DOJ Builds Digital Wall to Keep Foreign Spies Away
Published Date: 1/8/2025
Rule
Summary
Starting April 8, 2025, the Department of Justice is blocking certain countries and people from accessing sensitive U.S. personal and government data to keep Americans safe. This new rule affects businesses and data brokers who handle this info, making sure they follow strict limits on sharing or selling it. No big costs are expected, but everyone involved needs to get ready for these important changes.
Analyzed Economic Effects
7 provisions identified: 3 benefits, 3 costs, 1 mixed.
Ban on Certain Data Transactions
Starting April 8, 2025, the Department of Justice prohibits certain transactions that involve United States Government-related data or bulk U.S. sensitive personal data when a foreign country or national has an interest. The rule covers acquisition, holding, use, transfer, transportation, exportation, or dealing in property that could give countries of concern or covered persons access to that data.
Prohibition on Certain Data-Brokerage Sales
The rule prohibits certain commercial data-brokerage transactions that would provide access to government-related data or bulk U.S. sensitive personal data to countries of concern or covered persons. Data brokers and purchasers who trade in such bulk data will be subject to these prohibitions.
Security Conditions on Deals and Contracts
The rule imposes predefined security requirements on certain restricted transactions, including investment, employment, and vendor agreements that involve government-related data or bulk U.S. sensitive personal data. Such transactions will be allowed only to the extent they meet those security requirements.
Recordkeeping, Reporting, and Audits
The rule establishes recordkeeping and reporting requirements, due diligence obligations for restricted transactions, audits, and reports to be furnished on demand, including reports on rejected prohibited transactions. It also establishes penalties and a compliance and enforcement regime.
Licenses and Advisory Opinions Process
The Department will issue general and specific licenses and advisory opinions to authorize otherwise prohibited or restricted transactions and may modify or rescind those licenses. Businesses and other U.S. persons can seek these licenses to pursue transactions that would otherwise be barred or restricted by the rule.
Exemptions for Official and Critical Transactions
The rule exempts certain transactions from its prohibitions and restrictions, including transactions conducted for the official business of the United States Government by employees, grantees, or contractors, and transactions under grants, contracts, or other agreements with the U.S. Government, including those for outbreak and pandemic prevention, preparedness, and response. The preamble also lists other exempt categories such as telecommunications services, financial services, and certain medical product authorizations and clinical investigations.
Designation of Countries and Covered Persons
The rule establishes a process to identify and designate 'countries of concern' and classes of 'covered persons' whose access to government-related data or bulk U.S. sensitive personal data poses a national security risk. Those designations determine which foreign countries and persons the prohibitions and restrictions apply to.
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