Privacy Shield

What is Privacy Shield?

The Privacy Shield is a data protection framework established by the U.S. Department of Commerce and the European Commission to facilitate the safe transfer of personal data between the EU and the U.S. It was created as a replacement for the Safe Harbor Agreement, which was invalidated by the European Court of Justice in 2015.

The framework aims to ensure that U.S.-based companies receiving personal data from EU citizens are committed to following EU data protection laws, specifically the General Data Protection Regulation (GDPR), by offering clear safeguards for privacy rights. While it was designed to protect individuals’ personal data, the Privacy Shield framework itself faced legal challenges, and the European Court of Justice invalidated it in July 2020, citing concerns about U.S. surveillance practices.

Examples of Privacy Shield in Practice

• EU-U.S. Data Transfers: A company based in the EU may use Privacy Shield to transfer personal data (such as customer or employee information) to a U.S.-based service provider, knowing that the provider is certified under the Privacy Shield framework to ensure that EU citizens' data is treated in compliance with GDPR.
• Compliance by U.S. Companies: A U.S. company offering services to EU customers, such as a cloud storage provider, may publicly declare its compliance with the Privacy Shield principles to reassure European customers that their data is protected according to EU standards.
• Privacy Shield Certification: A U.S. company wishing to handle European data can become certified under Privacy Shield by committing to specific data protection principles and subjecting themselves to annual reviews to ensure ongoing compliance.

What is the Difference Between Privacy Shield and GDPR?

Privacy Shield and the General Data Protection Regulation (GDPR) are both concerned with protecting personal data, but they serve different functions:

• GDPR: This is a comprehensive data protection regulation that applies to all EU member states and governs the collection, storage, processing, and transfer of personal data. It applies not only to businesses within the EU but also to non-EU businesses that process personal data of EU citizens. The GDPR emphasizes data subject rights, such as consent and access, and imposes strict penalties for non-compliance.
• Privacy Shield: The Privacy Shield was specifically created for the transfer of personal data between the EU and the U.S. to ensure that U.S.-based companies handling EU data meet EU standards. While GDPR sets out broad rules for data protection, Privacy Shield was a mechanism designed to ensure compliance with these rules when transferring data outside of the EU, specifically to the U.S.

With the Privacy Shield being invalidated, the mechanisms for EU-U.S. data transfers have become more complex, and companies now rely on Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs) to ensure compliance.

Why is Privacy Shield Important?

The Privacy Shield framework plays an important role in ensuring that the personal data of EU citizens is protected when transferred across borders, particularly to countries outside the EU that do not have the same data protection standards. Its primary importance includes:

• Ensuring Data Protection: It provides a mechanism for U.S. companies to demonstrate that they comply with EU privacy standards when processing EU citizens' data, offering EU individuals some assurances that their data will be protected.
• Fostering International Trade: By allowing for the legal transfer of data between the EU and the U.S., the Privacy Shield framework supports cross-border business relationships, including the services provided by companies like Amazon Web Services, Google, and Facebook.
• Legal Certainty: The Privacy Shield created a legal basis for U.S. companies to process EU data without the need for individual contracts or agreements with each EU partner. This simplifies compliance for businesses that need to transfer data.

How to Handle Privacy Shield and Cross-Border Data Transfers

While the Privacy Shield framework was invalidated, there are still several strategies for managing cross-border data transfers in compliance with GDPR:

• Use Standard Contractual Clauses (SCCs): The European Commission has approved SCCs as a legal mechanism for transferring personal data from the EU to non-EU countries, including the U.S. Companies can enter into contracts that stipulate these clauses, ensuring compliance with GDPR requirements.
• Binding Corporate Rules (BCRs): Multinational companies can adopt BCRs, which are internal rules for cross-border data transfers within the same corporate group. BCRs allow for the transfer of data across borders within a corporate structure while ensuring the data protection standards are maintained.
• Data Protection Impact Assessments (DPIAs): Companies should conduct DPIAs to assess the risks involved in transferring personal data to a third country, especially if that country doesn’t offer an equivalent level of protection to the EU’s data protection laws.
• Stay Updated on Legal Developments: The legal landscape for cross-border data transfers is evolving. Companies should stay informed about new legal rulings, such as the continued enforcement of GDPR and updates on cross-border transfer mechanisms, to ensure ongoing compliance.

How FaceUp Can Help with Privacy Shield and Data Transfers

FaceUp offers a secure, GDPR-compliant platform that helps organizations ensure their data handling and transfer practices align with EU data protection laws. For companies managing sensitive personal data across borders, FaceUp ensures that data is kept secure and compliant with both the GDPR and any applicable transfer mechanisms.

If your organization needs help with managing international data transfers or ensuring compliance with GDPR, FaceUp’s secure reporting platform allows employees and stakeholders to raise concerns anonymously. This ensures that data handling practices are always compliant and up-to-date with evolving legal requirements.