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Building a Responsible Cyber Society…Since 1998

[P.S: This is in continuation of the discussion of the proposed Data Protection Act in India and the public comments invited for the  Justice Srikrishna report.]

“Privacy by Design” is a concept which GDPR expects from Data Controllers and Data Processors.  The concept of Privacy by design basically means that measures for Privacy protection should be initiated right from the inception of a project and during the engineering process. It is not an after thought considered over the layer of processing but should be embedded into the basic framework of processing.

The concept of Privacy by design imposes a sense of responsibility on software manufactures who have a tendency to design software solely for functional purpose and expect Privacy to be taken care of manually at the time of implementation.

This concept needs to be extended to complete compliance of all provisions of the Data Protection Act which can be controlled by technical means by making “Compliance By Design” as a mandatory provision under law so that the responsibility for compliance is shared by both the software developers and the users. This could mean that systems and outsourced services should have mandatory encryption, mandatory authentication in the form of non repudiable digital signature system, mandatory compliance of data retention, mandatory archival of log records etc.

If such “Compliance by design” is mandated, then the quality of software products from the point of view of “Data Security” would increase and in the event of any “Data Breach” caused by vulnerabilities in the software systems, some responsibility may be imposed on the software companies also. This would help SMEs in particular who donot have greater dependency on the software suppliers, who donot agree for source code audit or for source code escrowing and also donot guarantee that their software is free from bugs.

Larger companies may have better ability to take their own measures to secure the systems irrespective of the vulnerabilities they come with. They also have the power to extract maintenance contracts and source code audits better than the SMEs and hence the proposal for Compliance by design should help SMEs more than large entities provided the definition of “By design” is extended to software development.

The new data protection act can consider imposition of “Compliance By Design” as one of the responsibilities of system developers (both hardware and software). In order to incorporate this provision, a separate chapter that defines the compliance requirements of the Data Controllers, Data Processors and Data Managers (as proposed in our previous article) along with how the fact of compliance should be disclosed to the public and to the Data Protection Authority. This should obviously be controlled through Registration and penal de-registration of entities who are Data Controllers/Processors/Managers.

Hopefully Compliance requirements donot simply remain on paper but are followed up for strict implementation.

In order to ensure that Compliance is taken seriously, Cyber Insurance should also be made mandatory so that the Cost of Insurance should incentivise the business entities to invest the right resources in achieving compliance.

The SKC has asked the feed back on whether the law should be made retrospective or prospective. If “Compliance” is an honest expectation, it goes without saying that the law has to be enforced prospectively with reasonable time given for compliance.

In the meantime the regulatory authorities need to even provide guidance and assistance to the Data processors and Controllers in the SME sector so that they can achieve compliance in the specified time. The compliance schedule also need to be extended with an additional time for smaller entities taking into account the incidence of cost as well as scarcity of manpower to assist them in the compliance.

The compliance dead line could therefore be about 1 year for large units and about 2 years for smaller units, with exact definition of what is Small and what is not being decided on the basis of turnover.

Naavi

[P.S: This is in continuation of the discussion of the proposed Data Protection Act in India and the public comments invited for the  Justice Srikrishna report.]

The EU law on Privacy under GDPR recognizes the “Right to Forget” which essentially means that the data subject can demand that his personal information should be erased from the records in the custody of the data processor/data controller once the data subject withdraws his consent.

Enabling “Erasure” of data is not as simple as it looks since data has a tendency to multiply and spread in different systems within the processing organization and it is often difficult to even recognize where all the copies of data are present. With need to back up data for reasons of disaster recovery and different versions of data getting created during the course of relationship of a customer with a data processing entity, when a demand for deletion comes up, it is difficult to ensure the complete erasure of data.

Further, since data is related to National Security and Crime control, there is a legal obligation to “Retain Data” in many circumstances. There will therefore be a conflict of interest between the need to erase data on request and the need to retain data for control of criminal activities. Even the need for Governance such as Direct benefit Transfer with the use of Aadhaar requires data to be retained and not erased at the request of only the data subject.

Even when Privacy is considered as a Fundamental Right, the law provides for exemptions for security purpose and hence the “Right to Forget” or “Right of erasure” is a concept which cannot be considered for the Data Protection Act.

