Navigating Compliance: Protecting Data and Business in a Global Market

Data Privacy Alert: How One DOJ Rule Could Freeze Your Global Business Overnight

In the ever-evolving landscape of cybersecurity and compliance, a recent development from the U.S. Department of Justice (DOJ) has significant implications for growing businesses, particularly those in the retail, hospitality, and restaurant sectors. On February 28, 2024, President Biden signed Executive Order 14117, aimed at preventing the large-scale transfer of Americans’ bulk sensitive personal data and U.S. Government-related data to countries of concern. This executive order, and the subsequent final rule issued by the DOJ, could drastically impact your global business operations, requiring stringent data security standards and strict compliance measures.

Understanding the Executive Order and DOJ Rule

The Executive Order 14117 targets countries of concern, including China, Cuba, Iran, North Korea, Russia, and Venezuela, by restricting the transfer of sensitive personal data and U.S. Government-related data to these nations. The final rule, issued in December 2024, outlines specific regulations to prevent these transfers, which could pose significant national security risks[2][4][5].

What Data is at Risk?

The categories of sensitive personal data under scrutiny include genomic data, biometric data, personal health data, geolocation data, financial data, and certain types of personally identifiable information. These data types are critical because they can be exploited by countries of concern to harm U.S. national security, for example, by developing or refining artificial intelligence, or by targeting specific individuals such as activists, academics, and journalists[3][5].

How Can This Impact Your Business Operations?

Data Brokerages and Third-Party Transactions

The rule restricts transactions involving data brokerages, vendor agreements, employment agreements, and investment agreements. U.S. persons must ensure that any foreign person they engage with contractually agrees not to resell or provide access to the data to countries of concern or covered persons. This adds a layer of complexity to international partnerships and data sharing, requiring thorough due diligence to avoid prohibited transactions[1][2][3].

Understanding Compliance and Enforcement

The DOJ has established a national-security program within its National Security Division to enforce these regulations. This includes prohibiting U.S. persons from knowingly directing any covered data transaction that is prohibited, as well as transactions designed to evade the regulations. The rule also clarifies that U.S. persons providing third-party platforms or infrastructure are not responsible for their customers’ prohibited transactions, unless they themselves conduct such transactions[1][4].

Why does Compliance Matter? Understanding Penalties and Consequences

Non-compliance can result in significant civil and criminal penalties. Given the severity of these consequences, it is crucial for businesses to understand and adhere to the new regulations. This includes implementing robust contractual requirements with foreign entities and ensuring that all data transactions are thoroughly vetted to prevent any violations[1][3][4].

How Can Your Business Achieve Compliance: Practical Recommendations

To navigate these new regulations effectively, here are some practical steps your business can take:

Conduct thorough risk assessments of all data transactions involving foreign entities, especially those from countries of concern. Assess the risk of each transaction and ensure that all necessary contractual safeguards are in place.
Review and update all contractual agreements with foreign persons to include clauses that prohibit the resale or transfer of sensitive data to countries of concern. The DOJ is expected to provide model contractual language to help with this process[1].
Enhance your data security protocols to protect sensitive personal data. This includes encrypting data, implementing access controls, and regularly auditing data transactions to ensure compliance.
Ensure that all employees involved in data transactions are aware of the new regulations and understand their roles in maintaining compliance. Regular training sessions can help in identifying and mitigating potential risks.
Given the complexity of these regulations, it is advisable to engage with legal and compliance experts who can provide tailored advice and ensure your business is fully compliant.

Understanding Industry-Specific Challenges

Retail and Hospitality

For retail and hospitality businesses, the collection and use of customer data are critical for personalized services and marketing. However, this data is also highly sensitive and must be protected under the new regulations. Implementing robust data protection measures and ensuring that all third-party vendors comply with the new rules is essential.

The Restaurant Industry

Restaurants often rely on third-party services for delivery, payment processing, and customer feedback. Ensuring that these third-party services do not transfer sensitive data to countries of concern is vital. Regular audits and strict contractual agreements can help mitigate these risks.

Why Does Compliance Matter: Protecting Customer Trust and Maintaining Investor Confidence

Compliance with these regulations is not just about avoiding penalties; it is also about protecting customer trust and maintaining investor confidence. Here are a few key takeaways:

Be transparent with your customers about how their data is being protected. This can enhance trust and loyalty.
Keep your investors informed about the steps you are taking to comply with the new regulations. This demonstrates your commitment to data security and compliance.
Regularly monitor your data transactions and update your compliance measures as necessary to ensure ongoing protection.

Key Compliance Takeaways

Familiarize yourself with the specifics of Executive Order 14117 and the DOJ’s final rule to ensure you are aware of all the requirements and restrictions.
Update your contractual agreements, enhance data security protocols, and educate your staff to ensure compliance.
Keep your customers and investors informed about your data protection efforts to maintain trust and confidence.

By taking these steps, you can navigate the complexities of the new DOJ rule, protect your business from potential disruptions, and ensure the continued trust of your customers and investors.

CISO Results