Tag Archive: cybersecurity

CHINA: PRC Cybersecurity Law – take action and monitor developments to avoid losing your China business

The PRC Cybersecurity Law is three weeks old, and non-compliant international businesses are already facing severe consequences. Since 1 June, twenty-two people engaged by a global technology giant have been arrested, and sixty online entertainment news sites have been shut down.

The law continues to evolve. The latest guidance provides practical answers to previous areas of uncertainty. Whilst some questions remain, the key message is: do not ignore the PRC Cybersecurity Law. It is now in force and organisations must comply with it.

Read on if you:

  • Transfer personal information and important data out of China
  • Are concerned your organisation may be a key information infrastructure operator
  • Supply network and cybersecurity products and services to China
  • Are unsure if you handle “important data” in or from China

Five key developments that you need to know

1. What is now in force?

2. Are the new overseas data transfer rules in force?

Not yet. The draft measures proposing conditions/restrictions on overseas transfers of personal data and important data by network operators including KIIOs (Draft Measures) did not come into force on 1 June 2017, surprising commentators. Unofficial sources indicate the lead regulator (CAC) discussed a revised draft of the Draft Measures with key stakeholders and proposed toning down some of the more onerous obligations. For now, we await official announcements from CAC.

If and when the Draft Measures come into force, organisations should follow the newly-published Draft Guidelines for Data Cross-Border Transfer Security Assessment (Draft Guidelines). These set out detailed guidance on the security self-assessments for cross-border transfers. They include practical tips on how and when to conduct a self-assessment, including key factors to consider (legality, legitimacy, control of risks, technical and management skills, the recipient’s capability to protect data, and the recipient countries’ political and legal environment), and a rating system to apply. Practical examples are also given on how to assess the sensitivity and level of influence of personal/important data, and solutions to minimise the risks.

3. Am I a KIIO?

We still don’t have a definitive answer, but previously unofficial guidance has now been formally published. The National Internet Security Check Operational Guideline is primarily a guideline for Government agencies. A key infrastructure protection regulation is being prepared by the Chinese authorities (which may or may not refer to this guideline) and (according to CAC) is expected to be published for public comment soon. It is hoped this regulation will provide greater certainty. For now, who does the guideline indicate will be deemed a KIIO?

  • Websites: operators of:
    • Party/Government websites
    • Key news websites
    • Websites with more than one million visits per day
    • Websites where a network security incident would have a significant impact (i.e. on work/lives of over one million individuals or 30% of a district; disclosure of personal information of over one million individuals; disclosure of large volumes of sensitive corporate information or “national basic data” (relating to resources, mapping); or damage to/endanger government image, social order or national security)
  • Platforms: operators of platforms:
    • With registered users over ten million, or with over one million active users (with a login frequency of at least once a day)
    • With average daily orders or transactions over RMB 10 million
    • Where a network security incident would have a significant impact (i.e. direct economic loss of RMB 10 million or above; on work/lives of over ten million individuals; disclosure of personal information of over one million individuals; disclosure of large volumes of sensitive corporate information or “national basic data” (see above); or damage to/endanger government image, social order or national security)
  • Production Businesses:
    • Operators of systems for public/government/cities such as healthcare, security, fire service, emergency management, production scheduling, traffic control
    • Operators of data centres with over 1,500 standard servers
    • Businesses where a network security incident would have a significant impact (i.e. on work/lives of 30% of a district; affect the utilities or transport of at least 100,000 individuals; death of five or more individuals, or serious injuries to fifty or more individuals; direct economic loss of RMB 50 million or above; disclosure of personal information of over one million individuals; disclosure of large volumes of sensitive corporate information or “national basic data” (see above); or damage to/endanger government image, social order or national security)

4. Can I still sell my technology products in China?

Yes, but you now need to consider the supervisory assessment/certification scheme for suppliers of critical network and cybersecurity products and services to KIIOs or to be used for other networks and information systems that relate to national security. We now have an initial catalogue of those caught by the new scheme:

Critical network equipment Specialised cybersecurity products
Routers All-In-One data backup
Switches Firewall (hardware)
Servers (rack-mounted) Web application firewall
Programmable logic controllers Intrusion detection system
Intrusion defence system
Security isolation and information exchange products (gatekeeper)
Anti-spam mail products
Network integrated audit system
Network vulnerability scanning product
Security data system
Website recovery products (hardware)

