Thailand is one of the countries in Southeast Asia most prone to cyber vulnerabilities and data breaches. To combat that, the authorities in the past year released two subordinate regulations concerning the transfer of personal data across borders under the Personal Data Protection Act (PDPA). Lawyers in Thailand unpack the new rules and outline what businesses are required to do.
Thailand has been quickly catching up with Southeast Asia’s brisk pace in enhancing data protection as cross-border activities increase and cyber security threats loom larger. And companies doing businesses in the second largest ASEAN economy are staring at increasingly severe punishment for non-compliance.
In June 2022, the Personal Data Protection Act (PDPA) - Thailand's first consolidated data protection law - came into full effect after being postponed twice due to the COVID pandemic. Since then, Thailand has been actively refining its approach on safeguarding personal data and securing cross-border transfers with an emphasis on transparency and consent.
“In general, the transfer of personal data outside Thailand typically requires obtaining consent, unless the destination country has adequate personal data protection measures (known as ‘adequate country’), the transfer qualifies under specific exemptions, or appropriate safeguards are in place,” explain Pranat Laohapairoj, partner, and Suphakorn Chueabuncha, senior associate, at Thai law firm Chandler MHM.
“These regulations provide operators with guidance on how to navigate cross-border data transfers under the PDPA, allowing for transfers with fewer statutory hurdles while ensuring compliance with data protection requirements and facilitating international business activities.”
- Pranat Laohapairoj and Suphakorn Chueabuncha, Chandler MHM
However, it could be a nuisance for companies to secure permission for international data transfers during their regular activities. Business operations are subject to disruptions if consent cannot be obtained. All this has made it essential to explore alternative approaches.
In December last year, the country’s Personal Data Protection Committee (PDPC) issued two subordinate regulations to address essential aspects of the cross-border transfer of personal data. The two notifications have come into effect since March.
“After a long period during which a loophole in cross-border transfer requirements existed, some operators opted to manage risks by engaging in offshore transfers without seeking exemptions,” Pranat and Suphakorn point out.
“These regulations provide operators with guidance on how to navigate cross-border data transfers under the PDPA, allowing for transfers with fewer statutory hurdles while ensuring compliance with data protection requirements and facilitating international business activities,” they add.
NEW SAFEGUARDS
Specifically, the first notification sets out two criteria classifying whether a destination country or organisation is “adequate” in offering personal data safeguards.
To satisfy the “adequacy” test, there needs to be data protection law or regulations in place in the destination country or organisation that align with or exceed the standards of the PDPA. Those include obligations assigned to data controllers to put in place security measures to protect the rights of data subjects with enforceable legal instruments in the case of breaches.
The second criteria is to determine whether such country, subject to consideration for its adequacy, has a proper authority or organisation to enforce their regulations.
Pranat and Suphakorn tell ALB that this notification imposes a self-assessment requirement on business operators, according to a PDPC member.
“Operators must assess whether the destination country meets the adequacy criteria, assuming the associated risks themselves. Alternatively, in uncertain cases, operators may request the PDPC to make a decision on a case-by-case basis (referred to as an ‘adequacy decision’),” say Pranat and Suphakorn. They add that PDPC may publish a list of countries deemed adequate - known as a "whitelist”, which has yet come into existence.
The second notification deals with data transfers to destination countries which fail to be seen as adequate under the PDPA, nor qualify for any derogations as stipulated in the law.
In this case, business operators are required to ensure a set of appropriate safeguards, which include implementing Binding Corporate Rules (BCR).
“In this regard, the BCR must be certified by the PDPC office based on the following three criteria: the legal effectiveness and enforceability of such BCR; clauses that recognise personal data protection, data subject’s rights, and mechanisms for lodging complaints; and appropriate security measures that are in compliance with the minimum requirements prescribed by PDPA,” note Pranat and Suphakorn.
In addition, operators can utilise Standard Contractual Clauses (SCC) for cross-border transfers, which is an agreement between a data exporter and a data importer designed to facilitate the safe transfer of personal data without requiring explicit approval from regulatory authorities.
The PDPC notification requires SCC to comply with the above three criteria for BCR together with some additional requirements, say Pranat and Suphakorn.
Firstly, the processing must be in compliance with the personal data protection law. Secondly, specific requirements must be complied with if a data recipient is either a data processor, or a data controller. Furthermore, the appropriate safeguards must have legal enforceability and be binding upon the related parties and ensure the rights of data subject.
“In any case, the subordinate regulation recognises two models of SCC - the ASEAN Model Contractual Clauses for Cross Border Data Flows, and the GDPR SCC - as appropriate safeguards in order to align with international practices,” add Pranat and Suphakorn.
ENFORCEMENT CHALLENGES
As Thailand has upped the ante in safeguarding data privacy and cracked down on insecure cross-border data transfers, businesses are expected to operate in a safer digital environment with the reassurance of enforceable legal remedies.
However, lawyers believe the absence of the so-called whitelist and a blank history of adequacy decisions in regard to destination countries have forced business operators to take up the arduous task of evaluating the adequacy of their personal data protection measures themselves. The uncertain timeline of further PDPD announcements also adds to the complication of staying compliant.
“In this scenario, operators must assume the associated risks themselves,” say Pranat and Suphakorn. “Under such circumstances, appropriate alternative safeguards, such as BCR and SCC, may prove to be more practical options for operators requiring cross-border transfers of personal data. These safeguards can help mitigate risks and ensure compliance with data protection regulations in the absence of recognized adequacy decisions or whitelist.”
Failure to comply with the requirements and obligations under any sub-regulations issued under the PDPA could result in the penalties specified under the PDPA. The maximum fine of 5 million baht ($135,750) applies specifically to cases involving cross-border transfers of sensitive personal data, while the maximum fine for other cases is 3 million baht.
That’s because in instances involving cross-border transfers, enforcement may be more challenging due to difficulties in compelling compliance from data recipients located outside Thailand. Consequently, fines in such cases may be higher than for other forms of non-compliance, according to lawyers.
However, “when determining whether to impose an administrative fine, the relevant authority considers factors such as the severity and circumstances of the case, including the extent of damage to data subjects, the value of damages, fines historically imposed in similar cases, and the method of remedy,” note Pranat and Suphakorn.
“It is essential to note that there are currently no precedent cases, as the PDPC generally adopts a compromising approach, meaning administrative fines are typically not imposed initially. Instead, in less severe cases, the authority may request operators to rectify the issue or issue a warning as an initial step in the process,” note Pranat and Suphakorn.
As the two sub-regulations came into force, lawyers are expecting more operators to reassess their approach to cross-border transfers and aim to ensure compliance.
At the moment, “many have chosen to implement SCC with their counterparties, viewing this option as relatively expedient and less complex compared to other alternatives. Moreover, they may find comfort in the familiarity of the requirements outlined in the GDPR SCC, which serves as an international standard,” the lawyers add.
