Tag: Data Security Program

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Preparing for the New Data Security Program, Part 2

Yesterday, I began a two-part blog post on preparing to respond to the Department of Justice’s (DOJ) new Data Security Program (DSP), which was released on April 8, 2025. Today, I want to conclude this series by reviewing additional key actions you can take now to prepare for the full effective date of October 6, 2025.

  • Set up internal processes for training, audit, and reporting.

The DSP does not just ask for policies; it demands proof of implementation. Your organization must build internal compliance muscle around training, auditing, and reporting specific to DSP obligations. Start with training. Who needs to know what? Procurement teams must understand vendor screening protocols. IT and security teams must recognize DSP risk categories. Legal must know the redlines on cross-border data sharing. Executives must understand their certification responsibilities. Everyone must grasp the stakes: violations carry real-world consequences, including civil penalties and criminal charges.

Next comes auditing. You must create audit plans that review DSP compliance across your data lifecycle, collection, storage, access, processing, sharing, and deletion. These audits should be independent, recurring, and specific to your Data Compliance Program. And don’t forget: if you engage in restricted transactions, you must conduct an audit and submit an annual compliance certification. This is not optional, but mandatory compliance activity is baked into the regulation.

Lastly, establish internal reporting mechanisms. That includes hotlines or portals for employees to report suspected violations and internal systems for escalating rejected transactions to compliance or legal. DSP requires you to report known or suspected breaches within 14 days. This is not a theoretical SLA; failing to meet the timeline is a compliance failure. Build templates, designate responsible officers, and track every report. If your whistleblower program is not integrated with your data governance team, you are already behind the proverbial 8-ball.

Think of this as building a new compliance pillar, just like you did for FCPA or anti-money laundering. It’s not about reinventing the wheel but about embedding DSP-specific requirements into the systems, teams, and culture you already rely on.

  • Engage your board and C-suite on DSP requirements. This is national security compliance, not just privacy.

One of the most underappreciated risks in corporate compliance today is the leadership’s assumption that DSP is just an extension of privacy laws. It is decidedly not. This is national security compliance. And that means the board and C-suite must be informed and actively engaged.

Start by educating the board on how the DSP aligns with existing fiduciary duties and oversight obligations. Directors must understand that data exposure to hostile foreign powers could result in enforcement actions, reputational damage, shareholder litigation, and, in some sectors, revocation of government contracts. This could raise the level of a material disclosure risk for public companies.

The C-suite also has new legal responsibilities. Senior officers must sign off on DSP compliance certifications, ensure audits are conducted, and provide adequate resources for risk management. That means CEOs, GCs, and CFOs are personally accountable for implementation, and their failure to act could aggravate an enforcement action. Bring DSP compliance into board audit committee agendas. Create executive-level working groups that include the CISO, Chief Privacy Officer, General Counsel, and Chief Compliance Officer. Produce quarterly dashboards showing compliance metrics, known or suspected violations, audit results, and third-party risk assessments.

Do not make the mistake of treating this like another privacy briefing. Treat it like an FCPA or sanctions discussion, with risk maps, case studies, DOJ priorities, and benchmark expectations, because this is not about theoretical data misuse. It’s about preventing hostile state actors’ strategic exploitation of American data. And that is a matter of national urgency. If your board does not understand this message, it is up to compliance to evangelize the message before regulators do it for you.

  • Start building your Data Compliance Program today—October 6, 2025, is not as far off as it seems.

October 6, 2025, may feel like a future problem, but let me assure you that the future is already knocking at your door. The DOJ has given us a roadmap and a runway. What you do with that time will define your compliance posture for years. Don’t treat the DSP as a regulatory cliff. Treat it as a strategic build.

Begin by appointing a DSP compliance lead with data governance and regulatory experience. Next, map your data flows, classify your datasets, and identify your exposure to restricted or prohibited transactions. Use that information to build a risk profile. That’s your foundation.

Then, develop your Data Compliance Program. Create written policies for due diligence, vendor screening, internal reporting, and audit procedures. Set up governance structures, designate accountable officers, and prepare for annual certifications. Do not wait until Q3 to scramble; start embedding controls into your existing compliance infrastructure now.

