Naavi.org

To

All Bankers, Economists in India

Dear Friends,

I have been highlighting the ill effects of Bitcoins and Private Crypto Currencies through these columns and urging the Government  to use the Crypto Currency Bill to ban all private Crypto currencies.

However, Crypto Currencies are the currency of the corrupt and corruption is all over our country and hence voices of people like us get drowned amidst the power of voices financed by corruption. Crypto Currencies have corrupted our Bureacracy, politicians, businessmen and even the Judiciary. Hence it is difficult to expect that a rational decision would be taken by the Government on the Crypto Currency Bill.

As a result the Government is prevented from even presenting the Crypto Currency Bill in the Parliament.

Now I am seeing an even greater danger which can  cause Holocaust or Pralaya in the financial systems. This is the emergence of Ripple and the Crypto Currency XRP.

While smaller Crypto exchanges are trying to make our Banks like SBI or ICICI Bank or HDFC Bank redundant and leading to their eventual closure, Ripple has set it sights on destroying the RBI and all other Central banks of the globe.

Ripple has set up a network of institutions which can send and receive money outside the network of SWIFT which means outside the regulation of the Central banks. Since XRP is convertible to any private crypto currency, Ripple is already capable of providing a global exchange and settlement for digital black money. Once this settles down, the RBI’s would be redundant, FEMA would not work and the global financial system would accelerate to its death.

My views are based on being an Ex-Banker and I want qualified economists and Bankers of the day to take a serious look at the impact  that can be caused by the Ripple system and how we can protect this catastrophe.

This is as important preventing global warming which can cause a watery grave for the earth.  I feel that India is in the cusp of an opportunity to take global leadership in ensuring that the Private Crypto Currencies and the exchanges like Ripple are effectively neutralized through our own Crypto Currency law and setting up a global group of countries to protect the financial holocaust.

Kindly respond before it is too late.

Naavi

Refer : JPC recommendation on SWIFT..

One of the surprising inclusions in the recommendations of the JPC on PDPB is related to the SWIFT network.  The recommendation 8 states

“The Committee observe that data protection in the financial sector is a matter of genuine concern worldwide, particularly when through the SWIFT network, privacy has been compromised widely. Indian citizens are engaged in huge cross border payments using the same network.

The Committee are of the view that an alternative to SWIFT payment system may be developed in India which will not only ensure privacy, but will also give boost to the domestic economy.

The Committee, therefore strongly recommend that an alternative indigenous financial system should be developed on the lines of similar systems elsewhere such as Ripple (USA), INSTEX (EU), etc. which would not only ensure privacy but also give a boost to the digital economy.”

Clearly, this recommendation is extraneous to the subject on hand and the committee could have avoided this topic which was more appropriate for Cyber Security.

There was a section of the industry which was insisting that “Financial Information” should not be considered as “Sensitive personal Information”. At the same time, the MHA was highlighting the Cyber Crime investigative requirements which were being frustrated by some Privacy issues. This also would have surfaced during the discussions on Data Localization.

In this discussion on Cyber Frauds and need for enabling law enforcement to have investigative freedom, some recommendation has been sneaked in regarding “Alternate system for SWIFT” which otherwise is outside the scope of the JPC’s mandate.

It is true that most of the SWIFT frauds were associated with the identity theft of the officials authorized to operate SWIFT account as in the case of the Bank of Bangladesh/City Union Bank frauds or failure of basic information security principles as in the case of PNB-Nirav Modi case. But these were related to compromise of  “Business Credentials” through  Cyber Criminals and not directly related to “Privacy” of the Bank officials as individual data subjects.

It is therefore intriguing that the JPC was made to add this extraneous comment with the words “Strongly recommend”. This direction is addressed to the RBI and the Ministry of Finance and is not related to the implementation of PDPB 2019.

It is intriguing therefore to ponder why this extraneous recommendation was brought into this JPC report and whether there was some manipulative hands behind this recommendation. I consider that most of the member would not have recognized that this recommendation is related to the destabilization of the country’s economy which is being attempted through the discussions on the Crypto Currency regulation and not to PDPB.

I see a clear motive behind this recommendation to provide a support to the Crypto Currency system with this recommendation for dismantling of the SWIFT system and would like to draw the attention of the chairman of the JPC that the committee was perhaps mislead into adding this recommendation in this report.

For example, the INSTEX EU was a Special Purpose Vehicle (SPV) created by a few members of EU to ensure transactions with Iran outside the regular Banking system  because of the US sanctions. Since SWIFT could not be invoked for transfers of money for these trades, an alternative to bypass the sanctions was devised through INSTEX. This is a limited private network for financial settlements for humanitarian aids to one country affected by the sanctions of USA.

