GDPR Compliance in Cyprus: Key Challenges for Financial and Professional Firms
Table of Contents
Introduction
Category: Data Protection & Compliance
For financial and professional firms in Cyprus, from CIFs and CASPs to law firms, audit practices, and corporate service providers, for instance, the regulatory framework for privacy and data security centers around the GDPR.
With a view to a harmonized data protection framework within the European Union, this Regulation entered into force in May 2018. Its principles however bear directly on the handling by obliged entities in Cyprus of data on their clients, employees, or partners. With heavy fines for breaches and increasing scrutiny from both the regulators at the European Union level and at the local level with the Office of the Commissioner for Personal Data Protection (PCPD), GDPR compliance is no longer an option but rather a matter of trust and a question of reputation or financial costs.
This article looks at the primal principles of GDPR, the enforcement framework locally in Cyprus, the challenges encountered by the regulated entities, and what firms can practically do to improve compliance.
GDPR Overview and Core Principles
This policy is based on seven data protection principles listed in GDPR, resulting in legislative imperatives as to how personal data must be processed.
- Fairness and transparency - data must be processed legally, fairly, and in a manner expected by the data subject.
- Limitation as to Purpose - data should be collected for specified, legitimate purposes.
- Data Minimization: companies must only collect what they need.
- Accuracy: personal data shall be kept up to date.
- Limited Period of Storage: data must not be stored for longer than is needed.
- Integrity and Confidentiality: One must protect the data through technical and organizational means.
- Accountability: Organizations must be able to show that they have complied.
These principles cannot be rejected by any bound entity established in Cyprus while dealing on a daily basis with sensitive finayncial and legal data.
EU GDPR Framework
The GDPR operates equally and uniformly across the EU member states, Cyprus included. Some of the key obligations are:
- DPOs must be appointed for large scale data processing.
- DPIAs shall be conducted in cases of processing involving high risks.
- Breach notification should be communicated within 72 hours to the competent supervisory authority.
Imposition of huge fines, which can grow up to €20 million or 4% of global annual turnover-if this amount is higher.
Cyprus Supervisory Authority
In Cyprus, the Commission for the Protection of Personal Data is the Supervisory Body under the GDPR. The PCPD issues codes of practice, inspects, and imposes fines on companies in various sectors, among them telecommunications, insurance, and financial services. In cases of CIFs, CASPs, and professional firms, this is frequently reinforced by sectoral regulators as well:
- CySEC states that CIFs and CASPs must ensure their client data are secure.
- ICPAC emphasizes the GDPR obligations of auditors and accountants.
The Cyprus Bar Association (CBA) insists on strict data protection standards being applied by law firms.
Though awareness is quite robust, Cypriot businesses continue to grapple with some common GDPR compliance issues:
1. Complicated Data Mapping
Many firms do not have a full picture of client or employee data flows across systems, departments, or third-party providers.
2. Consent and Management of Lawful Basis
It is especially difficult to obtain and manage consent in online customer onboarding and marketing.
3. Cross-Border Data Transfer
Other than the EU, where a firm has client or affiliate presence, it has to face restrictions on data transfer at an international level. Another method is to obtain Standard Contract Clauses (SCCs).
4. Technology Risks
Cloud storage, remote onboarding, and digital collaboration tools may have given unauthorized access risk and breaches.
5. Resource Constraints
Small firms usually lack the resources to ensure full GDPR compliance, leaving gaps in policies and monitoring.
According to the law, financial and professional firms will have to adopt measures to address these challenges.
Data Mapping and Risk Assessment
- Keep an up-to-date list of all data holding systems and processes.
- Assess risks to identify points of vulnerability in data flows.
- Apply the principle of data minimization and collect only the data truly needed.
Lawful Basis and Consent Management
- The lawfulness of data processing should be clearly recorded.
- Each time you send a marketing communication or onboard a client, use a consent management tool.
- Clients may always revoke their consent.
Data Subject Rights Handling
- With clearly defined procedures relevant to processing requests from data subjects for access to, rectification, erasure, or data portability.
- Ensure compliance with the established schedule for handling requests as dictated by the GDPR (usually one month). Train personnel to ascertain and escalate requests.
Cross-Border Data Transfers
Whenever personal data are transferred out of the European Union, safeguards must be ensured.
- Employ approved transfer mechanisms such as Standard Contractual Clauses ("SCCs") or Binding Corporate Rules ("BCRs").
- Keep abreast with developments on EU adequacy decisions that may impinge on transfers.
Cyprus’ PCPD has demonstrated strict enforcement of GDPR:
- Case Study 1 – Financial Institution Fine
A bank was fined for having failed to provide clients with clear information about data processing.
Lesson: Transparency is the essence of GDPR compliance.
- Case Study 2 - Law Firm Breach
The law firm suffered a breach due to the weak encryption applied to client files.
Lesson: Data confidentiality must be safeguarded with robust technical means.
- Case Study 3- CASP Non-compliance
A CASP was found to be retaining client data longer than necessary.
Lesson: Firms must have strict retention schedules that reflect the principle of storage limitation under the GDPR.
These examples highlight regulators’ expectations: firms must not only have policies in place but also demonstrate active, ongoing compliance.
Conclusion
Compliance with the GDPR lands more now on client protection, maintenance of professional integrity, and the greater aspect of trust establishment within the financial and professional services.
With the glare of heightened regulation and this ever-changing landscape of the digital world, data protection has to now pose a question far different from that relative to mere box-ticking exercises. Instead, there must come a proactive approach to data protection, and it must be organised.
The Centre-8's GDPR & Data Protection Training Course gives compliance officials, auditors, lawyers, financial officers with practical skills and ground realities to know their obligations under the GDPR, to apply best practices, and to prepare for an inspection by supervisory authorities.
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References
- GDPR Full Text – eur-lex.europa.eu
- European Data Protection Board – edpb.europa.eu
- Cyprus Commissioner for Personal Data Protection – dataprotection.gov.cy
- CySEC Announcements – cysec.gov.cy
- ICPAC GDPR Guidance – icpac.org.cy
- Cyprus Bar Association GDPR Guidance – cba.org.cy