Guide to GDPR Compliance for US Companies

Published/Updated December 22, 2022

What Is GDPR Compliance?

The European Union’s General Data Protection Regulation (GDPR) is a law that went into effect across the EU in 2018 to protect the privacy rights of EU citizens. The GDPR specifies certain privacy rights that all EU citizens have, and certain privacy obligations that organizations must obey as part of handling the data of EU citizens. GDPR compliance is simply an organization’s attempt to live up to those regulatory requirements.

The Benefits of GDPR Compliance

First, companies should understand that GDPR compliance is mandatory if you want to collect and process the data of EU citizens. So above all else, the primary benefit of complying with the GDPR is avoiding the wrath of privacy regulators across Europe. Violations of the GDPR expose companies to costly investigations and potentially onerous monetary penalties. The better your GDPR compliance program, the less likely you are to experience such enforcement actions.

That said, there are several other benefits, too.

It Provides Business Opportunities

If your business is GDPR-compliant, that sends a message to potential customers that you are a trustworthy business partner and they can feel confident putting their confidential data in your hands.

This is especially true in the business-to-business world, since corporations are legally responsible for GDPR violations that third parties might suffer while working on the corporation’s behalf. When you are GDPR-complaint, you are reducing their third-party risk, because you are their third party. That gives you a strategic advantage over competitors that are not GDPR-complaint.

It Drives Efficiency and Innovation

When the Covid-19 pandemic struck in 2020 and businesses had to shift to remote work quickly, many were caught unprepared. Their ability to guarantee protection of personal data came under severe strain as so many people had to change business processes so quickly.

GDPR compliance, however, is not optional; companies must find a way to keep personal data secure. So compliance can spur innovation and efficiency, as companies perfect new ways to keep data secure while developing new business processes in response to the pandemic.

It’s Good Marketing

The public likes to know that their personal data is safe, and that they can trust the businesses asking them for personal data. GDPR compliance tells them you are a trustworthy business, and helps your company avoid painful headlines about privacy breaches.

Are U.S. Companies Affected by the GDPR?

Yes. The GDPR applies to any organization that operates in the EU or that collects or processes the personal data of EU citizens. So if a business in the United States (or anywhere else in the world, for that matter) handles such data, the GDPR can apply to you.

That said, the exact compliance requirements will vary depending on the size of your company and how you process and store the applicable data. For example, if your company’s website actively targets EU citizens (known as data subjects) for marketing or monitoring, then you are a data controller and your organization must comply.

On the other hand, if you only process EU data for another business but don’t collect the data from EU citizens directly, then the GDPR defines you as a data processor. Data processors still do have numerous compliance obligations under the GDPR, but those duties are not the same as those for data controllers. (A company can also be both a controller and a processor at the same time.)

The GDPR guarantees eight rights to data subjects (that is, EU citizens). Those businesses covered by the GDPR must then be able to provide those rights to be fully compliant.

What Are the GDPR Enforcement Penalties?

Any privacy regulator in any EU member state can take action against companies that violate the GDPR. Regulators can levy fines against your organization no matter where the company is based; and those fines can be up to 4 percent of annual global revenue or up to 20 million euros, whichever is the higher amount.

Regulators might also be allowed to seize corporate assets you own in the EU; and law enforcement may be called upon to cooperate with the GDPR in taking legal action against your company.

Does GDPR Apply to EU Citizens Living in the U.S.?

Not necessarily. The requirements of the GDPR apply to the physical location of the person whose data is being used rather than their citizenship. So, for example, if an EU citizen purchases an item while traveling or living in the United States and their data is then stored by an American company in U.S.-based computer servers – the GDPR will not apply.

Conversely, if an American citizen is living or staying in the EU for an extended period, the GDPR can apply to that person’s data usage. U.S. citizens living in the United States are not subject to these requirements.

Who Needs to Be GDPR Compliant?

GDPR applies to any entity (any person, business, or organization) that collects or processes personal data from any person in the European Union. For example, any firm that receives purchases from EU-based customers must be GDPR-compliant. Anyone with a website that gathers data on its users and may get visitors from the EU must also be GDPR-compliant.