RippleNet is another system more directly related to bypassing an established currency exchange system by enabling a peer to peer money settlement system.

Ripple is a protocol is a blockchain based exchange system which presently works for exchange of legit currency. But it is intended to be a monetary system which is decentralized as compared to SWIFT. It creates a layer of money transfer enablement outside the network of Central banks of different countries which SWIFT represents. Use of RIPPLE could violate FEMA but like the Crypto currencies which violate the RBI act, would be adopted by many institutions as an alternative to the use of SWIFT. This system can support the Crypto Currency systems for international drug and arms trade more efficiently than the Crypto exchanges that prevail now. As a result the Crypto currencies would soon be added into the  RIPPLE settlement system and it would become one big global financial systems which will eliminate the role of Central Banks and behind that the currency system prevailing in the world.

Once the control of international monetary exchange is removed from the Central banks, the path would be clear to use the same network for exchange of the Digital Black money such as the Crypto Currencies.

Hence this recommendation of the JPC to provide respect to Ripple is a dangerous proposition about which most of the JPC members might not have been aware.

While legitimization of Private Crypto Currencies would destroy the economic system of one country, recognition of Ripple would at one stroke destroy the Global economic system as we know of.

This planting of the idea in an unrelated JPC discussion indicates that the proponents of “Global  Economic Destruction System” have their tentacles in several places silently working on sabotaging the established economic system.

The RTGS/IMPS/UPI system used in India is a successfully working real time peer-to-peer settlement system within the regulatory structure of the Central Bank and can be extended globally within the control of the consortium of the Central Banks of the Sovereign  Governments to address any inefficiencies of the SWIFT system. However  the risks of Cyber Crimes remain whether the system of settlement is SWIFT or Extended RTGS or RIPPLE.  Hence the recommendation to replace SWIFT with RIPPLE is a completely undesirable intrusion into the JPC recommendation and must be ignored.

It is necessary to red-flag this recommendation which fortunately has no relation to any of the amendments in the PDPB2019. Many of the Privacy activists may even fail to recognize the implication of this proposition in a JPC.

But let it be on record that Naavi.org is concerned about this inclusion of anti-SWIFT recommendation in the JPC report on PDPB 2019. We consider the Ripple as a destructive mechanism for the Global Financial System and every effort should be taken to bring down the system as it could unite all the private crypto currencies into a monstrous system the impact of which cannot even be imagined.  India now has an opportunity to outlaw Ripple as part of the Crypto Currency bill and we must take the lead to enlighten the world about the dangers of Ripple and Crypto currencies. 

Naavi

Reference Articles:

Ripple pilots a Private Leger for Central Banks launching CBDCs

The Future of CBDCs

The end of Privacy? Central Banks plan to launch digital coins

Why Governments are wary of Bitcoins

Is Ripple for real? A closer look at the company behind the third most valuable digital currency

Meet Ripple & XRP, Cryptocurrency for Banks

SEC Charges Ripple and two executives with conducting $1.3 billion unregistered securities offering

Ripple Vs SWIFT; Who is going to dominate Inter-Bank Money Transfers?

Other articles on DPA 2021

14. PDPA 2021: Concept of Discovery Consent

13. JPC Recommendations on SWIFT Alternative: Out of scope and Disruptive of Global Economic System

12. JPC recommendation on Children Data

11. JPC recommends DPA to watch on Incident Register

10. JPC comments beyond the Amendments-2: Implementation Schedule

9. JPC comments beyond the Amendments-1-Priority of law

8. Clarifications from the JPC Chairman on DPA 2021

7. Anonymisation is like Encryption with a destroyed decryption key 

6. PDPA 2021: The data breach notification regarding Non Personal Data

5. PDPA 2021: The Data Protection Officer is now in an elevated professional status

4. PDPA 2021: The nature of Data as an Asset and nomination facility

3. PDPA 2021: Regulating the human perceptions

2. PDPA 2021: Definition of Harm to include psychological manipulation

1. PDPA 2021: Should Big Data and Data Analytics industry be worried?

In designing the Data Protection regulations, problem areas have been

a) Deceased data principals

b) Legacy holdings of personal data

c) Personal data of minor children.

Having adopted “Consent” as a basic form of establishing lawfulness of processing, it is essential that the “Consent” itself should be lawful.

