How Should a Data Fiduciary Handle Data Transfers?

An effective data fiduciary framework would legally bind companies that collect user-generated information with duties to safeguard it and legal consequences if misuse occurs, helping address any imbalanced power structures that encourage companies to misuse personal data.

At the core of any data fiduciary's journey lies identification of entities handling digital personal information. In this article, we explore who qualifies as data fiduciaries as well as ways of handling transfers in accordance with DPDPA.

Identifying the Data Fiduciary

When it comes to data transfers, the DPDP Act mandates that data fiduciaries be held responsible and accountable for actions of data processors - specifically that due diligence be carried out to ensure compliance.

Identification of a Data Fiduciary is important because it determines how and why personal information will be processed. According to the DPDP Act, personal data must only be processed lawfully with explicit consent or under certain specified legitimate circumstances. Furthermore, data must be collected using reliable means of identification; children or those living with disabilities require verifiable parental or legal guardian approval before any processing can take place.

Data fiduciaries should provide a method for grievance redressal and maintain an up-to-date record of processing activities. Furthermore, when seeking consent they should provide clear notice with unambiguous terms, and allow individuals to withdraw it at any time.

Identifying the Data Processor

The DPDP Act mandates Data Fiduciaries to take reasonable security measures to protect personal information against breaches. This means creating robust internal monitoring and visibility systems, breach notification protocols, risk evaluation frameworks, as well as effective responses against threats or attacks.

Transparency in data processing activities is also a requirement, with this entail communicating to data subjects what information is collected, how it will be used and for what purpose. Furthermore, accuracy and timeliness must also be assured.

In the event of a data breach, data fiduciaries must notify both their affected data principals and the Data Protection Board of India as soon as possible to ensure individuals understand its nature and scope, including any possible ramifications on them or their privacy rights. This obligation requires careful consideration from data fiduciaries; furthermore they should have a plan in place to minimise its effects and inform all affected parties accordingly.

Identifying the Recipients of the Data

Data fiduciaries carry an enormous responsibility, serving as guardians of personal data that lies with them and adhering to all relevant legal regulations while upholding the trust placed in them by Data Principals. Their responsibilities may include maintaining the accuracy, consistency and completeness of data; implementing robust technical and organizational safeguards against data leakage; making data processing activities transparent for Data Principles and providing effective grievance redressal processes.

Distinguishing between data fiduciaries and processors can be a complex task. Chaudhari noted during a panel discussion that this determination depends on an entity's activity-specific capabilities to exert control over another party - for instance payment aggregators may qualify as both data fiduciaries and processors depending on their level of influence over them; payment aggregators might fall under this definition but not always processors - ultimately this distinction determines if an entity has enough accountability capacity to account for third party's misadventures - only then will it face full statutory liabilities associated with this statutory liability exposure.

Identifying the Purpose of the Data Transfer

Data fiduciaries must clearly understand why and how they collect personal information, prioritize accuracy over quantity, implement strong security protocols and retain only as long as necessary. Failure to meet these requirements could result in severe financial penalties as well as irreparable damage to their reputations.

For instance, organizations conducting research using children's data must obtain verifiable parental consent before proceeding. While the draft Rules don't specify an ideal method to achieve this consent, they do state that any method must "resemble reliable details of age or identity", giving organizations some leeway in adopting their own standards for this process.

If your organisation transfers personal data to a third country, they must ensure it complies with local laws and regulations. This means ensuring the recipient takes sufficient measures to secure it as well as that its purpose in that jurisdiction is lawful. Furthermore, cross-border data transfers must be documented as evidence that they adhere to DPDP Act requirements.