Cross-border PII data transfer basics and regulations

Nataliia Dolzhenko

With the rise of globalization and digitalization, businesses of all sizes are transmitting Personal Identifiable Information (PII) across borders. However, transferring PII across borders requires complying with various privacy laws and regulations in source and destination countries.

For example, the EU’s GDPR enforces strict data protection rules, while other regions adopt more lenient or fragmented approaches. Understanding the basis for cross-border PII transfers, applicable laws, and common challenges is critical to maintaining legal compliance and protecting individual privacy.

Businesses must ensure compliance to avoid legal penalties, protect data integrity, and build trust with their customers. This article explores the fundamentals of cross-border transfer of personal data and the regulations shaping them.

What is PII data with meaning and examples?

PII stands for Personally Identifiable Information. It refers to any data that can be used to identify, contact, or locate an individual, either directly or indirectly. This may include names, addresses, phone numbers, social security numbers, and more.

While PII data meaning often overlaps with personal data, it’s important to distinguish between the two. Personal data vs PII: all PII is personal data, but not all personal data qualifies as PII. For example, aggregated, anonymized information is personal data but not PII.

Organizations handle PII when interacting with customers, employees, or other stakeholders. This is why it’s important to understand its meaning and implications to avoid falling into legal complications. PII can be categorized into two main types:

Sensitive PII: Refers to those data that, if exposed, could result in harm to the concerned person, such as identity theft, financial fraud, or breach of privacy. Sensitive PII data examples include:

Non-Sensitive PII: Refers to data that, on its own, cannot cause significant harm to its owner but may still be combined with other information to identify an individual. Examples of non-sensitive PII data include:

Additionally, PII vs sensitive data highlights another distinction. Sensitive data, such as health records or political affiliations, requires stricter handling than basic PII.

Basis for PII cross-border data transfer

There are several reasons why an organization may choose to perform cross-border PII data transfer, depending on the specific jurisdiction and applicable laws. let’s discuss some of these reasons:

  1. Consent: An organization may choose to conduct cross-border data transfer based on the permission granted by their clients. This is a valid basis for cross-border data transfer.
  2. Contractual necessity: Another basis for a PII data transfer could be because the transfer is necessary for the performance of a contract between the data subject and the controller or a third party.
  3. Legal obligation: Another reason for cross-border PII data transfer is if the transfer is required to comply with a legal obligation to which the data controller is subject. The data controller must understand PII data regulations before embarking on any transfer process.
  4. Vital interests:  The cross-border transfer of data could be necessary to protect the vital interests of the data subject or another natural person.
  5. Public interest The transfer is necessary for the performance of a task carried out in the public interest or the exercise of official authority vested in the controller.

It’s important to note that the specific requirements and conditions for each basis may vary depending on the applicable PII data laws.

PII data transfer laws and regulations

The transfer of PII data is primarily influenced by the data transfer laws governing the location where the data was collected, or stored. Several countries and continents globally have regulations that govern the transfer of data outside their territory. In this section, we shall highlight the provisions of some of these laws regarding cross-border data transfer.

  1. The European Union’s General Data Protection Regulation (GDPR). The GDPR, effective since 2018, has influenced several data privacy laws around the world. In Europe, it governs how PII data is processed and transferred. It has strict provisions in place for safeguarding data when it is transferred outside Europe. Below are some key clauses regarding data transfer outside the European Economic Area (EEA):
  2. Adequacy Decisions: PII data can only be transferred outside the EEA to countries deemed by the European Commission to offer an “adequate” level of data protection, such as Canada, Japan, South Korea, etc.
  3. Standard Contractual Clauses (SCCs): For countries without adequate data protection laws in place, businesses must use legally binding agreements (SCCs) that outline data protection measures, before data transfer can be approved.
  4. Binding Corporate Rules (BCRs): Multinational companies can adopt BCRs, approved by data protection authorities, to allow PII data transfers within their organization globally. This is often resorted to when there are no adequate data privacy laws in place, in the countries data is to be transferred.
  5. Consent and Transparency: Explicit consent must be obtained from data subjects for transfers under certain conditions, and they must be informed about how and where their data will be used.
  6. Penalties: Non-compliance can result in heavy fines of up to €20 million or 4% of the company’s global annual turnover, whichever is higher.

California Consumer Privacy Act (CCPA) – United States.