As we have repeatedly held, a “Consent is a contract” and its validity expires on the death of the person.  hence personal data of a deceased person moves out of the contours of a data protection law. This is also reasonable since the basic purpose of such legislation is to protect the privacy of a citizen of a country and I presume that it is not in the citizenship act to recognize a deceased person to have rights equivalent to a living citizen.

In the pdpa 2021, an attempt has been made to introduce a concept of “Nomination” where in the data principal can record his instructions for handing over the personal data to the nominated person.  The legality of such nomination would be debated separately by experts. At present, we consider that this is only an operational instruction and does not amount to legal inheritance of the deceased digital assets by the nominee.  This issue needs a more serious consideration than what has been done now in the form of a minor modification of Section 17 . (Recommendation 39).

This recommendation suggests that a legal heir or legal representative may be nominated by the data principal to exercise the right to be forgotten, or to append the terms of agreement with regarding to processing of personal data in the event of death of such data principal.

This provision is ultra-vires the ITA 2000 and survives only because DPA 2021 is a more recent special law. But it presumes that “Data” is a “Property” the rights of which survive death and can be transferred to another person. Section 17(4) does not specifically mention that the right is limited to carrying out some duties towards bringing back the data asset for the use of legal heirs and not to enjoy the benefits of the data by the nominee.

Further “Right to Processing of data” by consent is like transfer of a “Right to use” for a limited purpose and similar to an “Assignment”. The nomination is therefore an exercise of the right of assignment already exercised. This clarity is also not present in the amendments.

However, presence of 17(4) does provide an outlet for data of deceased persons to be brought to open.

On the treatment of legacy holding of personal data and how to handle it after the new act comes into effect, the recommendations are not clear.

However, an indication of the thinking of the committee is available in the suggestions related to the handling of the consent in respect of the children. While the consent for a child (person of less than 18 years of age) is to be obtained from the parent, 3 months before the personal attaining the majority, the Data Fiduciary should start making an attempt to get a fresh consent from the erstwhile minor. But this consent can be obtained effectively only after the minor completes 18 years. Hence sending of a notice 3 months in advance can only to prepare the parent to give up his consent.

In the contingent event that no renewal of consent is received, the section 17(4) DPA 2021 suggests that the “Discontinuity of service should be avoided”. This is a contradiction since this would mean that the consent provided earlier would continue to be held valid even after the minor attains majority and not specifically opted in.

This however may be considered as a practical decision to ensure that “Mere silence” of the minor should not be considered as “Withdrawal of consent”.

If this principle is extended to cases of personal data collected and processed before the law comes into existence, it appears that there is a case to argue that

“In the case of legacy personal data in which valid consents are available from data principals (though  under notice issued prior to DPA 2021), a notice for renewal with a new notification has to be sent and after three months  if there is no opt out request, the processing may continue”. … (This is only an interpretation of Naavi)

We can await if the DPAI gives any clarity on this interpretation.

Naavi

Other articles on DPA 2021

14. PDPA 2021: Concept of Discovery Consent

13. JPC Recommendations on SWIFT Alternative: Out of scope and Disruptive of Global Economic System

12. JPC recommendation on Children Data

11. JPC recommends DPA to watch on Incident Register

10. JPC comments beyond the Amendments-2: Implementation Schedule

9. JPC comments beyond the Amendments-1-Priority of law

8. Clarifications from the JPC Chairman on DPA 2021

7. Anonymisation is like Encryption with a destroyed decryption key 

6. PDPA 2021: The data breach notification regarding Non Personal Data

5. PDPA 2021: The Data Protection Officer is now in an elevated professional status

4. PDPA 2021: The nature of Data as an Asset and nomination facility

3. PDPA 2021: Regulating the human perceptions

2. PDPA 2021: Definition of Harm to include psychological manipulation

1. PDPA 2021: Should Big Data and Data Analytics industry be worried?

One of the recommendations (Recommendation 4) of the JPC regarding DPA 2021, is that the “Authority should ask the data fiduciaries to maintain a log of all data breaches (both personal and non-personal data breaches) to be reviewed periodically by the authority, irrespective of the likelyhood of the harm to the data principal.

This provision means that the Incident Register maintained by the Data Fiduciary should be made available to the DPA from time to time. Since the normal Incident register of an organization may contain many issues which cannot be classified as “Data Breach”, it becomes necessary to maintain the incident register separately for “Data Breach Incidents” and if possible “Personal Data Breach Incidents” separately from “Non Personal Data Breaches”.

