Data Protection in Cross-Border Business: Key Legal Challenges Every International Company Should Know
- 6 hours ago
- 4 min read
Author: Dóra Fekete
Introduction
Today, businesses operate in an increasingly broader international environment due to digitalization and, as a result, the expansion of global business relations. The emergence of multinational companies, cloud-based services, international customer relationships, and remote working has made the cross-border processing of personal data a completely natural part of economic life. At the same time, however, legal obligations relating to data protection have also increased significantly. Ensuring lawful data processing is not only a legal obligation but has also become a determining element of companies’ competitiveness and business reliability.
What do we mean by cross-border, international data processing?
Cross-border data processing refers to any data processing operation during which personal data are transferred to another country or processed there. This may occur in numerous situations, to mention only a few examples: data sharing between multinational companies or corporate groups, the use of foreign cloud service providers, or the operation of international customer management systems. Such data processing often involves the personal data of employees, customers, business partners or suppliers, and, as it forms a highly complex system, its legal regulation must also be correspondingly comprehensive.
Within the European Union, the fundamental rules governing the protection of personal data are laid down in the General Data Protection Regulation (GDPR), which establishes uniform requirements for all Member States, thereby ensuring more predictable and harmonised data processing. One of the fundamental principles of the GDPR is that personal data may be transferred to a third country only where an appropriate legal basis exists. Where the European Commission has adopted an adequacy decision, such transfers may take place without additional authorisation. In the absence of such a decision, however, appropriate safeguards must be implemented, including in particular Standard Contractual Clauses (SCCs), Binding Corporate Rules (BCRs), or other safeguards provided for by the Regulation.
Managing Legal Risks
As can be seen, businesses may face numerous legal risks in the course of international data processing. Perhaps the most common issue is the unlawful international transfer of personal data, particularly where such transfers take place without adequate safeguards. Another significant risk arises from inadequate technical and organisational security measures, which may easily lead to personal data breaches. Furthermore, a frequent deficiency is the lack of adequate transparency, where data subjects are not properly informed about the processing of their personal data, or where businesses fail to take into account the specific data protection requirements of individual jurisdictions.
One of the fundamental tools for ensuring lawful operation is the establishment of an appropriate contractual framework. Data processing agreements concluded between data controllers and data processors must clearly define the rights and obligations of the parties, the purpose and duration of the processing, the categories of personal data concerned, as well as the technical and organisational security measures to be applied. In the case of international data transfers, it is of particular importance that such agreements comply with the requirements laid down in Chapter V of the GDPR.
Raising Awareness of Data Protection Responsibilities
Data protection compliance is therefore not merely a legal issue in this context but also an important organisational responsibility. Regular data protection training for employees, keeping internal policies continuously up to date, and establishing procedures for handling personal data breaches are all fundamental tasks in ensuring compliance with the applicable rules. Businesses must ensure that their employees are familiar with the legal requirements governing data processing, as well as with the reporting and response obligations that apply in the event of a personal data breach.
These obligations should be taken seriously, as violations of data protection legislation may have significant consequences. Under the GDPR, administrative fines may amount to up to 4% of the undertaking’s total worldwide annual turnover for the preceding financial year or EUR 20 million, whichever is higher. In addition to financial penalties, businesses may also face regulatory investigations, civil claims, and even damage to their business reputation.
In order to achieve legal compliance, it is therefore particularly advisable to conduct regular data protection audits, maintain up-to-date records of processing activities, apply the principles of privacy by design and privacy by default, and periodically review contracts and internal procedures governing international data transfers. The Schrems II judgment of the Court of Justice of the European Union particularly emphasized that the lawfulness of international data transfers should not be assessed only once but must instead be subject to continuous review in order to ensure that the safeguards remain up to date.
Conclusion
In conclusion, cross-border data processing has become an indispensable part of the operation of international businesses. Although legal compliance imposes considerable administrative and organizational responsibilities on companies, it also contributes to reducing business risks, strengthening consumer trust, and enhancing the long-term competitiveness of businesses. In light of the expected further development of data protection legislation, it is of paramount importance for companies to continuously monitor the evolving legal framework and regularly review their internal compliance systems.
Reference list:
2.    EDPB Recommendations 01/2020