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7. Section 155(1) DPA provides that, if the Commissioner is satisfied that a person has failed, or is failing, as described in section 149(2) DPA, the Commissioner may, by written penalty notice, require the person to pay to the Commissioner an amount in sterling specified in the penalty notice.
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8. The types of failure described in section 149(2) DPA include, at section 149(2)(a), "where a controller or processor has failed, or is failing, to comply with... a provision of Chapter II of the UK GDPR... (principles of processing)" and at section 149(2)(c), "where a controller or processor has failed, or is failing, to comply with... a provision of Articles 25 to 39 of the UK GDPR... (obligations of controllers and processors)."
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9. Chapter II UK GDPR sets out the principles relating to the processing of personal data that controllers must comply with. Article 5(1) UK GDPR lists these principles and includes the requirement at Article 5(1)(f) UK GDPR that "personal data shall be... processed in a manner that ensures appropriate security of the personal data, including protection against unauthorised or unlawful processing and against accidental loss, destruction or damage, using appropriate technical or organisational measures". This is referred to in the UK GDPR as the "integrity and confidentiality" principle.
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10. Article 32 UK GDPR (security of processing) materially provides:
"(1) Taking into account the state of the art, the costs of implementation and the nature, scope, context and purposes of processing as well as the risk of varying likelihood and severity for the rights and freedoms of natural persons, the controller and the processor shall implement appropriate technical and organisational measures to ensure a level of security appropriate to the risk...
(2) In assessing the appropriate level of security account shall be taken in particular of the risks that are presented by processing, in particular from accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to personal data transmitted, stored or otherwise processed".
For Public Release
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11. Article 33(1) UK GDPR (notification of a personal data breach) provides:
"In the case of a personal data breach, the controller shall without undue delay and, where feasible, not later than 72 hours after having become aware of it, notify the personal data breach to the Commissioner, unless the personal data breach is unlikely to result in a risk to the rights and freedoms of natural persons. Where the notification under this paragraph is not made within 72 hours, it shall be accompanied by reasons for the delay".
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12. Article 4(1) UK GDPR defines a personal data breach as:
"a breach of security leading to the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to, personal data transmitted, stored or otherwise processed".
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13. The legal framework for setting penalties is set out in Section V: 'Decision to impose a penalty' below.
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14. This section summarises the relevant background to the findings of infringement. It does not seek to provide an exhaustive account of all the details of the events that have led to the issue of this Penalty Notice.
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15. DPP is a law firm, headquartered in Bootle, England. It employs fewer than 250 staff and has offices in Birmingham, Bootle, Liverpool, London and Tolworth. It specialises in the practice of law related to crime, military, family fraud, sexual offences and actions against the police.3
For Public Release
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16. On 4 June 2022 at approximately 11:30, DPP's email server stopped working and staff had no access to DPP's IT network.4 DPP's in-house IT manager established that all files across its servers had been corrupted.5 DPP's external IT supplier believed that DPP had suffered a ransomware incident, despite not receiving any payment demands.6
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17. The timeline of events leading up to (and following) the Cyber Incident was as follows:
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18. DPP told the Commissioner that, following an analysis of log files by a third party consulting firm, there was evidence to suggest brute force attempts on its network as early as 19 February 2022.7 This occurred a further 12 times and there were in total 400 attempts to gain access to the network.8 The brute force incidents were targeted at an administrator account for a legacy case management system (see further points on 'sqluser' below at paragraph 25 to 28) which was only available online sporadically.9
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19. An administrator account, sqluser, authenticated onto
10 It is considered likely that an end- user laptop was compromised by the threat actor and subsequently authenticated onto the network. It was this compromise that allowed the threat actor to access sqluser.11 Following this login, there are indicators
that Cobalt Strike was deployed onto the network and the threat actor began running PowerShell commands. $^{12}$ At the time of the incident DPP had multi- factor authentication ("MFA") for the purposes of connecting to its network via a VPN. $^{13}$ However, the administrator account, sqluser, did not have MFA due to its role as a service- based account. $^{14}$
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20. DPP's email server stopped working but incoming emails remained available through its firewall. $^{15,16}$ In the early hours, logs show Windows Defender being disabled on and a Virtual Machine backup service stopping on. $^{17}$ Forensic investigators believe at this point the threat actor deployed ransomware. $^{18}$