The possibility of the DPA having access to the Incident register could mean that if there is a delay between the “Getting the knowledge of a data breach” and the “Reporting of the data breach” then the DPA may be able to penalize the company. The committee suggests that if harm is caused on account of the delay in reporting of the breach, the data fiduciary would be responsible.  However, in the event the data breach is reported despite precautions and arising out of business rivalry or espionage, the DPA may consider a temporary reprieve to the data fiduciary regarding reporting of the data breach to the data principal.

While the suggestion of the committee on the sharing of the incident register is appreciated as a measure to ensure prompt reporting, the practicality of the DPA being able to make proper use of this “incident Watch” for the thousands of data fiduciaries coming under its watch is a challenge to say the least. At best these become issues to be considered when there is a data breach report to be investigated.

If we remember, under the CERT IN guidelines for Cyber Cafes, it was stated that monthly reports of the Cyber Cafe server activity has to be shared with the authorities. But it remained an impossible provision completely forgotten by all. This “Incident Report” to be shared with the DPA is also likely to be one such non starter.

However, since this is not part of the actual act, it remains a part of the wish list and is unlikely to be implemented.

Under recommendation 2 it is suggested that the DPA will consider regulations on Non Personal data to be issued in due course. However for several more years, it is unlikely that the DPA will be able to catch up with the burden of regulation of the personal data and the multitude of regulations that needs to be issued from time to time. Hence there would be no time for the DPA to consider regulations on the Non Personal Data. Hence the “Non Personal Data Regulation” is likely to remain only an empowerment for the time being and not likely to be taken up in the first two or three years.

( To be continued…)

Naavi

Other articles on DPA 2021

14. PDPA 2021: Concept of Discovery Consent

13. JPC Recommendations on SWIFT Alternative: Out of scope and Disruptive of Global Economic System

12. JPC recommendation on Children Data

11. JPC recommends DPA to watch on Incident Register

10. JPC comments beyond the Amendments-2: Implementation Schedule

9. JPC comments beyond the Amendments-1-Priority of law

8. Clarifications from the JPC Chairman on DPA 2021

7. Anonymisation is like Encryption with a destroyed decryption key 

6. PDPA 2021: The data breach notification regarding Non Personal Data

5. PDPA 2021: The Data Protection Officer is now in an elevated professional status

4. PDPA 2021: The nature of Data as an Asset and nomination facility

3. PDPA 2021: Regulating the human perceptions

2. PDPA 2021: Definition of Harm to include psychological manipulation

1. PDPA 2021: Should Big Data and Data Analytics industry be worried?

In the PDPB 2018, a clear road map of implementation of the law had been provided. This had been removed in the PDPB 2019. However in the DPB 2021, the detailed implementation schedule has been suggested.

This may be made part of the notification.

The suggested implementation schedule (Recommendation 3)  is as follows:

1. The Chairperson and members of DPA to be appointed within 3 months.
2. DPA commences its activities within 6 months
3. Registration of Data Fiduciaries to commence in 9 months
4. Adjudicators and Appellate Tribunal to be appointed within 12 months
5. Complete act to be effective within 24 months.

It has been suggested that the Government shall be in consultation with the stakeholders during the time if implementation and also keep the legitimate interests of business in mind so that it does not detract too far from the Government’s stated objective of promoting ease of doing business in India.

It is to be noted that though the principal objective of the DPA 2021 is to provide protection of Privacy right of the Indian citizens, the objectives of the Bill as also stated in the Preamble reiterate that the Business also has a stake in this law and its interest cannot be ignored.

In comparison, GDPR is clearly pro-privacy in its implementation and some of the decisions of the supervisory authorities are blatantly anti-business. Such an approach is counter productive to development and the JPC has therefore taken a stand not to treat business as outcasts. While this will continue to be debated by privacy activists as anti-Puttaswamy judgement, it is essential for the Government to balance the needs of different stake holders and one manifestation of this is contained in the Recommendation 2 stating that the legitimate interests of business has to be kept in mind while fixing the time line of implementation.

Two years has been the general time given in many other laws including GDPR and though Government could have curtailed this to about an year  given the delay that has already occurred, the JPC has stuck to the standard 24 month time line.

Hopefully industry would consider this reasonable.

