The Eprivacy Regulation (Epr) and Its Impact on Banks

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The Eprivacy Regulation (Epr) and Its Impact on Banks www.pwc.ch/ Is ePrivacy defining the future standard of data protection for the banking industry? The ePrivacy Regulation (ePR) and its impact on banks “The question of the right to privacy must be one of the defining issues of our time.” S. Shetty PwC | The ePrivacy Regulation and its impact on banks | 2 Table of Contents The ePrivacy Regulation (ePR) and the impact on banks 3 The ePrivacy Regulation in a nutshell 3 Legal background 3 Key requirements of the ePrivacy Regulation 4 The ePrivacy Regulation and the GDPR 5 How does the ePrivacy Regulation affect you? 7 Key challenges of ePR for banks 7 What is our suggested approach 8 Prioritisation is key 8 How can PwC help? 9 Contacts 9 3 | The ePrivacy Regulation and its impact on banks | PwC The ePrivacy Regulation (ePR) and its impact on banks The European Commission is finalising the ePri- The cornerstones of the proposed rules on Privacy vacy Regulation (ePR), which may become effec- and Electronic Communications are: tive, together with the EU GDPR, from May 2018. All electronic communications must be confi- The ePR, which protects the right to respect for dential private life and communications, is one of the key Listening to, tapping, intercepting, scanning and pillars of the EU’s Digital Single Market Strategy. storing of, for example, text messages, e-mails or voice calls will not be allowed without the consent This new regulation is designed to be ‘future- of the user. The newly introduced principle of proof’: all existing and future communication confidentiality of electronic communications will technologies are and will be subject to it. This will apply to current and future means of communica- have a disruptive effect on banks’ digital strate- tion - including, for example, all appliances linked gies, which will have to be redefined in line with to the IoT (‘Internet of Things’). the new requirements. Confidentiality of users' online behaviour and devices has to be guaranteed The ePrivacy Regulation in a nutshell Consent is required to access information on a The ePrivacy Regulation will replace the existing user's device – the so-called terminal equipment. ePrivacy Directive, which was revised in 2009. The Users also need to agree to websites using cookies new regulation comprises several adjustments to or other technologies to access information stored address current trends in digital markets and it on their computers or to track their online behav- entails a considerable extension of scope. The key iour. goal of the ePrivacy Regulation is to protect elec- tronic communications of natural and legal persons Processing of communications content and and to protect the information stored in their metadata is conditional on consent terminal equipment. Privacy is guaranteed for the content of commu- nication as well as metadata – for example, who was called, the timing, location and duration of the Legal background call, as well as any websites visited. In the recent years, electronic communications services have evolved significantly. Consumers and Spam and direct marketing communications businesses are relying more and more on inter- require prior consent net-based services to communicate, such as instant Regardless of the technology used (e.g. automated messaging, Voice over IP and web-based e-mail, calling machines, SMS or e-mail), users must which are not covered by the current ePrivacy give their consent before unsolicited commer- Directive. The proposed Regulation on Privacy and cial communications can be addressed to them. Electronic Communications aims at reinforcing Marketing callers will need to display their phone trust and security in the Digital Single Market. The number or use a special prefix number that indi- draft regulation also aligns the rules for electronic cates a marketing call. communications services with the new world-class standards of the EU's General Data Protection Regu- lation (GDPR). PwC | The ePrivacy Regulation and its impact on banks | 4 Key requirements of the ePrivacy cookies, such as the need to provide transparent Regulation information on privacy settings and to offer possi- bilities to change privacy settings for all third-party The ePR has an extensive material scope as it cookies (via the browser settings). According to includes rules on various aspects of electronic the current draft, the browser settings will need to communications. The following are the key require- allow website visitors to accept or refuse cookies ments outlined in the draft regulation. from all websites, as well as other ‘identifiers’ – Scope: legal and natural persons in the EU which is a change from the current cookie ‘popups’ The regulation applies to both legal and natural that users see on most websites today. persons and covers the provision of e-communica- tion services and the use of such services by such Extended requirement for user’s consent users within the Union. The regulation addition- The ePR will require the user’s consent in ally applies to information related to the