The U.S. Justice Department on Monday proposed new regulations to prevent federal government data or the personal information of Americans in large quantities from falling into the hands of nations such as China, Iran, and Russia.
TakeAway Points:
- The U.S. Justice Department on Monday proposed new rules to protect federal government data or Americans’ bulk personal data from getting into the hands of countries like China, Iran, and Russia by placing new limits on certain business transactions.
- Washington has been trying to stem the flow of American personal data to China, part of a years-long struggle over trade and technology.
- According to a government posting, U.S. regulations that would prohibit specific U.S. investments in artificial intelligence in China are now being finalised.
New data protection rules
The proposal, which was previewed in March, implements an executive order issued earlier this year by President Joe Biden, which aims to keep foreign adversaries from using accessible American financial and genomic data and health data for cyber attacks, espionage, and blackmail.
In addition to China, Russia, and Iran, the rule would also apply to Venezuela, Cuba, and North Korea.
Washington has been trying to stem the flow of American personal data to China, part of a years-long struggle over trade and technology.
In 2018, a U.S. panel that reviews foreign investments for potential national security threats rejected a plan by China’s Ant Financial to acquire U.S. money transfer company MoneyGram International because of concerns over the safety of data that can be used to identify U.S. citizens.
The officials said transactions will be banned with data brokers who know the information will end up in “countries of concern,” as will the transfer of any data on U.S. government personnel.
Monday’s proposal for the first time gave more specific details about the types and amounts of data that cannot be transferred, including human genomic data on over 100 Americans or personal health or financial data on over 10,000 people.
The proposal would also bar the transfer of precise geolocation data on over 1,000 U.S. devices.
The rule would allow the Justice Department to enforce compliance both through criminal and civil penalties.
U.S. officials told reporters on Monday that Chinese apps such as TikTok could run afoul of the proposal if they transferred sensitive data from U.S. users to a Chinese parent company.
US to curb AI investment in China
U.S. rules that will ban certain U.S. investments in artificial intelligence in China are under final review, according to a government posting, suggesting the restrictions are coming soon.
The rules, which will also require U.S. investors to notify the Treasury Department about some investments in AI and other sensitive technologies, stem from an executive order signed by President Joe Biden in August 2023 that aims to keep American investors’ know-how from aiding China’s military.
The final rules, which target outbound investment to China in AI, semiconductors and microelectronics and quantum computing, are under review at the Office of Management and Budget, the posting showed, which in the past has meant they will likely be released within the next week or so.
“It looks to me like they’re trying to publish this before the election,” said former Treasury official Laura Black, a lawyer at Akin Gump in Washington, referring to the Nov. 5 U.S. presidential election. Black added that the Treasury office overseeing the regulations generally provides at least a 30-day window before such regulations go into effect.
The proposed rules
The Treasury Department published proposed rules with a raft of exceptions in June and gave the public a chance to comment. The draft rules placed the responsibility on U.S. individuals and companies to determine which transactions will be restricted.
Black expects the final rules to further clarify the scope of coverage over artificial intelligence and the threshold for limited partners.
The proposed rules banned transactions in AI for certain uses and involved systems trained in using a specified quantity of computing power. They required notification of transactions related to the development of AI systems or semiconductors not otherwise prohibited.
Publicly traded securities such as index funds or mutual funds, certain limited partnership investments, and certain syndicated debt financings were among the proposed exceptions.