[P.S: This is in continuation of the discussion of the proposed Data Protection Act in India and the public comments invited for the  Justice Srikrishna report.]

Many of the issues connected with Privacy arise out of the complaint that “information collected by a Data Controller” is processed in such a manner that the data subject feels that his privacy has been breached. Hence “Consent” is sought and obtained before collection of information. Section 79 of ITA 2000/8 under its rules has already adopted the procedure of disclosure and consent when an “Intermediary” collects personal data from a data subject in India. The fact that “Consent” should be an “Informed consent” is also well appreciated.

However most data subjects never care to read the Privacy statements or Privacy policies when presented to them before a specific use of a service. Many service providers also take blanket permissions ignoring the principles of minimal collection and purposeful use.

In the absence of proper legal requirements, data subjects can only try to take legal action against an entity that breaches the law if they can claim damages. But in most cases, damages cannot immediately be recognized and evaluated and hence “breach” can be recognized but not its consequences. Hence there can be no legal remedy in most cases.

When a data protection law is in place, the regulator can take action for breaches even when no damage is claimed by any data subject. Though this provision is available even now under Section 46 of ITA 2000/8, it is hardly recognized as existing. When the new law comes in, since there will be a recognized regulator called the “Data Protection Officer of India”, it will be his duty to monitor the industry and initiate action when required.

Some data controllers may blame the data processors for the breach and data processors may allege that the data controller did not indicate the responsibilities properly in the SLA. Even now many of the data processors in India coming under GDPR allege that they donot have a proper Business Associate Contract from their vendors specifying the information security requirements. Hence the responsibilities cast on the data processors is vague and goes without compliance.

The new law should ensure that this “Vagueness” is removed, by making it mandatory that the Data Controller who is the person/entity to whom the data subject provides the personal data and  “Consent” to use that data in a particular manner, take full responsibility for any breach and also mandate that any sub processors are bound with specific instructions which are clear. If the sub processor is also within the Indian jurisdiction, it may suffice to make a reference to the legal provision in toto by referring to the Act. But when the Data Controller and Data Processor are in different jurisdictional areas, it is necessary for the Data Controller to specify in a contract the actual responsibilities related to the processing of any data set/s and not leave it vague.

Assuming that this provision is taken care of, we can expect that all controllers will present comprehensive “Consent Requisitions” whenever online consent is required. They may even justify in the requisition the purpose of collection and how the information will be secured etc. However, in the process the consent requisition will be a long online document which no user is likely to read at length and just proceed to click “I Accept” and start availing the service. In some cases the service provider may say that “Continued use of the service is deemed to be a consent of the privacy policy” and provide a hyper link which the user does not care to open and see.

Such online consents may not be treated as proper  “Informed Consent” because it is not digitally signed and also because the likelihood of it having been read and understood before it is consented to is low. Since India does not recognize the Click Wrap contract  the acceptance of consent by the click of the button has no legal sanctity. The consent therefore only becomes an “Implied Consent of a dotted line contract”, where the fine point details could be considered voidable at the option of the customer.

Even when such consents are treated as contractually acceptable, the data subject may not be able to decypher the intricacies of the contract and take an informed decision. When multiple parties require multiple types of consents and multiple times, there would be inevitably the “consent fatigue” that makes him simply click without a second thought.

Hence the current system of each data controller taking individual consent each time a data is required for a specific purpose is not practically efficient.

One of the ways by which we can overcome this is to treat personal data as a property of value to the data subject and every usage as “Licensed Use” with some kind of rewards to be available to the data subject which is proportionate to the benefits that the data user may enjoy. In this concept the data subject actually sells the right to use his personal data for a consideration. However to manage this system, the data subject needs professional assistance and hence there is a role for an intermediary “Who Collects consents and data, keeps it with himself and releases it on specific request to a user as a personal Data manager of the data subject”.

The “Data Manager” being a professional agency knows the value of the personal data to different service providers and maximize the returns to the data subject. It is not necessary that the reward to the data subject is in the form of direct money. It could be in the form of reward points that are exchanged for some valuable service.