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21. During the incident MegaSync and Rclone software were installed on. $^{19}$ The threat actor utilised tools to perform the exfiltration of data from the network. Towards the end of the incident the threat actor utilised the administrator account, sqluser, to download and run an anti-virus which acted as a form of clean-up for the incident (and thus making the incident response investigation more difficult). $^{20}$
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22. DPP reviewed firewall and server logs and it assessed that no data had been exfiltrated. $^{21}$ At the time of the Cyber Incident, DPP's firewall logs did not record egress data flows, it would therefore not have been possible for DPP to ascertain if data had in fact been exfiltrated. DPP established that data was recoverable by off-site backups within 24
hours. However, DPP's systems were not operating properly for around one week leaving it unable to access the personal data it was processing. Whilst DPP staff did not have access to DPP's case management software for eight days, DPP told the Commissioner that staff retained the ability to access, and respond to, incoming emails with no impact on client cases.\[22\]
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23. The National Crime Agency ("NCA") contacted DPP to advise them that three folders of DPP's data, totalling 32.4Gb, had been published on the dark web. This included court bundles, PDFs, Word documents, photos and video (including police body cam footage) relating to DPP's clients and experts instructed to give evidence in legal proceedings to which DPP's clients were a party.
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24. 43 days after the Cyber Incident, DPP reported the personal data breach to the Commissioner. DPP were unaware that the loss of access to personal data constituted a personal data breach and therefore that they were required to notify the Commissioner about the Cyber Incident.
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25. Sqluser was an administrator account for a legacy case management system. The account was setup by FWBS Ltd (subsequently acquired by Thomson Reuters) in 2001 for the purposes of automating communication between DPP's servers.\[23\] Despite having a limited role on the network, it had full administrator rights (i.e. unrestricted access) across DPP's network.\[24\] DPP were aware of the sqluser account as far
back as 2011. <sup>25</sup> DPP told the Commissioner that previous attempts to change the password had blocked access to the legacy case management system.<sup>26</sup> DPP did not know the password and could not reset it.<sup>27</sup> The password was only known by FWBS Ltd/Thomson Reuters.
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26. DPP stated that they did not conduct a risk assessment to understand the risks associated with the sqluser account because FWBS Ltd told them that the sqluser account was "critical to the data replication of the servers" and because DPP was "reliant on our suppliers for the correct functioning and protection of our system".<sup>28</sup>
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27. The legacy case management system was taken out of service on 30 April 2019 as DPP changed case management systems to DPS Software Ltd.<sup>29</sup> DPP's service agreement for the sqluser account later came to an end in 2021. However, due to DPP's data retention policy of six years, this system was still operational as DPP needed to access data in the system.<sup>30</sup> DPP stated that its retention policy was in accordance with guidance issued by the Solicitors Regulation Authority (SRA).
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28. The threat actor used sqluser to authenticate onto a remote desktop machine that facilitated access to the legacy case management system (as outlined above in paragraph 19). By compromising the sqluser account the threat actor was able to perform lateral movement across DPP's network.
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29. DPP subsequently moved its complete case management, accounts and email system to a managed hosted environment operated by its case
management software suppliers, The Access Group. $^{31}$ This supplier controls all security aspects including the use of Microsoft 365 MFA.
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30. DPP suspended sqluser from the DPP network and it is now only accessible \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square \square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \)\square$ \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\) \(\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\)\square\(32 In its report into the Cyber Incident, a second consultancy firm instructed by DPP also recommended that DPP mandates MFA for all remote access methods (a process that was ongoing at the time of the Cyber Incident).\(^{33}\)
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31. In the months following the Cyber Incident, DPP sent notifications to affected data subjects, in line with its obligations under Article 34 UK GDPR.
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2.1. On 25 May 2018, the GDPR entered into force, replacing the previous EU law data protection regime that applied under Directive 95/46/EC ("Data Protection Directive"). The GDPR seeks to harmonise the protection of fundamental rights in respect of personal data across EU Member States and, unlike the Data Protection Directive, is directly applicable in every Member State.3
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2.2. The GDPR was developed and enacted in the context of challenges to the protection of personal data posed by, in particular:
a. the substantial increase in cross-border flows of personal data resulting from the functioning of the internal market;4 and
b. the rapid technological developments which have occurred during a period of globalisation.5 As Recital (6) explains: "... The scale of the collection and sharing of personal data has increased significantly. Technology allows both private companies and public authorities to make use of personal data on an unprecedented scale in order to pursue their activities...."