Use this runway to build muscle memory: conduct tabletop exercises, test your reporting protocols, and audit your readiness. Engage your business units with training, mock scenarios, and real-life case studies. The goal is not just compliance; it is about cultural adoption. You’ve already failed if your people see this as a box-checking exercise. The organizations that will thrive under DSP are the ones that treat this not as a regulatory burden but as an opportunity to lead. Because let’s face it: national security compliance is the new frontier. And October 6, 2025, won’t end this journey. It’s the beginning.

The DSP marks a seismic shift for compliance professionals in the era of data as a national security asset. This is not just another privacy framework but a national security regulation with teeth. U.S. companies must now treat data governance the way they’ve treated anti-bribery compliance or export controls: with rigor, documentation, and executive oversight. That starts with reviewing and aligning privacy policies to DSP-defined risk categories, especially around government-related and bulk-sensitive personal data.

Vendor agreements must be audited for exposure to covered persons or countries of concern and updated with enforceable clauses to prevent prohibited data transfers. Organizations must also build robust internal training, auditing, and reporting systems, with mandatory 14-day reporting windows for violations. Most critically, boards and C-suites must be actively engaged, and this is national security compliance, not just IT hygiene. The clock is ticking, with full enforcement kicking in on October 6, 2025. Compliance professionals have a unique opportunity to lead from the front, building a proactive, risk-based Data Compliance Program that integrates DSP mandates into business operations before DOJ examiners come knocking. The message is clear: Know your data. Know your risks.

Finally, take action before your inaction becomes your liability.

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Preparing for the New Data Security Program, Part 1

Yesterday, I introduced the Department of Justice’s (DOJ) new Data Security Program (DSP), which was released on April 8, 2025, and implemented under Executive Order 14117. Today, I want to begin reviewing key actions you can take now to prepare for the full effective date of October 6, 2025. We will complete our review of key steps to take tomorrow.

1. Review your current data governance and privacy policies—align them with DSP risk categories.

Data governance is no longer just about classification and access rights; it’s now a frontline national security function. The DSP requires fundamentally rethinking how organizations define, inventory, and control sensitive data. Compliance officers must start with a forensic review of current data governance frameworks: What data are you collecting? Who touches it? Where does it live? Who can access it, and how is it transferred internally and externally? Once mapped, each dataset must be examined through the DSP lens: Is it government-related? Does it contain bulk sensitive personal data? Is it linked to current or former U.S. government personnel? These are not simply IT questions. These are compliance questions with profound legal implications.

Next, organizations must evaluate their privacy policies for blind spots. Many policies were written for GDPR or CCPA, not for adversarial data exfiltration by foreign intelligence services. If your data policies are not risk-aligned to DSP categories, such as data brokered to third parties or aggregated in ways that make re-identification likely, you are flying blind in a regulatory minefield. This isn’t a call for a quick redline but a strategic overhaul of how you structure data controls, policies, and risk frameworks. Collaborate with your CISO, but lead with your compliance hat on. The DOJ is not asking for IT security alone, and they are demanding accountable, auditable compliance with national security-grade rigor. Treat this like an FCPA compliance program: document everything, know your risk vectors, and escalate anomalies. The age of “data policy as an afterthought” is over. In the DSP era, data is not just a privacy concern but a geopolitical flashpoint.

2. Audit your third-party vendor agreements for exposure to covered persons or countries of concern.

Third-party risk just got geopolitical. Under the DSP, vendor due diligence has become a national security obligation. You must now screen for performance and financial viability and whether any foreign vendor, subcontractor, or partner is a “covered person” or tied to a country of concern like China, Russia, Iran, North Korea, Venezuela, or Cuba. Even indirect ownership or residency triggers a compliance obligation. That friendly cloud storage provider with a branch in Shenzhen? Is that IT support firm subcontracting code maintenance to Belarus? They may now be regulatory liabilities under the DSP.

Start with a comprehensive audit of all current vendor agreements, focusing on data-sharing terms, sub-licensing permissions, and geographic exposure. Can the vendor access, process, or host government-related or bulk-sensitive personal data? If so, is there a clause prohibiting onward transfer to covered persons or countries of concern? If not, you’re potentially out of compliance. You may need to renegotiate or terminate contracts that create risks you can’t control. Relying on “we didn’t know” is insufficient, as the DSP holds U.S. persons accountable for failing to implement reasonable and proportionate due diligence.