Further, the “Data Manager” as an intermediary can act like the “Personal Data Locker” and offer services such as anonymization and pseudonomization as well as providing limited set data devoid of key identifiers. He can ensure that value addition in the form of data mining and Big data analytics can be conducted without compromising the privacy of the data subject.

In order to provide an opportunity for such intermediary business, Personal property should be recognized as the property of the individual and he should have the right to license it for a price. The proposed data protection act should also recognize and define the role of the “Data Manager” as a business in which the data subject transfers the right to manage his personal data exclusively to one such agency. This role is different from that of the “Data Controller” and “Data Processor” as is used in laws such as GDPR. He should deal with the Data Controllers and ensures that they adhere to the principles such as minimal collection, purposeful use, adequate security, removal on completion etc. When he approves disclosure of personal data of his clients, he can ensure that adequate value is returned to the data subject however small it is.

The Data manager will subsume the role of the Data Controller to the extent that the data subject provides his consent only to the Data manager and all that the data controller gets is a “proxy identity”. The linking between the proxy identity and the real identity is in the hands of the Data Manager and the principles enunciated in our earlier discussions on “Regulated Anonymity” can be used so that only responsible data controllers will get the real identity based premium personal data. Others can get a lower valued proxy identity data. Some others may use limited data set and others the de-identified data. Thus the Data Manager can effectively classify and package data offerings and create value where as today the data subject does not get any value for his personal data which he shares with various service providers.

This type of parallel thinking can be incorporated in the Indian Data Protection Act so that it does not become simply a rehash of the GDPR or other international data protection legislation.

Naavi

[P.S: This is in continuation of the discussion of the proposed Data Protection Act in India and the public comments invited for the  Justice Srikrishna report.]

The Justice Srikrishna Committee (SKC) has propounded 7 key principles of the Data Protection Act and proceeded to provide several questions in its report seeking public comments.

The Seven key principles under which the proposed Data Protection law would be based are as follows.

1.Technology agnosticism– The law must be technology agnostic. It must be flexible to take into account changing technologies and standards of compliance.

2.Holistic application– The law must apply to both private sector entities and government. Differential obligations may be carved out in the law for certain legitimate state aims.

3.Informed consent– Consent is an expression of human autonomy. For such expression to be genuine, it must be informed and meaningful. The law must ensure that consent meets the aforementioned criteria.

4.Data minimisation– Data that is processed ought to be minimal and necessary for the purposes for which such data is sought and other compatible purposes beneficial for the data subject.

5.Controller  accountability–  The  data  controller  shall  be  held  accountable  for  any processing of data, whether by itself or entities with whom it may have shared the data for processing.

6.Structured enforcement– Enforcement of the data protection framework must be by a high-powered statutory authority with sufficient capacity. This must coexist with appropriately decentralised enforcement mechanisms.

7.Deterrent  penalties–  Penalties  on  wrongful  processing  must  be  adequate  to  ensure deterrence.

The above principles may determine the broad contours under which the SKC may work out a draft of the Data Protection Act of India (DPAI). In the background  the Supreme Court’s views on Aadhaar as an instrument of Governance and a potential tool of breach of Privacy will be weighing in the minds of those who will work on the drafts.

One of the first counters to be raised therefore is “Whether these principles need to be expanded? or Modified?”

It is in this context that we raise the first supplementary principle to be added to the list.

“The proposed Data protection Act should be amenable for compliance by all stakeholders with pleasure and appreciation of the purpose. It should not attempt to enforce the law compliance by pain… except to the inevitable minimum required pain that accompanies all changes.”

The second principle which follows the first is that the proposed law should confine itself to the limitations that is inherent in such a legislation. The law is proposed as “Data Protection Act of India” but is it the right defining of the proposed law? or should it be considered differently? is a question to ponder.

When the honourable 9 member bench of the Supreme Court (Puttaswamy Judgement) declared in a hurry that “Privacy is a Fundamental Right under the Constitution of India”, there was no time to deliberate and come to a conclusion on “What is Privacy”. The order did not specify the definition but said Privacy is a fundamental right. So the task before the Data Protection Act legislators include defining what they propose to protect.

A question naturally arises therefore that if the 9 eminent jurists could not define the enigmatic concept of “Privacy”, should the Data Protection Act of India attempt to do it?

Data protection legislation may not be the right law to define Privacy. It should be through a different law under the overall domain of  “Democratic Rights of an Indian Citizen under our constitution”.

On the other hand the Data Protection law can effectively define the “Security to be accorded to Data” of a particular type. “A Data Protection Act” should confine itself to protection of “Data” which may be personal data, sensitive personal data, or even corporate data. Calling an Act as “Data Protection Act” and confining it only to being an “Individual Information Privacy Protection Act” is not warranted.

However, India already has a law called “Information Technology Act” which has several provisions that fall in the category of “Data Protection”. It also has provisions that are meant to protect “Information Privacy” because of Sections 72A and 43A. Sections 43 and 66 along with several other sections such as Section 67C, Section 79, etc define responsibilities of individual information privacy protection. Sections like 69, 69A and 69B also provide the “Reasonable Exemptions”.

Now whatever the new Data Protection Act proposes will be in partial modification of ITA 2000/8 and will introduce a conflict with ITA 2000/8 and perhaps also on the UIDAI act.

The new Data Protection law should therefore decide if it steers clear of the existing ITA 2000/8 or trample upon its provisions and replace them with a new set of the same provisions under a different legal provision.

We should not forget that there is a “Health Care Data Privacy Act” which is also on the drawing board and has already been partially rolled out in the form of EHR guidelines (though the industry has largely ignored it).

One of the other principles that the proposed law should declare for itself is therefore the following:

The Proposed Data Protection Act shall work in harmony with the current established laws in the country such as Information Technology Act 2000Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act,

The Key principles should therefore be increased from 7 to 9.

The main purpose of the suggestion is that we need a legislation that the stakeholders will absorb as a necessary legislation that is good for our society and hence all of us have a duty to comply with it.

Unlike the GDPR which tries to impose its will through  obnoxious penal provisions, Indian Data Protection Act or Information Privacy Protection Act, or Individual/Personal Information Privacy Protection Act, as it may be called should not bank upon its ability to control the market with its penal provisions. By stating that the penalty can be 4% of global turnover or 20 million Euros, GDPR is showing its muscle. India can counter this by saying that the penalty may be 5% of global turnover and INR 2 billion and make it applicable to any entity in the world. With such a provision we can also make the international community raise eyebrows and recognize our existence.

But is this the way law should be imposed? by threatening to wipe out a company in case of non compliance? and leave it to the mercy of the adjudicator to determine the final penalty and if possible use his discretion as a leverage to ask for favours from the accused?

Penalty should be a deterrent but it should not be so huge that the accused either declares bankruptcy immediately or thinks of bribing his way out. It is in this context that we say law should promote compliance not with pain but with pleasure.

Data Controller is also a stake holder

In the data protection law, the drafting people should also decide who is the stake holder/ or stake holders?. Is the stake holder solely the individual and others like the Data Controller or Data Processor only targets for imposing a penalty if they donot comply? ..when what they need to comply itself is unclear?

We must accept that a Company registered in India is as much an entity that needs Government protection as the individual who is a citizen of India. Hence the law of privacy cannot go over board and look at punishing the Data Controller severely as the EU law tries to do. Of course we donot trust the Companies as also the Government when it comes to Privacy protection and hence the need for the law. Law some times tries to provide protection to the Government separately (eg UIDAI) but imposes hefty fines on the private sector for the same offence. This may not be fair.

What follows therefore is that whatever law which is now being proposed, it should be equally applicable to a Company or the Government or an individual.

Secondly, if Individual’s data needs protection, corporate’s data also needs protection. If one is called “Privacy”, the other may be called “Data Protection”.

Hence if we call this new law as “Personal Information Privacy Protection Act”, then it can confine itself to protecting individuals against invasion of privacy that may arise because such information is not protected by a corporate or Government.

If we call this a “Data Protection Act”, then it should extend to Corporate data as well. Since ITA 2000/8 is already covering this aspect, there is no need to cover security of corporate data through this Act. On the same logic, if this law has to be a comprehensive law on Personal Data Protection, then Section 43A and 72A needs to be removed from ITA 2000/8.

If Section 43A and 72A are to be retained and the new law has to extend to privacy protection, then the law should clearly explain that the new provision is in addition to the earlier provisions in ITA 2000/8 and not in derogation of the earlier provisions present in ITA 2000/8.

If this precaution is not taken into account, we will end up with the argument which was presented by an advocate in an adjudication proceeding in Karnataka and accepted by the then adjudicator that “Introduction of Section 43A applicable for body corporate in ITA 2008 automatically changes the meaning of Section 43 and confines its jurisdiction to individuals only”. Though the undersigned did not subscribe to this view at that time and does not even now, if law is not clear, it enables such manipulation by clever advocates to the detriment of the society.

I therefore urge the SKC to declare that

what they are proposing is not in derogation of any of the existing laws and in particular the provisions contained in ITA 2000/8 on data protection in general and personal data protection in particular.

Jurisdictional Umbrella

It is more or less imperative that the law will define that it is applicable to the processing of data of an individual citizen of India by any person including a Company incorporated in India or otherwise or by Government in India or otherwise.

However, this will naturally lead to a conflict in implementation when the law is breached by a foreign company or a Government. Similarly a foreign Company or a Government may also try to impose its own law (eg GDPR) on an Indian company and claim penalties which may be significant and also involve foreign exchange outflow.

The Proposed law provides an opportunity to ensure that this conflict between different laws applicable to a single company in India is resolved without the company (registered in India and therefore expecting the Indian Government to protect it’s legitimate interests) having to face several international regulatory organizations at a given time.

Typically an organization handling data processing may have personal data from persons of different nationality. Each   now trying to impose its own laws and also extend extra territorial jurisdiction just like what GDPR has done in respect of information that belongs to its citizens. It has therefore become necessary for companies (Data Controllers or Data Processors) to tag every piece of personal information with the citizenship of the individual and try to apply appropriate laws. In one case it may involve “Right to Forget” and in another case there may be an “Obligation to retain”. In such cases, the Companies will be unable to comply with conviction if they donot have a data classification system that tags the information to the country of citizenship. (Hopefully there will be no dual citizenship problem).

This data protection law should recognize this problem of the business community and try to provide a solution.

The solution we suggest is two fold.

  1. Every consent should incorporate a specific clause which states that “This personal data shall be protected as per provisions of personal data protection applicable to ….. country. 
  2. The adjudication and imposition of penalties if any shall be determined as per the personal data protection regulations applicable to India and the Indian Data Protection Authority shall have the final authority in sanctioning any penalty in respect of any individual who is a citizen of India, any corporate or other organization registered and subject to Indian laws.

The jurisdiction clause is proposed as a mandatory part of the consent which itself should be mandatory.

This provision also means that if any EU entity imposes a penalty on an Indian Company, the Indian Data Protection Authority shall intervene to accept or reject the penalty claims.

In order to make the provisions of the new law fair, the law can offer reciprocal arrangements of similar nature to foreign jurisdictions and state

“Where penalties are imposed under the Personal Data Protection Act of India on a person who is either not a citizen of India or is a company registered outside India, then the Indian Data Protection Authority shall provide an opportunity to the Data Protection authority (if any) of the country to which the said company/individual belongs to implead on behalf of the said entity.”

Since some of these suggestions could interfere with international obligations, these may need to be properly drafted. The suggested intent is that no Indian Company will be directly made liable to any foreign authority whether by a contractual agreement or otherwise without a sanction of the Indian authorities. If this umbrella of protection is not created, GDPR will be an instrument that will create colonies in India and allow European companies control Indian Corporate entities.

Naavi

(Discussions will continue)

ITA 2008 already has a provision.. if Sophia breaks our law

Posted by Vijayashankar Na on November 25, 2017
Posted in Cyber Law  | Tagged With: , , , , , | 1 Comment

The advent of the “Humanoid robots” and “Artificial Intelligence” is posing a challenge to the law makers and interpreters on how does the current laws affect the actions of these machines. Saudi Arabia has created a complication by granting “Citizenship” to a humanoid robot called “Sophia”.

The stories about and interviews of Sophia by journalists (Refer one article here) indicate that we may be in for some interesting debates on whether Sophia can raise a “Family” etc., but we as observers of Cyber Law need to also discuss whether Sophia can commit a Cyber Crime and if so how should our law deal with it.

While Sophia may be a good girl now and take some time to learn the bad habits of humans, commission of “Offences” through misuse of so called “Artificial Intelligence” or even the malfunction of AI or a simple automated functionality is a day to day problem to be dealt with.

When E Commerce Act 1998 was drafted in India or when ITA 2000 was enacted or when it was modified in 2008, we could not think of a “Humanoid Robot” as a citizen of a country a reality. But within two decades of the sprouting of the first thoughts of Cyber Laws in India, we are now staring at a possibility that a humanoid robot can claim the rights of a citizen. While some Islamic fundamentalists are already asking why this citizen of Saudi Arabia is not wearing a hijab or a burkah, we need to ask, what happens if Sophia commits an offence knowingly or unknowingly.

It is to the credit of our law drafters that we can still consider that ITA 2000/8 can address such a situation since knowingly or unknowingly a provision was created in the law to meet such contingencies.

Under Section 11 of ITA 2000 it is stated that “An electronic record shall be attributed to the originator if it was sent by an information system programmed by or on behalf of the originator to operate automatically”.

Since all actions of the robot has to be by means of an “Electronic Document” (which is an aggregation of binary impulses), and each such document can be attributed to the person who originated the binary impulse/s, the actions of the robot can be legally attributed to the person who caused the information system (i.e. the robot) to behave in that manner.

Hanson Robotics, the company which has created Sophia will therefore be firstly liable for all actions of Sophia. However, since Sophia has been “Adopted” by the Saudi Arabian Government, one can argue that the responsibility for the actions of Sophia shifts to the Saudi Arabian Government. Hence Sophia becomes a “Government Property” of the Saudi Government and actions against her would be a war against Saudi and actions from her could be an action of the Saudi Government.

If therefore Sophia breaks any law of India, we should be prepared to launch an international litigation against Saudi Government which is considered a “Friendly Country” for India. I urge Ms Sushma Swaraj to think if we need a special “Treaty” with not only Saudi Government but also any other Government which in future would adopt such “Robots” as citizens so that any intended or unintended transgressions of Indian law by these robots would be considered as actions of the respective Governments and India retains the right to take actions against such Governments.

There is also a threat that sooner or later, just as Drones have become tools of terrorism, Sophia and her family may be taken over and radicalized by muslim terrorists and commit terror acts. We need to be prepared for such contingencies.

In this context, I would also like to warn all AI professionals that any AI device created by them will also be creating liabilities to the creators and they need to take necessary steps to ensure that what they consider as “Technical Snags” donot result in “Cyber Crimes” and put the creators behind bars.

Be Aware, Be compliant, Be Safe.

Naavi

New Banking Licenses in India

Posted by Vijayashankar Na on July 7, 2013
Posted in BankRBI  | Tagged With: , , , , , , , | No Comments yet, please leave one

The recent decision of RBI to  invite fresh applications for new Banking licenses have evoked response from 26 applicants. The undersigned who joined the Banking industry in 1973 and has been in working in the industry upto 1987 and later around the industry in Marketing of Banking services since 2000, diversified  as a consultant in Information Security for Banks particularly working for “Safe E Banking” environment.

With this background, some of my thoughts on the new licencing aspects have been placed on this website.

Here is a summary of articles so far placed on the website.

1. Should Indian Post be granted Banking license?… Do they need one?

2.Which of the 26 applicants deserve Bank license

3.Banking License aspirants should disclose business plans to public.

4.Will RBI disclose “Santion Mechanism” to enforce sanctity of Banking license conditions?

5. Not all Eligible applicants to get Banking license

6. New Bank Licenses-Make Cyber Crime Insurance Mandatory

7. “Deep Pockets” need not be the sole criteria for Bank licenses

8.Banking Licenses and Public Sector aspirants

9. New Banking License-Let’s remember Gandhian Principles of Banking

Naavi