terminal a number of instances, for example, for the equipment of users within the Union. processing of e-communication content and related metadata (when such processing is not Protection of electronic communication strictly necessary for the provision of the service) Electronic communication is protected through as well as for using information stored in terminal the principle of confidentiality. Accordingly, equipment. the processing of data and metadata related to electronic communications is restricted to what is Right of natural and legal persons to control strictly necessary to provide the communication electronic communications service and erasure is required once the data is no The regulation adds restrictions with respect to longer needed for its original purpose. This will calling-line identification and strengthens the impact, for example, Voice over IP and instant provisions for call blocking. messaging services (e.g. WhatsApp, Facebook messenger, Gmail, Skype). Restrictions on unsolicited communications Privacy is further strengthened through extended Protection of information stored in terminal consent requirements with respect to entries in equipment public directories and unsolicited communications The regulation restricts the processing of data (via e-mail, calls or any other electronic service). stored in the terminal equipment of users as well as the collection of information related to the Transparency on security risk user’s terminal equipment. Providers of electronic communication services have to inform users about the particular risks Privacy settings related to the security of networks and electronic Protection of privacy will be strengthened through communications. extended requirements relating to the consent to 5 | The ePrivacy Regulation and its impact on banks | PwC The ePrivacy Regulation and the Shared backbone GDPR Due to their complementary nature, the two regu- lations share a number of similarities, most notably The ePR aims at complementing and specifying the their national transposition model: both GDPR and requirements set out under the EU GDPR, i.e. the ePrivacy replace existing directives. This means that EU General Data Protection Regulation, which will they will be directly applicable without the need to be applicable from May 2018. Since the two regula- be transposed into national laws and, as such, the tions may have points of overlap, it is important to playing field for the protection of electronic commu- notice that the rulings under ePR are lex specialis to nications will be levelled across the EU. the GDPR and therefore they will prevail over the GDPR’s requirements in case of conflict (provided Furthermore, the two regulations share the same they do not lower the level of protection enjoyed by enforcement model: the same supervisory authori- natural persons under the GDPR). ties will oversee the application of the requirements and, in both cases, non-compliance may result in In light of the above, the following considerations fines up to 4% of revenues or EUR 20 million, which- are vital to the efficient and successful analysis and ever is higher. implementation of the two regulations. Finally, if the trilogue consisting of the European Parliament, the Council and the Commission, finishes the consultations in time, both regulations will be applicable as of May 2018. 10 January 2017 19 October 2017 26 October 2017 Adoption Window of compliance Adoption EU GDPR for EU GDPR EU GDPR 2/3 of the time granted to ensure compliance has past 25 May 2018 25 May April 2016 2019 Public Proposal for Approval by Trilogue Adoption of consultation ePrivacy LIBE committee* and ePR Regulation window of Planned adoption (ePR) compliance date for ePR Approval by EU widely perceived Parliament to as unrealistic, start trilogue postponement possible * LIBE committee = European Parliament Committee on Civil Liberties, Justice and Home Affairs Extended scope of ePR While the GDPR focuses on protecting the personal data of data subjects within the Union, the ePR has an extended scope, as shown in the table below: Scope GDPR ePrivacy Scope extension by ePR Data Natural persons Natural and legal persons Applies also to legal persons subjects Material Processing of personal data Processing of electronic Extension to any kind of scope communications data and electronic communication information related to and information – not only terminal equipment personal data Territorial • Controllers located in the Electronic services provided Widening of territorial scope Scope Union to users in Union (location to use of electronic communi- • Personal data of subjects in at which the user uses the cation services in the Union the Union service) PwC | The ePrivacy Regulation and its impact on banks | 6 Extended scope of ePR While the GDPR focuses on protecting personal data of data subjects within the Union, the ePR has an extended scope, as shown in the table below: Scope GDPR ePrivacy Protected Personal data Metadata and information stored in data terminal equipment Principles 1. Lawfulness, fairness and transparency Confidentiality of communication 2.
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