Law<\/strong>\u201d), currently scheduled to come into force on 30 September 2019, introduces, for the first time in the Cayman Islands, a legislative framework for data protection based on a set of internationally recognised privacy principles.\u00a0 The Law regulates the processing of all personal data in the Cayman Islands and will impact all entities established in the Cayman Islands, including all investment funds whether or not registered with the Cayman Islands Monetary Authority.\u00a0 The Law applies irrespective of where personal data is processed and applies to personal data irrespective of individual citizenship or residency.<\/p>\nThis note focuses on the specific effect of the Law on investment funds.<\/p>\n
With 30 September on the horizon, Cayman Islands funds should take the necessary steps to ensure that they understand their obligations under the Law and establish policies and procedures to provide adequate protection for all personal data under their control.<\/p>\n
Impact on Cayman Islands Funds<\/h2>\n
Under the Law, any entity established in the Cayman Islands that, as a data controller, processes, either directly or indirectly, any individual’s personal data will have certain duties with respect to that data and must ensure that such individuals are notified of their identity and for what purpose any of their personal data is used.\u00a0 An \u201cindividual\u201d means a living person and, as such, would include an individual serving as director of a corporate investor in a Cayman Islands fund, but not the corporate investor itself.<\/p>\n
For the purposes of the Law, a Cayman Islands fund will generally be regarded as a\u00a0 \u201cdata controller<\/strong>\u201d which is defined as a \u201cperson who, alone or jointly with others determines the purposes, conditions and manner in which any personal data are, or are to be, processed\u201d. \u00a0As a data controller, a fund is not only responsible for ensuring that it processes personal data in accordance with the Law, but is also responsible for ensuring that any entity or service provider which processes data on the fund\u2019s behalf (a \u201cdata processor<\/strong>\u201d), complies with the Law.\u00a0 This is particularly important where a data processor operates under the processing instructions and standards of a fund and a data breach occurs \u2013 data security requirements under the Law in this context only extend liability to data controllers.<\/p>\nData Processors<\/h2>\n
The fund administrator, or registrar and transfer agent, will, in some circumstances, be a data processor (and in other circumstances, be a data controller where it processes personal data, such as know your client information, for its own purposes) as it receives the subscription agreement and supplemental documents which include know your client, FATCA, and other personal data.\u00a0 An investment manager or advisor who reviews fund information related to individuals will also be a data processor for the purposes of the Law.<\/p>\n
Data processors may process personal data which the relevant data controller has entrusted to them only in accordance with the data controller’s instructions and the terms of a written agreement (a \u201cdata processing agreement<\/strong>\u201d or \u201cDPA<\/strong>\u201d), which forms the basis of a third party service provider\u2019s appointment as a data processor.\u00a0 The DPA may take the form of an amendment to an existing service agreement between the fund and the service provider or a stand-alone agreement.\u00a0 A DPA typically sets out data protection responsibilities (e.g. the fund is a data controller and the investment manager is the data processor), processing limitations (e.g. only on the basis of documented instructions from the fund), and requires the data processor to comply with the data protection principles (e.g. that data is kept secure and not transferred to a jurisdiction that does not ensure an adequate level of protection for the rights of data subjects).<\/p>\nA data processor may have already contractually agreed to comply with data protection requirements of another jurisdiction and, if so, the fund\u2019s board may consider whether this provides adequate protection under the Law.<\/p>\n
Documenting the Law for Funds<\/h2>\n
A fund should:<\/p>\n
\n- Have a privacy notice for investors and subscribers (an outward-facing document).<\/li>\n
- Amend any offering memorandum to reference its obligations under the Law.<\/li>\n
- Amend any documentation with third parties who may be handling personal data provided to them by the fund to ensure that they, as data processors, will process personal data in accordance with the Law (e.g. the investment management agreement and administration agreement).<\/li>\n
- Document and put in place the necessary internal procedures to ensure that it will comply with the Law going forward.<\/li>\n
- Pass any corporate resolutions necessary in connection with 1-4 above.<\/li>\n<\/ol>\n
These are each considered in more detail below.<\/p>\n
Privacy Notice<\/h2>\n
