A draft cybersecurity law in China could have serious implications for international banks, experts have warned.
Opponents have claimed that the wide-reaching Cyber Security Law along with new insurance regulations would allow China access to proprietary systems and would also contravene WTO rules.
The law is viewed as China’s biggest intervention to private international business in years and would require financial institutions to store and process all data on Chinese customers within China.
“The requirement on financial institutions to store and to process only in China data collected in China has significant impact on banking and finance business targeting individual customers. With respect to international banking and finance business, it is customary to store and process personal data in a regional hub which is traditionally located in India, Singapore and Hong Kong as far as the Asian market is concerned,” Yang Xun, of counsel at Simmons and Simmons in Shanghai tells GTR.
This week, a coalition of 46 business groups wrote a letter to Chinese premier Li Keqiang asking him to rethink the proposals around cybersecurity, which they fear signals an era of increased protectionism in China and which they said could negatively affect China’s economy.
While international trade banks may have a limited number of domestic customers in China, the ruling would compromise progress made on opening China up to international markets and cross-border trade.
The requirement prohibits the transfer of data collected in China to regional hubs outside of China, so unless institutions are willing to relocate their hubs to within the country, it may impinge upon the business they wish to do there.
Source: http://www.gtreview.com/news/asia/china-cybersecurity-law-could-affect-trade-banks/
