Data PrivacyUndertaking a Transfer Impact Assessment: Key Considerations

INTRODUCTION

With increasing reliance on global data flows, organizations face growing legal obligations when transferring personal data outside their home location. For the European Economic Area (EEA) specifically, the General Data Protection Regulation (GDPR), along with the landmark Schrems II judgment by the Court of Justice of the EU, imposes stringent requirements on such international transfers. One of these requirements is the need to conduct a Transfer Impact Assessment (TIA) when using tools like Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs).

A TIA is essential to assess whether the laws and practices of the recipient country provide a level of data protection that is essentially equivalent to that guaranteed within the home location. TIAs are typically necessary when using- SCCs, BCRs, and ad hoc contractual clauses.

HOW TO CONDUCT A TIA?

Mapping the Data Transfer

The first step in conducting a TIA is understanding and documenting the nature and scope of the data transfer. This involves identifying:

• The type of personal data being transferred (e.g., HR records, customer details, financial data).
• The parties involved, including the data exporter (home country) and the data importer (located in a third country), as well as any subprocessors.
• The purpose of the transfer, such as cloud hosting, technical support, or marketing analytics.
• The frequency and duration of the transfer, and whether it is a one-time or recurring arrangement.

This mapping exercise lays the foundation for assessing the legal risks and implementing safeguards.

Understanding the Transfer Mechanism

Next, it is important to determine the legal basis for the international transfer. Under GDPR, common mechanisms include:

• SCCs – the most widely used instrument, especially after the invalidation of the Privacy Shield.
• BCRs – typically adopted by multinational corporate groups.

It is crucial to ensure that the selected mechanism is valid for the specific transfer and is not used in isolation without additional considerations.

Evaluating the Legal Landscape of the Recipient Country

A core component of the TIA is assessing the laws and practices of the third country where the data is being transferred. The focus here is on whether these laws interfere with the effectiveness of the chosen transfer mechanism.

Key considerations include:

• Surveillance laws: Does the country allow government access to data, and under what conditions?
• Safeguards and redress: Are there adequate legal remedies for data subjects in case of misuse or unlawful access?
• Judicial independence: Can the courts offer impartial oversight in privacy-related matters?
• Public authority powers: Are access requests proportionate and limited, or are they broad and indiscriminate?

Assessing the Effectiveness of Safeguards

It is not enough to rely on SCCs or BCRs on paper. Organizations must examine whether these safeguards are effective in practice.

Questions to ask include:

• Can the data importer comply with the obligations under the SCCs without being overridden by local laws?
• Are there instances where importers have received government requests for data?
• Does the importer have mechanisms in place to notify the exporter in case of such requests?

A candid assessment of these practical realities helps determine the need for further mitigation measures.

Implementing Supplementary Measures

If the third country’s laws are found to undermine the protection guaranteed by the law of the home country, the organization must consider supplementary measures to bridge the gap. These can include:

• Technical Measures such as Encryption (especially with keys held only by the exporter), pseudonymization or anonymization of data prior to transfer
• Contractual Measures such as clauses pertaining to enhanced audit and inspection rights, commitments to challenge government access requests, transparency obligations and incident response protocols
• Organizational Measures such as data minimization practices, strict internal access controls, employee training on privacy compliance, etc.

Such measures must be tailored to the risks identified in the legal analysis and must be capable of being enforced in the recipient country.

DOCUMENTING THE TIA

A well-documented TIA provides evidence of due diligence and serves as a critical record in case of audits or regulatory inquiries. The documentation should cover:

• The description of the transfer and the data involved
• The selected transfer tool
• The findings of the third-country legal assessment
• The supplementary measures adopted
• The final conclusion on whether the transfer can proceed

This documentation must be retained and reviewed periodically.

Monitoring and Reassessment

A TIA is not a one-time formality. It must be updated regularly in response to:

• Changes in the law or enforcement practices in the recipient country
• Modifications to the scope or nature of the transfer
• Updates to the transfer tool or supplementary safeguards
• Continuous monitoring ensures that the level of protection remains adequate over time.

AMLEGALS REMARKS

Conducting a TIA is no longer a theoretical compliance exercise but now is a legal necessity for safeguarding individuals’ rights in cross-border data transfers. While the process may seem complex, approaching it in a structured manner as elaborated hereinabove, starting with data mapping, followed by legal evaluation, risk mitigation, and ongoing monitoring ensures that organizations meet both their regulatory obligations and their ethical responsibility toward data subjects.

In an era where data is both an asset and a liability, a robust TIA framework is a vital component of any organization’s privacy governance program.

– Team AMLEGALS