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2.3. Such developments made it necessary for "a strong and more coherent data protection framework in the Union, backed by strong enforcement, given the importance of creating the trust that will allow the digital economy to develop across the internal market..."6
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2.4. Against that background, the GDPR imposed more stringent duties on controllers and significantly increased the penalties that could be imposed for a breach of the obligations imposed on controllers (amongst others).7
The relevant obligations
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2.6. Chapter 1 GDPR sets out the general provisions. Article 5 of Chapter II GDPR sets out the principles relating to the processing of personal data. Article 5(1) lists the six basic principles that controllers must comply with in processing personal data, including:
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2.6. Article 5(2) GDPR makes it clear that the "controller shall be responsible for, and be able to demonstrate compliance with, paragraph 1 ('accountability')".
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2.7. Chapter IV, Section 1 addresses the general obligations of controllers and processors. Article 24 sets out the responsibility of controllers for taking appropriate steps to ensure and be able to demonstrate that processing is compatible with the GDPR. Articles 28- 29 make separate provision for the processing of data by processors, under the instructions of the controller.
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2.8. Chapter IV, Section 2 addresses security of personal data. Article 32 GDPR provides:
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1. Taking into account the state of the art, the costs of implementation and the nature, scope, context and purposes of processing as well as the risk of varying likelihood and severity for the rights and freedoms of natural persons, the controller and the processor shall implement appropriate technical and organisational measures to ensure a level of security appropriate to the risk, including inter alia as appropriate:
(a) the pseudonymisation and encryption of personal data;
(b) the ability to ensure the ongoing confidentiality, integrity, availability and resilience of processing systems and services;
(c) ...
(d) a process for regularly testing, assessing and evaluating the effectiveness of technical and
organisational measures for ensuring the security of processing.
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2. In assessing the appropriate level of security, account shall be taken in particular of the risks that are presented by processing, in particular from accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access to, personal data transmitted, stored or otherwise processed.
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2.9. Article 32 GDPR applies to both controllers and processors.
Penalties
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2.4.0. Article 83(1) GDPR requires supervisory authorities to ensure that any penalty imposed in each individual case is "effective, proportionate and dissuasive".
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2.11. The principle that penalties ought to be effective, proportionate and dissuasive is a longstanding principle of EU law. The Commissioner is under an EU law obligation to ensure that infringements of the GDPR are penalised in a manner that is effective, proportionate and dissuasive.
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2.4.2. Further, Recital 148 emphasises, inter alia, that "in order to strengthen the enforcement of the rules of this Regulation, penalties including administrative fines should be imposed for any infringement of this Regulation, in addition to, or instead of appropriate measures imposed by the supervisory authority pursuant to this Regulation. It also records that due regard should be given to the:
... nature, gravity and duration of the infringement, the intentional character of the infringement, actions taken to mitigate the damage suffered, degree of responsibility or any relevant previous infringements, the manner in which the infringement became known to the supervisory authority, compliance with measures ordered against the controller or processor, adherence to a code of conduct and any other aggravating or mitigating factor...
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2.13. Recital 150 provides as follows:
In order to strengthen and harmonise administrative penalties for infringements of this Regulation, each supervisory authority should have the power to impose
administrative fines. This Regulation should indicate infringements and the upper limit and criteria for setting the related administrative fines, which should be determined by the competent supervisory authority in each individual case, taking into account all relevant circumstances of the specific situation, with due regard in particular to the nature, gravity and duration of the infringement and of its consequences and the measures taken to ensure compliance with the obligations under this Regulation and to prevent or mitigate the consequences of the infringement. Where administrative fines are imposed on an undertaking, an undertaking should be understood to be an undertaking in accordance with Articles 101 and 102 TFEU for those purposes. Where administrative fines are imposed on persons that are not an undertaking, the supervisory authority should take account of the general level of income in the Member State as well as the economic situation of the person in considering the appropriate amount of the fine. The consistency mechanism may also be used to promote a consistent application of administrative fines. It should be for the Member States to determine whether and to which extent public authorities should be subject to administrative fines. Imposing an administrative fine or giving a warning does not affect the application of other powers of the supervisory authorities or of other penalties under this Regulation.