A privacy notice enables a fund to comply with the requirement that data subjects (investors) are entitled to be informed of the identity of the data controller and the purposes for which their personal data are processed.\u00a0 Best practice is to provide additional information such as the legal bases on which data is processed, categories of data obtained, source of the data, the recipients or categories of recipients of the data, details of any international transfers (i.e. transfers outside the Cayman Islands), the retention period of the data, the rights available to individuals (including the right to make a complaint to the Ombudsman), and (if applicable) the details of any automated decision making.\u00a0 This would be inserted in a fund\u2019s subscription agreement, but should also be available as a standalone document to existing investors.\u00a0 At a minimum, a privacy notice should be put in place in advance of 1 October 2019.<\/p>\n
Offering Memorandum<\/h2>\n
The offering memorandum should be amended to include a brief description of the Law, investor personal data rights, and lawful purposes for processing.\u00a0 If the fund is not actively offering interests, this step may be undertaken at a later date to include provisions related to data protection.<\/p>\n
Third Party Service Providers Handling Personal Data Provided by the Fund<\/h2>\n
Data processing agreements with third party service providers (data processors), such as the administrator and investment manager, should be amended to explicitly provide for respective obligations under the Law as well as liability for breach of these obligations.\u00a0 Funds should check their administration agreements and investment management agreements to determine whether such agreements contain adequate obligations to comply with the Law or similar measures.\u00a0 In the event that a DPA is absent, this should be added as a matter of course.<\/p>\n
Internal Procedures<\/h2>\n
A fund\u2019s internal cornerstone data protection procedures should include: a data protection policy which mirrors its privacy notice and details regarding how personal data is obtained, stored, protected, and processed; a data retention policy and data retention schedule to outline storage and destruction protocols; a data subject access request procedure for appropriate and compliant responses to data subject queries and complaints; and a data incident response plan which includes responsibilities, measures, and reporting obligations in the event of a data breach.<\/p>\n
GDPR<\/h2>\n
The European Union\u2019s General Data Protection Regulation ((EU) 2016\/679<\/em>) (\u201cGDPR<\/strong>\u201d) establishes a regulatory framework for the protection of personal data in European Economic Area (EEA) countries.\u00a0 Compliance with the GDPR equates to compliance with the Law in broad terms but there are additional obligations under the Law (e.g. the requirement to notify the Ombudsman in the event of a reportable breach within 5 days).\u00a0 If the fund or investment manager comply with another adequate national data protection standard such compliance may also suffice for the purposes of the Law, but advice in this regard should be sought.<\/p>\nTiming<\/h2>\n
Every affected fund and investment manager should have a privacy notice in place as soon as possible; ideally when the Law is currently scheduled to come into force on 30 September 2019.\u00a0 Diligent efforts to put in place additional required data protection documentation and procedures should be made following the Law\u2019s inception, recognising that, in practice, requests for information by data subjects are unlikely and other requirements such as implementing a document retention policy can be developed over a period of time.<\/p>\n
Further Information<\/h2>\n
For further information please reach out to your usual Campbells contact or email us on dataprotection@campbellslegal.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"The Data Protection Law, 2017 (the \u201cLaw\u201d), currently scheduled to come into force on 30 September 2019, introduces, for the first time in the Cayman Islands, a legislative framework for data protection based on a set of internationally recognised privacy principles.\u00a0 The Law regulates the processing of all personal data in the Cayman Islands and will impact all entities established in the Cayman Islands, including all investment funds whether or not registered with the Cayman Islands Monetary Authority.\u00a0 The Law applies irrespective of where personal data is processed and applies to personal data irrespective of individual citizenship or residency.<\/p>\n
This note focuses on the specific effect of the Law for investment funds.\u00a0<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"yst_prominent_words":[3482,15,3516,3470,3468,1938,3473,3477,3469,3479,3480,1115,3514,1939,3467,3478,3471,3515,3481,1995],"class_list":["post-5202","post","type-post","status-publish","format-standard","hentry","category-client-advisory"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/posts\/5202"}],"collection":[{"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/comments?post=5202"}],"version-history":[{"count":14,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/posts\/5202\/revisions"}],"predecessor-version":[{"id":5261,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/posts\/5202\/revisions\/5261"}],"wp:attachment":[{"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/media?parent=5202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/categories?post=5202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/tags?post=5202"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.campbellslegal.com\/wp-json\/wp\/v2\/yst_prominent_words?post=5202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}