The new Trial Measures for Security Review of Network Products and Services (Trial Measures) provide practical guidance on how the scheme will be implemented. Whilst uncertainties remain, the Trial Measures clarify that:

  • Reviews will focus on “security and controllability” risks of products and key components, from manufacture through to sale, implementation and maintenance/support. Initially TC260 standards have been released for evaluating security and controllability of central processing units, operating systems and office software
  • Competition impact is a lesser concern, but reviews will look at dependence on certain providers
  • Reviews will also consider risks of providers accessing data and user information through their products/services
  • Reviews may be conducted in a lab, onsite, remotely or through background investigations. While some technical documentation must be provided, it is not yet clear whether source code must be disclosed; and what sort of test environment providers may need to make available to the authorities

5. What is “important data”?

“Important data” is broadly defined to include information that relates to national security, economic development, or social or public interest. Appendix A of the Draft Guidelines sets out an 11-page list of examples in key sectors such as utilities, telecommunications, geographical information, finance and e-commerce. The coverage is very broad, and is a useful reminder to organisations that the PRC Cybersecurity Law does not just affect personal data and has a very wide reach.

What other developments are anticipated?

Issue Development Impact
General personal data protection Draft Information Security TechniquesPersonal Information Security Specifications, published for public consultation and, according to reports, expected to be implemented soon.

This is in effect an update to the 2013 general data protection guidelines governing personal data, which is the current persuasive best practice, and practical guidance, on how to handle personal data in China

High: first statement of key data protection principles in China; significant changes to key terms such as “sensitive personal data” and “data controller”; greater clarity on privacy notices and terms to be included; additional security measures; and new DPO requirements
Minors’ data Draft Regulations on the Protection of the Use of Internet by Minors, published for public consultation in January 2017 Medium: additional protections for minors’ online, including safeguards for collection, use and disclosure of minors’ personal data by “network information service providers”
Encryption Draft PRC Encryption Law, published for public consultation in April 2017 High: more standardised approach to encryption and IT security in China (including mandatory national standards); use of encryption would be mandatory for some networks and data; encryption will remain heavily regulated; requirement for suppliers to provide decryption support
Consumer data Draft Regulations on the Implementation of the Law on the Protection of the Rights and Interests of Consumers, published in Summer 2016 High: strengthening of consumer personal data protection, including consent, mandatory data breach notification and record retention requirements
E-commerce data Draft E-commerce Law High: new data protection obligations including prior notice consent; explicit consent for subsequent changes of scope/purpose; data retention, use and security obligations: immediate data breach notifications: and irretrievable anonymisation of e-commerce data before disclosure

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CHINA: significant changes to data and cybersecurity practices under PRC Cybersecurity Law

After a third deliberation, the Chinese government passed the new PRC Cybersecurity Law on 7 November 2016. The new law will come into force on 1 June 2017 and has significant implications for the data privacy and cybersecurity practices of both Chinese companies and international organisations doing business in China.

The new PRC Cybersecurity Law intends to combat online fraud and protect China against Internet security risks. In short, it imposes new security and data protection obligations on “network operators”; puts restrictions on transfers of data outside China by “key information infrastructure operators”; and introduces new restrictions on critical network and cybersecurity products.

The new law has been widely reported in both the local and international press. While Chinese officials maintain that China is not closing the door on foreign companies with the introduction of this new law, there has been widespread international unease since the first reading. Commentators have expressed concern that competition will be stifled; regarding the handover of intellectual property, source codes and security keys to the Chinese government; as to perceived increased surveillance and controls over the Internet in China; and in relation to the data localisation requirements. Other new obligations, including increased personal data protections, have been less controversial, but are a clear indicator of the increased focus within the Chinese authorities on data protection, and could signal a change to the data protection enforcement environment in China.

Some of the key provisions of the final law (which contains some changes to earlier drafts of the law) include (inter alia):