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2.14. In line with the above, when deciding whether to impose a fine and the appropriate amount of any such fine, Article 83(2) GDPR requires the Commissioner to have regard to the following matters:
(a) the nature, gravity and duration of the infringement taking into account the nature scope or purpose of the processing concerned as well as the number of data subjects affected and the level of damage suffered by them;
(b) the intentional or negligent character of the infringement;
(c) any action taken by the controller or processor to mitigate the damage suffered by data subjects;
(d) the degree of responsibility of the controller or processor, taking into account technical and organisational measures implemented by them pursuant to Articles 25 and 32;
(e) any relevant previous infringements by the controller or processor;
(f) the degree of co-operation with the supervisory authority, in order to remedy the infringement and mitigate the possible adverse effects of the infringement;
(g) the categories of personal data affected by the infringement;
(h) the manner in which the infringement became known to the supervisory authority, including whether, and if so to what extent, the controller or processor notified the supervisory authority of the infringement;
(i) where measures referred to in Article 58(2) have previously been ordered against the controller or processor concerned with regard to the same subject-matter, compliance with those measures;
(j) adherence to approved codes of conduct pursuant to Article 40 or approved certification mechanisms pursuant to Article 42; and
(k) any other aggravating or mitigating factor applicable to the case, including financial benefits gained, or losses avoided, directly or indirectly from the infringement.8
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2.4.5. Article 83(5) GDPR provides that infringements of the basic principles for processing imposed pursuant to Article 5 GDPR will, in accordance with Article 83(2) GDPR, be subject to administrative fines of up to €20 million or, in the case of an undertaking, up to 4% of its total worldwide annual turnover of the preceding financial year, whichever is higher.
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2.4.6. Article 83(4) GDPR provides, inter alia, that infringements of the obligations imposed by Article 32 GDPR on the controller and processer will, in accordance with Article 83(2) GDPR, be subject to administrative fines of up to €10 million or, in the case of an
undertaking, up to $2\%$ of its total worldwide annual turnover of the preceding financial year, whichever is higher.
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2.17. Article 83(3) GDPR addresses the circumstances in which the same or linked processing operations give rise to infringements of several provisions of the GDPR. It provides that "... the total amount of the administrative fine shall not exceed the amount specified for the gravest infringement".
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2.18. Article 83(8) GDPR provides that the exercise by any supervisory authority of its powers to fine undertakings will be subject to procedural safeguards, including an effective judicial remedy and due process.
Cooperation and consistency
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2.19. Where, as here, the processing in issue is cross- border, Article 56 GDPR makes provision for the designation of a lead supervisory authority. In this case, the Commissioner is acting as the lead supervisory authority. Chapter VII GDPR establishes the regime for ensuring cooperation between lead and other concerned supervisory authorities, permitting unified decision- making.<sup>9</sup>
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2.20. Article 60 GDPR provides:
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1. The lead supervisory authority shall cooperate with the other supervisory authorities concerned in accordance with this Article in an endeavour to reach consensus. The lead supervisory authority and the supervisory authorities concerned shall exchange all relevant information with each other.
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2. The lead supervisory authority may request at any time other supervisory authorities concerned to provide mutual assistance pursuant to Article 61 and may conduct joint operations pursuant to Article 62, in particular for carrying out investigations or for monitoring the implementation of a measure concerning a controller or processor established in another Member State.
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3. The lead supervisory authority shall, without delay, communicate the relevant information on the matter to the other supervisory authorities concerned. It shall without
delay submit a draft decision to the other supervisory authorities concerned for their opinion and take due account of their views.
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4. Where any of the other supervisory authorities concerned within a period of four weeks after having been consulted in accordance with paragraph 3 of this Article, expresses a relevant and reasoned objection to the draft decision, the lead supervisory authority shall, if it does not follow the relevant and reasoned objection or is of the opinion that the objection is not relevant or reasoned, submit the matter to the consistency mechanism referred to in Article 63.
