Binding Corporate Rules: Insights for International Companies

A multinational company operates globally, but its data protection duties under GDPR are based in Europe. How can it legally transfer personal data from its Paris office to its headquarters in New York or a branch in Singapore?

Binding Corporate Rules (BCRs) provide a GDPR-approved framework under European Union law that allows multinational groups to transfer personal data lawfully between their entities inside and outside the European Economic Area (EEA), including transfers to entities located in a third country. BCRs play an important role in facilitating lawful data transfers that support global commerce and multinational business operations, guaranteeing that international data exchanges comply with regulatory requirements.

BCRs are regarded as a gold standard for data governance. Achieving them requires a rigorous process and a serious organisational commitment. BCRs are an alternative to other data transfer mechanisms, such as Standard Contractual Clauses.

Key Takeaways

• Binding Corporate Rules (BCRs) provide a legally binding, GDPR-compliant framework for multinational companies to transfer personal data internally across borders, maintaining consistent data protection standards worldwide.

• The approval process for BCRs involves detailed review by a lead EU data protection authority and cooperation with other member state authorities, culminating in a formal decision by the European Data Protection Board.

• BCRs are best suited for large multinational corporations with frequent intra-group data transfers, offering a comprehensive alternative to Standard Contractual Clauses for managing global data protection compliance.

What Exactly Are Binding Corporate Rules?

A Global, Internal Policy

Binding Corporate Rules are a company’s internal data protection policy that applies to entities established in the EU and beyond. Once approved by a competent supervisory authority, these rules become legally binding on every entity and employee within the organisation worldwide. BCRs are implemented across the organisation to provide a unified approach to data protection that complies with EU law and maintains data protection compliance across the world, not just within the EU.

Who Are They For?

BCRs apply specifically to intra-group transfers of personal data, including the personal data of clients as well as employees. They are designed for enterprises and undertakings within a corporate group, making sure that all group members comply with data protection standards. They do not cover transfers to external, third-party organisations or entities outside the group.

Core Components of Binding Corporate Rules

Binding Corporate Rules must include several key elements to comply with the General Data Protection principles:

• Legally Binding: The rules must be enforceable by the company’s entities, employees, and the individuals whose personal data is transferred. The company is responsible for upholding the BCRs, which guarantee enforceable rights for data subjects. BCRs must be actively applied by all relevant members within the group to maintain data protection and compliance.

• GDPR Principles: BCRs must integrate core GDPR principles such as purpose limitation, data minimisation, accuracy, security, and storage limitation. BCRs must also include provisions for compliance with these principles.

• Data Subject Rights: Individuals must have clear rights to enforce the BCRs, including access, correction, objection, and complaint mechanisms. These rights cover how their data is processed, and the BCRs govern all data processing activities.

• Accountability: The rules must demonstrate the company’s commitment to data protection through regular audits, employee training, and a clear governance structure. Procedures must be established for regular audits and compliance checks.

• Appropriate Safeguards: BCRs serve as proper safeguards for international transfers of personal data to third countries that may not provide an adequate level of protection. Organisations must provide adequate guarantees to comply with EU standards when transferring data internationally.

• Controller and Processor Roles: BCRs distinguish between controller and processor roles. A controller determines the purposes and means of processing personal data, while a processor processes personal data on behalf of the controller, both under the provisions of the BCR framework.

BCRs have been developed and refined over time, especially following the implementation of the GDPR, to improve their compliance framework and international acceptance.

The Path to BCR Approval

A Rigorous Undertaking

Obtaining approval for Binding Corporate Rules is a formal and detailed process, not a simple registration, and must be conducted in accordance with legal standards and GDPR requirements. It requires thorough documentation and demonstration of compliance with EU data protection law.

Main Steps in the Approval Process

1. Drafting and Application: The company drafts its BCRs, maps all international transfers of personal data, and submits an application to a single lead EU data protection authority.

2. Review by Lead Authority: The lead authority conducts a detailed review of the submitted documents to verify compliance with GDPR and general data protection principles, in accordance with Article 46.2(b) of the GDPR.

3. EU Cooperation: The lead authority shares the application with other member state supervisory authorities across the EU. These authorities review the BCRs and provide their opinions. The consistency mechanism set out in Article 63 of the GDPR facilitates cooperation among supervisory authorities and member states to maintain a uniform approach to the approval process.

4. Formal Decision: The European Data Protection Board (EDPB) issues an opinion based on the feedback. After consensus, the lead authority grants the final approval, and the BCRs are only considered BCRs approved after the formal decision by the lead authority and the EDPB, with each member state playing a role in the review and approval process.

The entire process can take several months and requires close cooperation between the company and multiple supervisory authorities.

Binding Corporate Rules vs. Standard Contractual Clauses (SCCs)

Choosing the Right Tool

Both Binding Corporate Rules and Standard Contractual Clauses are valid GDPR mechanisms for data transfers. They serve different purposes and scenarios.

Key Differences

• Scope: BCRs cover internal, intra-group transfers of personal data. SCCs apply to transfers to external organisations or third parties.

• Customisation: BCRs are tailored to the specific structure and operations of a company group. SCCs are standardised legal templates that must be used as-is without modification.

• Implementation: BCRs require a significant upfront investment in drafting, approval, and ongoing compliance. SCCs are faster to implement for one-off transfers, but can become complex to manage across multiple vendors.

Are Binding Corporate Rules a Fit for Your Company?

A Strategic Investment

BCRs represent a long-term commitment to data privacy and compliance. They streamline global operations by providing a unified legal basis for international transfers of personal data.

Who Benefits Most?

Large, mature multinational corporations with consistent, high-volume data flows between their global entities gain the most from BCRs. They benefit from the harmonised data protection policies and reduced administrative burden compared to managing multiple SCCs.

Conclusion

For multinational corporations, Binding Corporate Rules offer a unified framework for managing global data transfers and maintaining compliance with EU law. For those with a general interest, it is helpful to review the available GDPR-compliant tools that protect international data flows and to understand the legal bases for transfers to third countries.