Also, consider implementing a DSP-specific screening protocol that goes beyond sanctions and AML lists and includes the DOJ’s Covered Persons List. Integrate this into your vendor onboarding, renewal, and periodic review processes. Remember, under the DSP, even inadvertent exposure can constitute a violation. That means it’s no longer enough to run a vendor through OFAC and call it a day. You need a national security screening lens. Compliance must lead this effort, not procurement, legal, or IT. If a vendor relationship enables DSP-prohibited access, the legal liability will land squarely on your doorstep.

3. Draft contractual clauses that prohibit data resale or access by covered entities.

The DSP has thrown a wrench into how we think about contract drafting. Referencing generic data use terms or standard confidentiality clauses is no longer sufficient. You’re exposed if your contracts do not explicitly prohibit the onward sale or transfer of covered data to countries of concern or covered persons. Under the DSP, exposure is not simply reputational but both civil and criminal.

Compliance teams should immediately collaborate with legal and procurement to update all relevant agreements. That includes data-sharing contracts, licensing, cloud service agreements, vendor onboarding templates, and M&A data room protocols. Insert clauses prohibiting foreign counterparties from transferring sensitive personal or government-related data to any covered person or country of concern. Go further: mandate that they notify you of any suspected breach and certify compliance annually.

Do not stop at language insertion. Require enforceability mechanisms, termination clauses, indemnification provisions, and audit rights. The DOJ clarified that including boilerplate language will not shield you from enforcement. You may have committed a prohibited transaction if you knew or should have known that a foreign vendor resold data to a hostile actor. Even the best legalese won’t save you without operational controls to back it up.

Consider maintaining a DSP Clause Library, a set of pre-approved terms for use across contracts by legal and compliance staff. Train your contract managers on red flags. Build escalation protocols when counterparties push back. And do not forget to update your templates as the DOJ issues more guidance. In short, think of DSP compliance clauses the way you would anti-corruption reps and warranties in an FCPA context: a first line of defense, but only effective when part of a broader compliance architecture.

The Department of Justice’s new Data Security Program, effective October 6, 2025, is a game-changer for corporate compliance. It redefines data governance as a national security obligation, requiring companies to align privacy policies with DSP risk categories and scrutinize third-party vendors for ties to covered persons or countries of concern. Compliance professionals must proactively draft enforceable contracts, build auditable training and reporting systems, and educate C-suites and boards that DSP is not “just privacy”; rather, it is national security compliance. With the clock ticking, the time to act is now. Join us tomorrow for Part 2, where we continue the roadmap to DSP readiness.

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Data Defense is the New Compliance: What the Data Security Program Means for Compliance

In an age where data is the new oil, the Department of Justice (DOJ) has dropped a regulatory hammer with the release of the Data Security Program (DSP), which was released on April 8, 2025, and was implemented under Executive Order 14117. If you are a corporate compliance officer, this is not simply another acronym to file away; it is a full-blown mandate to build a risk-based compliance infrastructure that treats data the way we’ve historically treated cash: something precious, something dangerous, and something that foreign adversaries are actively trying to exploit. The DSP marks a critical shift in how compliance professionals think about national security, not as the purview of spooks and diplomats but as a living, breathing component of your organization’s third-party risk, data governance, and vendor oversight programs. Equally interestingly, the Trump Administration builds with zero fanfare on the building blocks put in place by the Biden Administration.

DSP Is More Than an IT Issue

The DOJ is not simply aiming at you, your Chief Information Officer (CIO), but rather looking squarely at you, the compliance professional. The new rules require U.S. persons (which includes individuals and corporations) to proactively monitor, restrict, and, when necessary, report data transactions that could expose U.S. Government-related or bulk sensitive personal data to adversarial foreign actors. These rules are about compliance and accountability. DSP enforcement brings with it the full force of the International Emergency Economic Powers Act (IEEPA), meaning penalties can include civil fines exceeding $368,000 per violation and criminal liability with up to 20 years in prison. That should sober up even the most compliance-fatigued executive.