The CCPA, implemented in 2020, focuses on empowering California residents with control over their PII. While it is less stringent than the GDPR, it is a landmark regulation in the U.S., influencing other states to adopt similar laws. Below are its provisions regarding data transfer:

  1. Right to Know and Delete: Consumers have the right to know what PII is being collected, how it is used, and request its deletion.
  2. Consent for Data Sharing: Businesses must obtain consumer consent before transferring or selling their data. This is particularly critical for cross-border transfers to ensure compliance with destination countries’ laws.
  3. Opt-Out Options: Consumers can opt out of the sale or sharing of their data with third parties, including foreign entities.
  4. Penalties: Businesses face fines of up to $2,500 per violation or $7,500 per intentional violation. Civil suits are also permitted for certain data breaches.

Personal Information Protection Law (PIPL) – China.

China’s Personal Information Protection Law (PIPL), enacted in 2021, establishes comprehensive privacy regulations akin to the GDPR while imposing stringent localization requirements for sensitive data. A key focus of the PIPL is its governance of cross-border transfers in China, ensuring that personal information leaving the country adheres to strict legal frameworks. The law outlines specific provisions for cross-border data transfers, which include:

  1. Data Localization: Critical PII and sensitive data must be stored within China unless approval is obtained for cross-border transfers.
  2. Cross-Border Transfer Assessments: Businesses must conduct security assessments to evaluate the risks of transferring PII abroad and ensure the receiving country provides adequate protection.
  3. Consent and Specific Purpose: Explicit consent is mandatory for transferring PII out of China. Transfers must have a specific, disclosed purpose.
  4. Penalties: Violations can result in fines of up to 5% of a company’s annual revenue in China, along with potential suspension of operations.

Brazil’s General Data Protection Law (LGPD).

The LGPD which is Brazil’s comprehensive data protection law, governs how organizations handle PII within Brazil and during international transfers. Below are some points to bear in mind when transferring data outside Brazil:

  1. Adequacy Requirements: PII transfers are allowed only to countries with data protection laws deemed adequate by Brazil’s National Data Protection Authority (ANPD).
  2. Contractual Safeguards: If adequacy requirements are not met, businesses must rely on legal instruments, such as contracts or user consent, to ensure data protection.
  3. User Consent: Individuals must provide informed consent for cross-border transfers, which must be clear and detailed.
  4. Penalties: Organizations can face fines of up to 2% of their annual revenue in Brazil, capped at 50 million BRL per violation.

Cross-border PII data transfer challenges

Despite legal frameworks, several challenges complicate cross-border PII data transfers worldwide. Below, we explore some of the most pressing challenges associated with these transfers.

Different countries have varying privacy regulations, creating compliance challenges for organizations operating across multiple countries. Multinational companies would have to review several data sovereignty laws by country and find a way to maintain compliance, even among those with contradictions.

Some countries are not recognized as providing adequate data protection under international standards, and so businesses sending data to such countries must find other alternatives to transfer their data. Alternatives, such as Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs), can be costly and time-consuming to implement. Additionally, data transfers to such countries may face additional scrutiny, thereby increasing compliance burdens.

Many nations enforce data localization laws, requiring certain types of PII to be stored or processed within their borders. China, Russia, etc. are examples of countries with such requirements. To manage this, organizations must invest in local cloud infrastructure or partner with local providers, leading to increased costs and operational complexity.

Cross-border transfers expose PII data to cybersecurity threats, such as data breaches, interception during transit, or inadequate protection in the destination country.

Cultural perceptions of privacy and ethical data use vary across regions, influencing public expectations and regulatory focus. For instance, in Europe, privacy is often seen as a fundamental right, leading to stricter regulations. However, in the U.S., data practices are more business-driven, with varying state-level laws. Organizations must align their practices with local cultural and ethical norms to maintain trust and compliance.

Legacy systems, incompatible software, or lack of robust encryption protocols can hinder secure data transfers.

How InCountry helps companies stay compliant with PII data transfer laws

An effective solution to the challenges of PII data transfer is leveraging cloud storage facilities in the countries where your business operates. While setting up such infrastructure may be costly for most organizations, partnering with a reliable cloud service provider like InCountry offers a cost-efficient and seamless alternative.

At InCountry, we go beyond traditional cloud services. Our mission is to help businesses worldwide comply with local data privacy laws in the regions they operate. One of our flagship solutions, Data Residency as a Service, allows businesses to store PII data in the country where it is collected, ensuring compliance while maintaining easy access from anywhere.

InCountry ensures your data is securely stored in your preferred location, giving you the confidence to operate globally without risking compliance issues. Over the years, we’ve partnered with organizations across industries to help them navigate and adhere to complex privacy regulations, freeing them to focus on their core business goals.

Our advanced data security tools and protocols are continually updated to safeguard your sensitive information. By partnering with us, you eliminate compliance worries and ensure your data remains protected at all times.

Ready to simplify compliance? Contact us today to explore how we can help your business thrive while meeting all regulatory requirements.