal Court and Federal Court of Appeal decided that CSIS breached the duty of candour owing to the Court in seeking and obtaining search warrants fro surveillance on Canadians outside Canada).

Canadian police and security agencies can also obtain information held in the U.S., just as American security agencies can obtain records held in Canada through information-sharing agreements, protocols and a bilateral treaty between the United States and Canada known as the Mutual Legal Assistance Treaty (the "MLAT"). Other countries have similar investigative powers.

While the Americans are making some modest reforms to their surveillance laws, Canadian authorities are actually expanding their reach; the Anti-terrorism Act, 2015 (Bill C-51) was passed on June 9, 2015, and is awaiting royal assent. This new law expands the information-gathering powers between CSIS, police investigators and other Canadian government agencies.

Further, the effect of so-called "boomerang routing" means that online information flowing between a Canadian sender and Canadian recipient is still often routed through the US. (See: Thus, even where data is not physically stored in the US, it may be caught by ongoing N.S.A. surveillance at the point the data traverses through an internet exchange point located within the United States.


As a matter of risk-assessment for Canadian companies outsourcing data to cloud-computing service providers, should you be concerned that your (or your customers') Canadian online data will be subject to access by the U.S. government?

1. We know that for Canadian private sector businesses there are still no legal prohibitions against outsourcing data to the United States (note that the public sector is treated differently);

2. Best practices still dictate that (a) reasonable safeguards should be built into the outsource contract (including confidentiality, use-restrictions, security, and provisions to meet monitoring and audit requirements), and (b) customers should notified in a clear way when their personal information will be stored or handled outside Canada.

3. There can be no doubt that surveillance practices under the (old) PATRIOT Act resulted in the mass indiscriminate collection of internet and phone data for many years (and very likely continues within the 6-month period after enactment of the FREEDOM Act). It appears very likely that Canadian data outsourced to the U.S. was subject to bulk collection by the N.S.A. Due to "boomerang routing", it appears likely that even data stored on servers located within Canada often flows through internet exchange locations within the U.S., and therefore would be susceptible to bulk collection by the N.S.A. The USA FREEDOM Act (which is really the PATRIOT Act 2.0) does impose some mild but important reforms on the scope of N.S.A. surveillance. If bulk data and phone-record collection is actually curtailed, the ongoing risk is associated with "targeted" or "selection term" access, in situations where government security and law enforcement agencies exercise rights of accessing and monitoring online data in the course of investigations of a "specific person, account, address, or personal device" in the U.S. It is worth noting that this ongoing risk of access is similar on both sides of the Canada/U.S. border, since Canadian security and law enforcement agencies have similar powers of investigation, and the two governments can rely on MLAT requests and other information sharing protocols to share data.

When you weigh the issues and risks associated with outsourcing Canadian data to the U.S., consider these points and seek advice from experienced IT and privacy counsel.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.