Who’s in the DOJ’s Crosshairs?

The program identifies “Countries of Concern,” including China, Russia, Iran, North Korea, Venezuela, and Cuba. It further defines “covered persons” as not just foreign governments or entities but any individual or company operating under their influence, including contractors and subsidiaries that may be 50% or more owned by such parties. This is not simply a red flag but should be seen as a red carpet for compliance departments to step up and create data-focused due diligence protocols that mirror those already established under FCPA for anti-bribery or OFAC for sanctions screening.

The DSP targets four main types of transactions:

1. Data Brokerage Agreements

2. Vendor Agreements

3. Employment Agreements

4. Investment Agreements

Any of these, involving sensitive personal data or government-related data, could trigger a compliance obligation or, worse, a violation. Even anonymized or encrypted data isn’t exempt if it can be aggregated to reveal individual identities. Compliance teams must now incorporate data risk classification and flow mapping into their routine controls and audits.

Restricted and Prohibited Transactions: Not Just Semantics

The DSP distinguishes between “prohibited” and “restricted” transactions. Prohibited transactions, like selling bulk data to a covered person or foreign entity, are off-limits. Restricted transactions, such as engaging a foreign vendor for cloud services, are allowed only if specific due diligence, security protocols, and contractual safeguards are met.

Translation for compliance officers: This is your new playbook. You must tailor contract language to prohibit onward data transfers, track compliance, audit vendors, and report violations within 14 days. Inaction isn’t just a missed best practice; it could also be a statutory violation.

Your New Compliance Infrastructure: Four Pillars

Under Subpart J of the DSP, companies must develop and maintain a robust Data Compliance Program. Here’s what the DOJ expects from you:

1. Risk-Based Due Diligence Procedures: Know your data, vendors, employees, and business model. Map where sensitive data lives and flows. Identify exposure to covered persons or countries of concern.

2. Security Requirements: Implement the Cybersecurity and Infrastructure Security Agency’s (CISA) security standards and document them in a written policy reviewed annually.

3. Audit Program: Conduct an annual independent audit to assess DSP compliance, covering your vendors, data flows, contracts, and internal controls.

4. Training and Certification: Deliver targeted training to frontline staff and compliance officers. Certify the program annually with a sign-off from a senior officer not designated as a covered person.

The Compliance Response

Do not underestimate the power of line managers in operationalizing this program. From procurement officers vetting vendors to HR leads onboarding new hires, your middle managers are now your eyes and ears for potential data risks. Equip them with training, toolkits, and escalation protocols. Empower them to say, “No, we can’t do that,” and back them up when they do. This is where culture meets controls, and a compliance-minded organization distinguishes itself from a liability waiting to happen. DSP violations are serious business, but the program leaves room for good-faith actors. Reporting suspected breaches or rejected transactions within 14 days may mitigate enforcement risks.

What to Do Now: A Compliance  Checklist

For those who want to get ahead of this before the hammer drops, here’s your compliance punch list:

  • Review your current data governance and privacy policies—align them with DSP risk categories.
  • Audit your third-party vendor agreements for exposure to covered persons or countries of concern.
  • Draft contractual clauses that explicitly prohibit data resale or access by covered entities.
  • Set up internal processes for training, audit, and reporting.
  • Engage your board and C-suite on DSP requirements. This is national security compliance, not just privacy.
  • Start building your Data Compliance Program today, as the date of October 6, 2025 (the full implementation date) is not as far off as it seems.

Conclusion: The Age of Data National Security is Here

The DSP marks a sea change for compliance professionals. It transforms data governance from an IT-driven policy concern into a top-tier compliance risk, with reporting deadlines, audit mandates, and hefty penalties. It requires us to think beyond cybersecurity and embrace data risk as a function of geopolitical conflict and corporate accountability. Compliance is not simply about following the rules; rather, it is about being the first line of defense in protecting American data, values, and institutions from adversarial exploitation. And in that mission, every compliance professional is now a stakeholder in national security.

So, as Bette Davis might say, buckle up, tune up your compliance programs, and get ready to evangelize the next great frontier in corporate compliance.