Canada: Privacy Commissioner Reverses Its Position On Cross-Border Transfers Of Personal Information

Last week the Office of the Privacy Commissioner of Canada (the "OPC") launched a "Consultation on transborder dataflows" (the "Consultation"), in which it proposes to totally reverse its policy position on cross-border data transfers by organizations subject to the Personal Information Protection and Electronic Documents Act ("PIPEDA"). In the absence of an applicable exception under PIPEDA, the OPC's revised view is that the transfer of personal information for processing, including a cross-border data transfer or the transfer of personal information to an affiliated corporation, is a "disclosure" of personal information that requires consent.

The OPC's new proposal is a departure from its previous position. Up until the release of the Consultation and the OPC's accompanying report of findings in its investigation into the 2017 Equifax breach (the "Equifax Report"), the OPC's policy position has been that a transfer of personal information for the purpose of processing is a "use" rather than a "disclosure" of personal information. The implication of such a transfer being a "use" is that transferring organizations are required to provide notice to affected individuals, while the main implication of that transfer being a "disclosure" is that the organization requires consent of the individual for the transfer.

The reason given by the OPC for this policy change is that under PIPEPA, any collection, use or disclosure of personal information requires consent, unless an exception to the consent requirement applies. Since "nothing in PIPEDA exempts data transfers, inside or outside Canada, from consent requirements", the OPC's updated view is that, "as a matter of law, consent is required".

The OPC intends to provide guidance on disclosures for processing and related consent and accountability requirements. It is seeking input on its updated policy position, as well as on specific areas for which related guidance would be most needed. Comments are due by June 4, 2019.

The cross-border disclosure of personal information, including for processing, requires consent

The Consultation also highlights the importance of obtaining meaningful consent. For consent to be valid, organizations must provide individuals with clear information regarding any disclosure to a third party, including instances when they are located in another country, and the associated risks.

In determining whether express or implied consent is appropriate, companies should consider the sensitivity of the information and the individuals' reasonable expectations in the circumstances; underlying both should be a consideration of the risk of harm to the individual. The OPC notes that "where there is a meaningful risk that a residual risk of harm will materialize and will be significant, consent should be express, not implied". In the OPC's view, "individuals would reasonably expect to be notified if their information was to be disclosed outside of Canada and be subject to the legal regime of another country."

Individuals must be informed of any options available if they do not consent to cross-border disclosures of their personal information

Individuals must be provided with clear and adequate information about the nature, purpose and consequence of any cross-border disclosure of personal information, so they can make an informed decision about whether to consent to the disclosure. Where the disclosure is not necessary to provide a product or service, individuals must be provided with a clear and easily accessible choice regarding the disclosure. However, where the transfer for processing is "integral to the delivery of a service", organizations are not obligated to provide an alternative.

The OPC did not specify a test for what is "integral to the delivery of a service".

When disclosing personal information to a third party for processing, a company does not relinquish control of the information

An organization that transfers personal information for processing will generally remain accountable for the personal information as the "controller". The Consultation notes that determining which organization has personal information "under its control" can be complex and must be assessed on a case-by-case basis. The OPC will look at factors such as contractual arrangements, commercial realities, evolving business models and shifting roles when determining which organization "controls" the personal information. As is currently the case, the controller will still be required to use contractual or other means to provide a comparable level of protection while the information is being processed.

The OPC's finding about the Equifax breach illustrates this accountability.

The OPC found that Equifax Canada remained accountable for the handling of Canadian personal information by Equifax Inc. The OPC determined that for the purposes of personal information handling under PIPEDA, Equifax Inc. is considered a "third party" to Equifax Canada because: (a) they are separately incorporated in different jurisdictions; (b) although both the Privacy Policy and Terms of Use available to Canadians at the time of the breach make reference to the possibility of Equifax Canada partnering with affiliates in the delivery of products, they are separate entities; and (c) Equifax Canada has consistently represented that its Chief Privacy Officer is the designated individual accountable for the handling of personal information by Equifax Canada.

The OPC also found that "to determine the appropriate levels of controls, consideration must be given to both the scope and sensitivity of personal information being handled". In some cases "where the third party is closely affiliated and the personal information being handled is of limited scope and sensitivity, it may be possible to rely on light controls and pre-existing, adequate, policies and practices of the third party" to fulfil the accountability obligations of the controller. However, where a substantial volume of sensitive personal information belonging to a large number of individuals is being handled over a prolonged period, the level of controls should be "commensurately high", including at a minimum: (a) a formal written arrangement, updated periodically and in the case of material changes; and (b) a structured program for monitoring compliance against the obligations laid out in the arrangement that is suitable to the scope and sensitivity of the personal information being handled.

Ultimately, the OPC concluded both Equifax Inc. and Equifax Canada contravened PIPEDA due to: (a) inadequate data protection safeguards by both companies; (b) inadequate accountability by Equifax Canada with respect to Canadian data processed by Equifax Inc.; and (c) the failure of Equifax Canada to obtain valid consent from individuals whose personal information was transferred to Equifax Inc. for processing and was eventually compromised.

Implications for Businesses

The OPC's shift in its position suggests a progression in aligning PIPEDA with the European Union's General Data Protection Regulation and Canada's international trade obligations. In setting out its revised policy position on cross-border data transfers, the OPC notes "organizations are free to design their operations to include flows of personal information across borders, but they must respect individuals' right to make that choice for themselves as part of the consent process." While "individuals cannot dictate to an organization that it must design its operations in such a way that personal information must stay in Canada (data localisation)", at the same time "organizations cannot dictate to individuals that their personal information will cross borders unless, with meaningful information, they consent to this."

As data transfers for processing are now considered third-party disclosures, regardless of whether the transfer is to a third party or an affiliate company, organizations should re-examine their consent processes and privacy policies. To obtain valid consent, organizations should provide clear and adequate information about the nature, purpose and consequence of any transfer of personal information to a third party, including instances when they are located in another country, and the associated risks. Where the information will be disclosed outside of Canada, individuals should be informed their personal information may be subject to the legal regime of another country. Where the disclosure is not necessary to provide a product or service, individuals must be provided with a clear and easily accessible choice regarding the disclosure.

Companies should also ensure they enter into data processing agreements that impose sufficiently robust obligations on recipient organizations, including for intercompany transfers of personal information between affiliated entities. Where a substantial volume of sensitive personal information belonging to a large number of individuals is being handled over a prolonged period, the parties should have in place: (a) a formal written arrangement, updated periodically and in the case of material changes; and (b) a structured program for monitoring compliance against the obligations laid out in the arrangement that is suitable to the scope and sensitivity of the personal information being handled.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions