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U.S. Government Restricts Data Transfers to Hostile Nations Citing National Security

Published February 29, 2024
4 months ago

In a pivotal move, Washington has escalated its efforts to shield American citizens’ personal information from foreign exploitation, particularly by entities in China and Russia. This Wednesday, the U.S. President Joe Biden’s administration announced a new executive order designed to restrict the bulk transfer of sensitive personal data to nations tagged as threats to national security.

The policy initiative is a robust response to increasing concerns that unfettered access to data such as geolocation, health records, biometric, and financial details by "countries of concern" — which also include Iran, North Korea, Cuba, and Venezuela — could compromise the security and privacy of U.S. citizens.

Senior U.S. officials elucidated that the proliferation of digital information trade, particularly via data brokers, poses a significant vulnerability. At present, China and Russia, among others, maneuver this legal data market to further malicious activities like cyber-enabled operations, espionage, and even potentially leverage it for blackmail. With this action, the administration aims to curtail the legal purchase of sensitive American data and close loopholes in the country's national security defenses.

The directive will prohibit transactions with data brokers when there is an indication that the personal data will be funneled to the aforementioned adversarial nations. Furthermore, it firmly restricts any data transfers relating to U.S. government personnel to these countries. Another facet of the order places a ban on all genomic data transfers to these states, a decision with substantial implications given the heightened sensitivity around genetic information security.

The development follows ongoing concerns within the legislative and executive branches about the risks associated with foreign access to U.S. citizens' personal data. It aligns with Congress' pursuit to prevent federal agencies from liaising with entities like China's BGI Group and Wuxi APPTEC, thereby obstructing China's potential acquisition of U.S. genetic and health-related data.

References to historical apprehensions are evident, such as the 2018 rejection by a U.S. national security review panel of China’s Ant Financial’s acquisition of MoneyGram International due to data security concerns. This executive order appears as a logical continuation of the U.S.'s assertive stance in defending its information sovereignty amidst the ongoing trade and technology disputes.

The new policy does not outright ban all interaction with foreign entities; it instead sets volume thresholds and introduces checks like anonymization and encryption to facilitate continued economic interactions with certain safeguards. This careful calibration is reflective of the White House’s understanding of the complicated nature of global data flows and the need to balance national security with economic realities.

Recognizing that the corporate sector has legitimate needs for cross-border data transfers, the order exempts specific types of data such as corporate payroll and compliance details. Additionally, the directive mandates that the justice department provide the industry with sufficient opportunity to review and comment on proposed regulations before enforcement.

This new framework reflects the Biden administration’s deep-seated concerns over the extensive data collection practices of companies today, as well as the potential for such amassed data to be transferred or sold to foreign intelligence, military, or government-controlled firms. By creating a more controlled environment for personal data transfer, Washington intends to diminish the likelihood of misuse and protect its citizens from covert international threats.

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