  • Chinese citizen’s personal information and “important data” gathered and produced by “key information infrastructure operators” (“KIIO”) during operations in China must be kept within the borders of the PRC. If it is “necessary” for the KIIO to transfer such data outside of China, a security assessment must be conducted pursuant to the measures jointly formulated by the National Cyberspace Administration and State Council unless other PRC laws permit the overseas transfer. While the final version of the law provides some guidance as to the industry fields that will be ascribed greater protection, such as public communications and information service, energy, transportation, water conservancy, finance, public service and e-government, the definition of KIIO remains vague and could potentially be interpreted to cover a broader range of companies and industry sectors. “Personal information” is defined as including all kinds of information, recorded electronically or through other means, that taken alone or together with other information, is sufficient to identify a natural person’s identity, including, but not limited to, natural persons’ full names, birth dates, identification numbers, personal biometric information, addresses, telephone numbers, and so forth. However, the types of information that might constitute “important data” is currently unclear. In any case, these data localisation rules are likely to create practical issues for international businesses operating in China.
  • A range of new obligations apply to organisations that are “network operators” (i.e. network owners, network administrators and network service providers). A “network” means any system comprising computers or other information terminals and related equipment for collection, storage, transmission, exchange and processing of information. Some commentators are suggesting that these broad definitions could catch any business that owns and operates IT networks/infrastructure or even just websites in China.
    • In terms of data protection, network operators must make publicly available data privacy notices (explicitly stating purposes, means and scope of personal information to be collected and used); and obtain individuals’ consent when collecting, using and disclosing their personal information. Network operators must adopt technical measures to ensure the security of personal information against loss, destruction or leaks, and in the event of a data security breach must take immediate remedial action and promptly notify users and the relevant authorities. They must also comply with principles of legality, propriety and necessity in their data handling, and not be excessive; not provide an individual’s personal information to others without the individual’s consent; nor illegally sell an individual’s personal data to others. The rules do not apply to truly anonymised data. There are also general obligations to keep user information confidential and to establish and maintain data protection systems. Data subject rights to correction of their data, as well as a right to request deletion of data in the event of a data breach, are also provided. While an earlier draft specifically provided protection to personal information of “citizens”, the final law does not make this distinction, and so seemingly offers a broader protection to all personal information. These requirements formalise as binding legal obligations some data protection safeguards that were previously only perceived as best practice guidance in China.
    • As regards network security, network operators must fulfil certain tiered security obligations according to the requirements of the classified protection system for cybersecurity, which includes (amongst other things): formulating internal security management systems and operating instructions; appointing dedicated cybersecurity personnel; taking technological measures to prevent computer viruses and other similar threats and attacks, and formulating plans to monitor and respond to network security incidents; retaining network logs for at least six months; undertaking prescribed data classification, back up, encryption and similar activities; complying with national and mandatory security standards; reporting incidents to users and the authorities; and establishing complaints systems.
    • Network operators must also provide technical support and assistance to state security bodies safeguarding national security and investigating crimes, and will be subject to government and public supervision. The form and extent of such co-operation is not currently clear, and international businesses have expressed concerns over the extent to which this may require them to disclose their IP, proprietary and confidential information to the Chinese authorities.
    • More general conditions on network operators carrying out business and service activities include: obeying all laws and regulations, mandatory and industry national standards, social mores and commercial ethics; being honest and credible; and bearing social responsibility. There are also requirements on network operators to block, delete and report to the authorities prohibited information and malicious programmes published or installed by users.
    • Network operators handling “network access and domain registration services” for users, including mobile phone and instant message service providers, are required to comply with “real identity” rules when signing up or providing service confirmation to users, or else may not provide the service.
  • Additional security safeguards apply to KIIOs, including: security background checks on key managers; staff training obligations; disaster recovery back ups; emergency response planning; and annual inspections and assessments. Further, strict procurement procedures will apply to KIIOs buying network products and services.
  • Providers of “network products and services” must comply with national and mandatory standards; their products and services must not contain malicious programs; must take remedial action against security issues and report them to users and relevant authorities; and must provide security maintenance for their products and services which cannot be terminated within the contract term agreed with customers. These new conditions will require providers of technology products and services to review and update their product and related maintenance offerings and, in particular, the contractual terms on which they are offered to customers.
  • Critical network equipment and specialised cybersecurity products must obtain government certification or meet prescribed safety inspection requirements before being sold or provided. This potentially catches a wide range of software, hardware and other technologies being sold – or proposed to be sold – by international companies in the China, since the definitions used in the law are drafted very broadly. Further guidance by way of a catalogue of key network products is expected in due course. There are concerns that this may create barriers to international businesses looking to enter the Chinese market.
  • Each individual and organisation shall be responsible for its own use of websites, and may not set up websites or communication groups for the purpose of committing fraud, imparting criminal methods, producing or selling prohibited items, or engaging in other unlawful activities. Again, there is scope for this to be interpreted and applied broadly.
  • Institutions, organisations and individuals outside China that cause serious consequences by attacking, interfering or destructing key information infrastructure of China shall be responsible for any damage, and the relevant public security department of the State Council may freeze assets and impose other sanctions against them. While these provisions would appear to have an extra-territorial effect, and could be interpreted very broadly, it is unclear what sanctions could in practice be enforced against organisations without a presence in China.
  • Other new rules relate to: network/online protections for minors; the establishment of schemes for network security monitoring, early warning and breach notification to relevant authorities and the public, as well as rights for individuals and organisations to report conduct endangering network security; opening of public data resources; and prohibitions on hacking and supporting activities.

