International data transfers: one mistake, multi-million pound fines

1.Regulatory Risks and Potential Exposures

International data transfers are indispensable for modern, interconnected businesses. However, such transfers expose organisations to a complex array of legal, operational, and reputational risks. The European Union’s General Data Protection Regulation (GDPR) imposes stringent requirements on the transfer of personal data outside the European Economic Area (EEA), mandating that recipient countries ensure an “adequate level of protection” (Art. 44 GDPR). Failure to comply can result in severe administrative fines of up to £17.5 million or 4% of annual global turnover (Art. 83 GDPR), as well as significant reputational damage and business disruption if regulators suspend data flows.

The primary risk associated with international data transfers is non-compliance with the GDPR’s strict cross-border transfer regime. The legal landscape is in constant flux and as a result organisations must rely on Standard Contractual Clauses (SCCs) and Transfer Impact Assessments to evaluate whether foreign legal regimes undermine these safeguards. This creates substantial legal uncertainty: even when using SCCs, organisations may be compelled to suspend transfers if they cannot guarantee adequate protection in practice, or risk exposing themselves to enforcement actions by supervisory authorities and potential litigation from affected individuals. The CJEU states “it is for the data exporter…to verify, prior to any transfer, and taking into account the circumstances of that transfer, whether that level of protection is respected in the third country concerned” (Schrems II, para. 134).

International data transfers are often integral to business operation, enabling cloud computing, global HR management, customer support, and supply chain logistics. Regulatory intervention can therefore have immediate operational consequences: if a supervisory authority orders a suspension or prohibition of data flows due to inadequate safeguards or non-compliance with Art. 46 GDPR mechanisms, critical business functions may be disrupted overnight. This risk is heightened by divergent enforcement approaches among EU Member States’ supervisory authorities and evolving guidance from bodies like the European Data Protection Board. Organisations should invest resources in monitoring regulatory developments, updating contractual arrangements, and implementing technical measures.

Beyond regulatory penalties and operational disruption, international data transfers carry substantial reputational risks. Publicised enforcement actions, such as high-profile fines or orders to halt transatlantic data flows, can erode customer trust and damage relationships with business partners who demand robust privacy protections. Moreover, organisations may face commercial disadvantages if they are perceived as unable to guarantee compliance with EU data protection standards, leading to lost contracts or exclusion from procurement processes where data security is paramount. The reputational fallout can be long-lasting and may attract further scrutiny from regulators worldwide.

2.Peril in Practice: France, Germany, and the US

The French regulator, CNIL, fined Google €150 million for cookie consent violations, which was an enforcement action with worldwide implications. The CNIL has also ordered companies to suspend use of certain US analytics tools when adequate protection against US government access could not be guaranteed. The United States remains a focal point because its intelligence laws (notably FISA Section 702 and Executive Order 12333) allow broad government access to non-US persons’ data without EU-style judicial redress mechanisms.

German regulators have been especially vigilant post the CJEU Schrems II decision, which invalidated the EU-US Privacy Shield framework on the grounds that US surveillance laws do not provide an adequate protection for EU citizens’ data. For example, the Bavarian Data Protection Authority investigated a website operator for using Mailchimp, a US-based service provider, without sufficient safeguards for transatlantic transfers. While no fine was imposed, this case prompted widespread reviews among German businesses.

3.How Our Commercial Legal Team Can Help

Our legal team guides clients through this complex environment by mapping international data flows, identifying relevant personal data flows. We conduct rigorous Transfer Impact Assessments tailored to each destination country’s legal environment and draft robust Data Sharing Agreements (with SCCs) with non-EEA counterparties, ensuring supplementary technical measures are implemented where necessary. We do not “sell” compliance; we help you operate globally with confidence while minimising risk exposure. If you have any doubts over your business’ international data flows, please contact Thomson Snell & Passmore to discuss how we can support you.