Naavi

Other articles on DPA 2021

14. PDPA 2021: Concept of Discovery Consent

13. JPC Recommendations on SWIFT Alternative: Out of scope and Disruptive of Global Economic System

12. JPC recommendation on Children Data

11. JPC recommends DPA to watch on Incident Register

10. JPC comments beyond the Amendments-2: Implementation Schedule

9. JPC comments beyond the Amendments-1-Priority of law

8. Clarifications from the JPC Chairman on DPA 2021

7. Anonymisation is like Encryption with a destroyed decryption key 

6. PDPA 2021: The data breach notification regarding Non Personal Data

5. PDPA 2021: The Data Protection Officer is now in an elevated professional status

4. PDPA 2021: The nature of Data as an Asset and nomination facility

3. PDPA 2021: Regulating the human perceptions

2. PDPA 2021: Definition of Harm to include psychological manipulation

1. PDPA 2021: Should Big Data and Data Analytics industry be worried?

The JPC report on PDPB 2019 contains 91 recommendations many of which are included in the main bill as amendments to PDPB 2019. The main amendments have been already discussed in several of our earlier articles. There are many small amendments in the nature of typo corrections which add up to the numbers but may not require specific discussions. However there are a few recommendations which are significant but for some reason have not been included in the amendments. They may however become guidelines for the DPA to incorporate in the regulations later on or for the Government to include during the Parliamentary debate. In order to keep track of such recommendations which are part of the legislative history of DPA 2021, we shall try to bring it on record through the following presentation.

Some of these comments would be referred to in a manner similar to the reference to “Recitals” under GDPR.

1. During the final stages of passage of the bill there was a discussion on whether the State Governments should be allowed to have their own “Data Protection Authority”.  If this had been agreed to, it would have given room to the State Governments coming up with their own data protection legislations to counter the DPA 2021 and create issues of their own. We have seen such attempts in bringing amendments to ITA 2000 through some state laws.

The Committee has made a categorical observation that this Act falls within the exclusive legislative domain of the Union Government.(Recommendation 1). Hence the State Governments cannot bring their own legislations. This would avoid a situation like what prevails in USA where each state wants to have a data protection law for its own citizens or situations that prevail in Canada and UK where provincial Governments may have some rights of their own through constitution to keep separate laws like what we had in Kashmir prior to the Article 370.

One India-One Data Protection law is therefore the policy pursued by the JPC and is welcome.

JPC has also clarified that this is a special law and overrides any other pre-existing laws that may govern the subject incidentally.

JPC has also clarified that the law would apply irrespective of any other law governing contractual relations between a data fiduciary and a data principal.

In Section 43A of ITA 2000 (Which will be removed after DPA 2021 becomes effective),  the “Reasonable Security Practices”  had given precedence to contractual agreement between parties  over other aspects  including law in force.

P.S: Section 43A Explanation :

 “reasonable security practices and procedures” means security practices and procedures designed to protect such information from unauthorised access, damage, use, modification, disclosure or impairment, as may be specified in an agreement between the parties or as may be specified in any law for the time being in force and in the absence of such agreement or any law, such reasonable security practices and procedures, as may be prescribed by the Central Government in consultation with such professional bodies or associations as it may deem fit.

The JPC has in its recommendation tried to clarify this point..

With the removal of Section 43A from ITA 2000 it will be deemed that DPA 2021 is the principal law in India covering personal data while ITA 2000 may continue to cover some aspects of personal data not addressed in DPA 2021.  The coverage of ITA 2000 will be considered mainly as restricted to “Protection of Non Personal Data” and the  “Criminal punishments  on the abuse of Personal Data” and any other application of ITA 2000 to personal data would be considered as “Incidental” application. As a result, if there are any contradictions, DPA 2021 would prevail.

It is important to note that the clarification that the provision would apply irrespective of other law governing contractual relations between the data principal and the data fiduciary will have an impact on all the Data Processing contracts currently being used by the Data fiduciaries either with the Data Principals or with other Data Processors.

A review of all such contracts may therefore be necessary.

(To Be continued…)

Naavi

Other articles on DPA 2021

14. PDPA 2021: Concept of Discovery Consent

13. JPC Recommendations on SWIFT Alternative: Out of scope and Disruptive of Global Economic System

12. JPC recommendation on Children Data

11. JPC recommends DPA to watch on Incident Register

10. JPC comments beyond the Amendments-2: Implementation Schedule

9. JPC comments beyond the Amendments-1-Priority of law

8. Clarifications from the JPC Chairman on DPA 2021

7. Anonymisation is like Encryption with a destroyed decryption key 

6. PDPA 2021: The data breach notification regarding Non Personal Data

5. PDPA 2021: The Data Protection Officer is now in an elevated professional status

4. PDPA 2021: The nature of Data as an Asset and nomination facility

3. PDPA 2021: Regulating the human perceptions

2. PDPA 2021: Definition of Harm to include psychological manipulation

1. PDPA 2021: Should Big Data and Data Analytics industry be worried?