While criminal sanctions, administrative penalties and civil liabilities potentially await those (both organisations and, in some circumstances, individual employees and officers) who violate the new law, unfortunately great uncertainties remain as to how the new legislation will be enforced, who exactly is caught by the various new rules, and the precise steps that organisations must take to comply with them. It is hoped that the Chinese authorities will publish more detailed, practical guidance in the coming months. In the meantime, organisations are strongly advised to review their data privacy and cybersecurity practices in China to ensure compliance with the new law before it comes into force on 1 June 2017, and to keep these under review as further guidance becomes available.

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2016 – Main trends on Cybersecurity

While many are not yet aware of the full breadth of the cybercrime phenomenon (cybercrime globally generates more revenues and is more profitable than drug trafficking!), there is a general consensus about the fact that certain breaches cannot be avoided. With a proliferation of connected devices operated remotely and a more pervasive use of data, companies are facing increasing (and more sophisticated) cyber threats. Such trend leads to increasing regulations fostering cybersecurity best practices. Here are our main takeaways from the cybersecurity seminar held in Milan last week. Read the rest of this entry »

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SPAIN: CNI and Microsoft join forces on cybersecurity

Author: Andrea Batalla

For the past 10 years, Microsoft and the Spanish National Intelligence Center (“CNI“, shorthand for the Spanish Secret Service) joined forces in research on cybersecurity. They have just expanded their cooperation in this field by signing a new agreement, which implies the continuity of the CNI in Microsoft’s Government Security Program (“GSP“).

The purpose of this agreement is to prevent and respond to incidents that may affect the security of Information and Communications Technology (“ICT“). In particular, it seeks to provide equivalent security conditions for the services which are available electronically and those provided physically at any office of the Spanish Administration.

The CNI, as well as other government agencies involved in the GSP, will benefit from the developments recently made by Microsoft in order to ensure greater transparency in the GSP. Specifically, the government agencies involved in the GSP (i) will have online access to the source code of additional Microsoft products, (ii) will be able to review the source code in the new worldwide Microsoft Transparency Centers; and (iii) will be able to discuss and exchange information on the security of Microsoft products and services, if they consider that there is a significant problem. In addition to this, the CNI will also have access to all the technical information on Microsoft products that it may need in order to improve the security against cyber-attacks and vulnerabilities that jeopardize public safety (including information related to the cloud services of the company).

 

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ITALY – “Digital Authorities” Round Table, University of Milan, 22 May 2015

Follow us on Friday 22 May 2015 at the University of Milan, with the main experts of our Italian “Digital Authorities” – Giuseppe Galasso (Director Communications – AGCM), Benedetta Liberatore (Director Audiovisual Services – AGCOM) and Luigi Montuori (Director Communications and Electronic Networks – Data Protection Authority), together with Marco Cuniberti (UNIMI) and Giangiacomo Olivi (DLA Piper).

We will be discussing the regulatory challenges for digital media and new technologies, including the latest regulations on cookies and the consultation on IoT launched by the Italian Data Protection Authority. We look forward to seeing you at 2:30 PM, Sala Napoleonica of the University of Milan, via Sant’Antonio 2. The entrance is free, but please register with infomaster.giurisrprudenza@unimi.it. See you soon!

@giangiolivi

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First IoT Legal and Business Framework Webinar: Summary of Conclusions!

Thank you all for attending our webinar on the “Internet of Things Legal and Business Framework”. For those who could not attend, the main conclusions are summarized below: Read the rest of this entry »

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Connected cars are privacy and security threats?

The recent report from the US Senator Ed Markey raises issues on the future of connected cars because of the privacy issues and the potential cybercrimes that might affect the security of vehicles.  This happens when the recent regulatory developments show that privacy and cybersecurity is on the top of the agenda of car makers and US and EU regulators are negotiating common rules.  Read the rest of this entry »

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