Cayman Islands: Comparing GDPR And Cayman's Data Protection Law - Navigating The Differences

Last Updated: 5 February 2019
Article by Peter Colegate

First published by DataGuidance, January 2019.

Investors in offshore financial centres increasingly require and demand data privacy. Obligations to collect personal data resulting from new international data sharing regimes, combined with cybersecurity concerns and innovative technology deployments are making the regulation of personal data more complex than ever before.

The EU's General Data Protection Regulation (GDPR) came into effect in May 2018. GDPR provides individuals with better control over their personal data and establishes a single set of data protection rules across the EU, making it simpler and cheaper for organisations to do business across the bloc. So far, so sensible. The sting in the tail, however, is that organisations outside the EU may also be subject to GDPR. With fines of up to EUR 20 million or 4% of the entity's global gross revenue, organisations in Cayman also need to understand their obligations under the GDPR.

The good news for Cayman comes in the form of a new Data Protection Law (DPL). Due to come into effect in September 2019, the DPL will regulate the future processing of all personal data in the Cayman Islands.

DPL and GDPR - Compliance Similarities

Definitions

"Personal data" is defined in both the new DPL and the GDPR to mean any information relating to an individual who can be identified, directly or indirectly, from that data. So in many cases online identifiers including IP addresses, cookies and other anonymised data sets may now be personal data if they can be (or are capable of being) linked back to the data subject.

"Data controller" means the person who, alone or jointly with others, determines the purposes, conditions and means of the processing of personal data. "Data subject" means an individual who is the subject of the data and "data processor" means any person who processes personal data on behalf of a data controller.

Rights of Data Subjects

Under both GDPR and the DPL, data controllers are required to provide a significant amount of information to data subjects at the time of collecting their data including the purposes behind the processing, details of transfers of data outside Cayman and any security and technical safeguards in place to protect the data subject's personal data. The expectation under both laws is that this information will be provided in a separate privacy notice.

Both laws give data subjects the right to obtain confirmation that their data is being processed and to access that personal data. Data controllers have one month (GDPR) or 30 days (DPL) in which to respond to a subject access request, although this time period can be extended where necessary, taking into account the complexity of the request and the number of requests. Under GDPR a copy of this information must be provided free of charge. The DPL permits a reasonable fee to be charged.

Under both the DPL and GDPR, personal data should not be kept for longer than is necessary for the intended purpose. Prescribed data retention periods are not set out in either law but an analysis will need to be undertaken to determine how long different types of personal data should be kept for. Under GDPR controllers must inform subjects of the period of time (or reasons why) data will be retained on collection. This is not a requirement under the DPL but as the retention analysis is also obligatory a notification to data subjects would be easy to achieve.

International transfers

Both the DPL and GDPR permit transfers outside of the Cayman Islands/the EU. Contracts can be put in place to control data transfers with third party processors or between members of the same group of companies.

The DPL was drafted with the specific aim of achieving adequacy status in the eyes of the EU to allow personal data to flow freely between EU member states and Cayman without additional mechanisms being put in place. GDPR now provides that adequacy decisions made by the European Commission can apply to specific processing sectors or territories within a country, as well as to a country as a whole. This could result in future adequacy decisions finding specific industry sectors or territories that provide adequate protection for data. Cayman has already confirmed its intention to apply for adequacy status in due course.

Data security

The DPL requires that "appropriate" technical and organisational measures are taken to prevent unauthorised or unlawful processing of personal data, and, to protect against accidental loss or destruction of, or damage to, personal data.

The GDPR is slightly more prescriptive than the DPL about what organisations need to have in place from a security perspective but not overly so. However, it is worth noting that under GDPR the security requirements are now legally extended to data processors as well as data controllers, putting processors on the hook for the first time for regulatory liability. There is no similar liability for processors under the DPL.

Data breach notification

Under the DPL, in the event of a personal data breach, the data controller must, without undue delay, but no longer than five days after the data controller should have been made aware of that breach, notify the Ombudsman and any affected data subjects of the breach.