The law is structured in this manner so that it can safeguard the data and privacy rights of all internet users in the EU, regardless of where they browse online or purchase. Therefore, if you conduct business with EU citizens, you must comply with GDPR.

5 Steps for GDPR Compliance

While compliance may appear to be burdensome, a wise approach does make compliance more manageable. Here are five steps to help you start your GDPR compliance journey.

  1. Inventory

    Understanding all the sources of data in your organization is the first step toward GDPR compliance. Whatever technology you employ, you must analyze and audit what personal data is saved and used across your data environment.

    You cannot rely on common knowledge or assumptions about where personal data in your legal possession may be located. Building an inventory of personal data is necessary to assess your exposure to privacy risks and to implement enterprise-wide privacy protections.

  2. Identify

    Once you have access to all data sources, t review them to see what personal data is contained in each. Personal information is frequently hidden in semistructured fields. To extract, categorize, and catalog personal data elements, you’ll need to be able to parse those fields.

    Given the data at hand, this categorizing operation cannot be done manually. Furthermore, you must process and classify personal data while accommodating variable levels of data quality. Pattern recognition, data quality criteria, and standardization are critical components of this process. Having the correct tools for the task can improve your GDPR compliance capabilities significantly.

  3. Govern

    Once you identify the personal data in your possession that is subject to the GDPR, you must implement policies and procedures for how to handle that data. GDPR compliance requires that privacy standards be established and disseminated across all lines of business.

    These policies and procedures should establish that personal data is only accessible by those with the appropriate rights, depending on the nature of the personal data, the permissions associated with user groups, and the usage context. To do this, your organization must specify the roles and definitions in a governance model.

  4. Protect

    Next, implement the appropriate level of data security. To assure GDPR compliance, you must safeguard data using one of three methods: encryption, pseudonymization, or anonymization.

    You must employ the proper approach based on the user’s permissions and the IT environment — all while meeting the increased need for analysis, forecasting, querying, and reporting. The simplest method to safeguard data privacy is to erase everything except the data required to execute essential business activities.

  5. Review and Report

    Reviews and reports are the fifth step on your path to GDPR compliance. At this point, you must be able to submit reports that demonstrate to regulators that:

    • You understand your personal data and where it is in your data landscape.
    • You effectively handle the process of obtaining consent from the persons concerned.
    • You can demonstrate how personal data is used, who uses it, and why.
    • You have the necessary mechanisms to handle issues such as the right to be forgotten, data breach notifications, and so forth.

Does the GDPR Require Audits?

Not quite. The language used in the GDPR requires that companies review their data and controls regularly, but does not expressly use the word “audit.”

Performing regular audits, however, is highly beneficial for any company that needs to comply with the GDPR. GDPR audits can examine your processes in depth and assure that each of the eight GDPR rights are provided by your system.

Also, the most important byproduct of a successful audit is documentation. Documented proof of audits and other compliance efforts can sometimes reduce penalties or fines in the event of a data breach. Moreover, regular audits of your system and controls can help prevent breaches from happening.

Compliance Management With Reciprocity ROAR Platform

If you’re struggling with your GDPR compliance efforts, Reciprocity ROAR has the solution. Our software will streamline and organize the compliance process, including automation that can save you time and resources.

Reciprocity ROAR Platform, which powers Reciprocity ZenRisk and ZenComply, allows you to view, understand, and act on your IT and cyber risks.

In-application guidance assists you with requirement and control scoping, risk identification, assessment, and treatment procedures of the standards and regulations you need. And with expert-recommended inherent and target risk ratings, you can swiftly transition from defense to offense, providing you with a quick grasp of your risk position. Expert assistance provides and maintains the knowledge you need to design and manage your activities confidently.

The Reciprocity ROAR Platform connectors go beyond just linking to another system by delivering the content required to establish compliance with the software you have. In addition, by reducing evidence gathering to avoid mistakes and enhance productivity, you can free up your team and minimize audit fatigue.

Schedule a demo today to learn more about how Reciprocity ROAR can keep your company GDPR compliant.