This is an excerpt from Centre for Information Policy Leadership (“CIPL”) President Bojana Bellamy’s recently published piece in the IAPP “Privacy Perspectives” blog, and are the views of the author.
International data transfers continue to be a top compliance and legal issue for both European and global organizations, requiring continuous reevaluation and increasing resources.
In its recent guidance from December 2022, the European Data Protection Board (the “EDPB”) provided draft guidance with updated interpretations and requirements regarding the use of the binding corporate rules (“BCRs”) transfer mechanism. In doing so, the EDPB missed an opportunity to address BCRs in a systematic, strategic and forward-thinking way, and to enable this important transfer mechanism to evolve into a more scalable, powerful and globally relevant tool for sustainable international data transfers.
It is high time to reconsider and evolve BCRs in light of the GDPR and new laws, as well as numerous new developments in international data transfers in Europe and beyond. To effectively and efficiently realize the potential of BCRs, policymakers should:
- Promote, incentivize and recognize their special nature. The European Commission, the EDPB and other supervisory authorities should proactively promote the wide adoption of BCRs and make it easier, and more attractive, for corporate groups of all sizes to obtain BCR approval. The BCR requirements cannot be more strict than for other transfer mechanisms and must reflect the unique nature of this transfer mechanism.
- Simplify and even transform the approval process. To facilitate their wider use, BCRs must be scalable and configurable for organizations of all sizes and corporate structures. DPAs should lessen the overall administrative burden and timelines of the BCRs application process and provide clear, workable criteria.
- Ensure a risk-based approach to risk assessments. BCRs represent a binding commitment to a uniform level of privacy protection across the entirety of a corporate group. Policymakers should therefore ensure the guidance and requirements for transfer risk assessments under BCRs do not have higher standards than other transfer mechanisms, such as standard contractual clauses. Instead, the same risk-based, contextual approach should apply to BCRs. Otherwise, businesses that have invested in a higher level of compliance, i.e., BCRs, are effectively penalized for and disincentivized from doing so going forward.
- Make BCRs interoperable and mutually recognized across jurisdictions. At present, organizations face a duplicative process of going through the same BCRs approval procedure in the EU and the U.K. without any difference in the substantive requirements. An informal mutual recognition should be expanded to the UK, just like the past expansion for Switzerland, for example. Also, the Global Privacy Assembly should work on a mutual recognition project, fully or partly, for BCRs approved in countries outside the EU under similar data protection laws, like Brazil, Singapore, and Australia.
- Recognize transfers from BCRs to BCR-approved companies. Today, corporate groups with BCRs are only able to rely on BCRs for intragroup data transfers, i.e., to controllers and processors within the corporate group. Given BCRs are reviewed and approved by regulators under the GDPR and represent a comprehensive compliance program that delivers a high level of data protection for all data once it enters a corporate group, companies with BCRs should be able to facilitate transfers to other BCR-approved companies.
An increased number of jurisdictions are adopting BCR-like provisions. This presents an urgent opportunity for policymakers to incentivize the further adoption of BCRs, with an eye on accessibility for organizations of all sizes and mutual recognition between BCR-approved organizations within the same jurisdiction and beyond.