GDPR requires for data controllers to notify the regulatory authority of personal data breaches without undue delay and, where feasible, not later than 72 hours after having become aware of a breach. The only exception to this rule is in cases where the breach is "unlikely to result in a risk for the rights and freedoms of individuals".

Right to be forgotten

There has been much confusion around about the new "right to be forgotten" under the GDPR. The broad principle underpinning this right is to enable an individual to request the deletion or removal of personal data where there is no compelling reason for its continued processing. The right is not absolute. Individuals have a right to have personal data erased and to prevent processing in specific circumstances, for example when the individual objects to the processing and there is no overriding legitimate interest for continuing the processing.

The DPL contains a similar right, although this is expressed as a general right of "erasure". Under the UK's Data Protection Act, from which the right of erasure in the DPL was drawn, the right is limited to processing that causes unwarranted and substantial damage or distress. Under the DPL this threshold is not present. As with GDPR, if there is no compelling reason for a data controller to retain personal data, a data subject can request its secure deletion.

Navigating the Differences

Direct marketing and consent

Under both the DPL and GDPR a data subject has the right at any time to require a data controller to stop processing their personal data for the purposes of direct marketing. There are no exemptions or grounds to refuse. A data controller must deal with an objection to processing for direct marketing at any time and free of charge.

Under GDPR, the controller must inform individuals of their right to object "at the point of first communication" and in a privacy notice. There is no such requirement under the DPL, but this would be recommended best practice.

Where things get slightly complicated is the issue of consent. Under the DPL, consent can be implied from the actions of the data subject. With GDPR, for any consent to be valid it needs to be obvious to the data subject what their data is going to be used for at the point of data collection and the controller needs to be able to show clearly how consent was gained and when it was obtained.

Treatment of data processors

GDPR sets out more detailed statutory requirements that apply to the controller/processor relationship, and to processors in general. The GDPR also makes data processors directly subject to regulation for the first time and prohibits data processors from processing personal data except on instructions from the data controller. GDPR also extends data security obligations to data processors.

Under the DPL, recommended best practice would always be to put in place a contract between a controller and processor to ensure that any personal data is processed only for authorised purposes, that all data is stored and transmitted securely and that disaster recovery practices are in place in the event of a data breach. Essentially, the contract should require the data processor to level-up its policies and procedures for handling personal data to ensure compliance with the DPL. Use of subcontractors by the service provider should be prohibited without the prior approval of the controller.

Appointment of a data protection officer

The DPL does not require the appointment of an official data protection officer (DPO) within an organisation, although this is recommended best practice. GDPR provides that the appointment of a DPO will only be mandatory where the data controller is a public authority or the core activities of the data controller consist of processing operations which require: (i) regular and systematic monitoring of data subjects on a large scale; or (ii) processing on a large scale of sensitive personal data. For all other organisations, the appointment of a DPO is voluntary.

Fines and penalties

GDPR provides for two tiers of sanctions, with maximum fines of up to EUR 20 million or 4% of annual worldwide turnover, whichever is greater.

Under the DPL, refusal to comply or failure to comply with an order issued by the Ombudsman is an offence. The data controller is liable on conviction to a fine of up to CID 100,000 or imprisonment for a term of 5 years or both. Monetary penalty orders of an amount up to CID 250,000 may also be issued against a data controller under the DPL.

Conclusion

As personal data develops into an increasingly valuable business asset, data protection is now a board level issue. Although questions remain regarding the effective enforceability of GDPR against non-EU controllers, there is no doubt that the long arm of EU data protection law is seeking to reach beyond EU borders. As many of the compliance obligations under the DPL and GDPR dovetail to a large extent, achieving compliance with the DPL - which is obligatory for all organisations handling personal data in the Cayman Islands – also puts an organisation well on the way to achieving compliance under the GDPR.

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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