China to Launch Mandatory Data Management Audits in 2025

China will implement mandatory data management audits beginning in 2025 as part of its comprehensive privacy law framework, introducing new requirements for companies operating within its jurisdiction. The regulations will affect a wide range of businesses, with particular emphasis on companies in the artificial intelligence sector. This follows recent transformations in the AI technology landscape that have reshaped business requirements across multiple industries.

Under the new requirements, organizations must maintain detailed records of all data transactions for a minimum of 10 years and be prepared to provide comprehensive reports to authorities upon request. The audits will evaluate the implementation of data minimization strategies, encryption protocols, privacy-enhancing technologies, and authorization management systems. These measures reflect China’s increasingly stringent approach to data protection, as evidenced by recent enforcement actions, including a $1.2 billion fine imposed on Didi for data privacy and security violations.

Zhang Wei, Director of China’s Cybersecurity Administration, stated, “These measures represent a significant advancement in our data protection framework and demonstrate our commitment to maintaining the highest standards of data security.”

The regulations include specific exemptions for certain types of transactions, including personal communications without value transfer, informational materials, travel-related transactions, and routine data sharing within corporate groups. Additionally, official U.S. government business will be exempt from these requirements.

Financial institutions face enhanced obligations under the new framework, including stricter customer due diligence requirements and beneficial ownership verification protocols. The regulations also introduce more severe penalties for non-compliance, with fines reaching up to RMB 10 million for serious violations.

The law’s scope extends beyond China’s borders, encompassing AML-related offenses that occur outside the country but impact Chinese security or financial order. Foreign financial institutions may be required to cooperate based on principles of reciprocity.

Source: VinciWorks

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November 20, 2024 – by the ID Tech Editorial Team