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5. Where the lead supervisory authority intends to follow the relevant and reasoned objection made, it shall submit to the other supervisory authorities concerned a revised draft decision for their opinion. That revised draft decision shall be subject to the procedure referred to in paragraph 4 within a period of two weeks.
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6. Where none of the other supervisory authorities concerned has objected to the draft decision submitted by the lead supervisory authority within the period referred to in paragraphs 4 and 5, the lead supervisory authority and the supervisory authorities concerned shall be deemed to be in agreement with that draft decision and shall be bound by it.
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7. The lead supervisory authority shall adopt and notify the decision to the main establishment or single establishment of the controller or processor, as the case may be and inform the other supervisory authorities concerned and the Board of the decision in question, including a summary of the relevant facts and grounds. The supervisory authority with which a complaint has been lodged shall inform the complainant on the decision.
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8. By derogation from paragraph 7, where a complaint is dismissed or rejected, the supervisory authority with which the complaint was lodged shall adopt the decision and notify it to the complainant and shall inform the controller thereof.
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9. Where the lead supervisory authority and the supervisory authorities concerned agree to dismiss or reject parts of a complaint and to act on other parts of that complaint, a separate decision shall be adopted for each of those parts of the matter. The lead supervisory authority shall adopt the decision for the part concerning actions in relation to the
controller, shall notify it to the main establishment or single establishment of the controller or processor on the territory of its Member State and shall inform the complainant thereof, while the supervisory authority of the complainant shall adopt the decision for the part concerning dismissal or rejection of that complaint, and shall notify it to that complainant and shall inform the controller or processor thereof.
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10. After being notified of the decision of the lead supervisory authority pursuant to paragraphs 7 and 9, the controller or processor shall take the necessary measures to ensure compliance with the decision as regards processing activities in the context of all its establishments in the Union. The controller or processor shall notify the measures taken for complying with the decision to the lead supervisory authority, which shall inform the other supervisory authorities concerned...
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2.2.1. Article 60(4) refers to the consistency mechanism, which is in Section 2 of Chapter VII GDPR. Article 63 provides that: "In order to contribute to the consistent application of this Regulation throughout the Union, the supervisory authorities shall cooperate with each other and, where relevant, with the Commission, through the consistency mechanism as set out in this Section. Article 65 GDPR provides, insofar as relevant, that:
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1. In order to ensure the correct and consistent application of this Regulation in individual cases, the Board shall adopt a binding decision in the following cases:
(a) where, in a case referred to in Article 60(4), a supervisory authority concerned has raised a relevant and reasoned objection to a draft decision of the lead authority or the lead authority has rejected such an objection as being not relevant or reasoned. The binding decision shall concern all the matters which are the subject
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2. The decision referred to in paragraph 1 shall be adopted within one month from the referral of the subject-matter by a two-thirds majority of the members of the Board. That period may be extended by a further month on account of the complexity of the subject-matter. The decision referred to in paragraph 1 shall be reasoned and addressed to the lead
supervisory authority and all the supervisory authorities concerned and binding on them.
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3. Where the Board has been unable to adopt a decision within the periods referred to in paragraph 2, it shall adopt its decision within two weeks following the expiration of the second month referred to in paragraph 2 by a simple majority of the members of the Board. Where the members of the Board are split, the decision shall by adopted by the vote of its Chair.
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4. The supervisory authorities concerned shall not adopt a decision on the subject matter submitted to the Board under paragraph 1 during the periods referred to in paragraphs 2 and 3.
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5. The Chair of the Board shall notify, without undue delay, the decision referred to in paragraph 1 to the supervisory authorities concerned. It shall inform the Commission thereof. The decision shall be published on the website of the Board without delay after the supervisory authority has notified the final decision referred to in paragraph 6.
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6. The lead supervisory authority or, as the case may be, the supervisory authority with which the complaint has been lodged shall adopt its final decision on the basis of the decision referred to in paragraph 1 of this Article, without undue delay and at the latest by one month after the Board has notified its decision. The lead supervisory authority or, as the case may be, the supervisory authority with which the complaint has been lodged, shall inform the Board of the date when its final decision is notified respectively to the controller or the processor and to the data subject. The final decision of the supervisory authorities concerned shall be adopted under the terms of Article 60(7), (8) and (9). The final decision shall refer to the decision referred to in paragraph 1 of this Article and shall specify that the decision referred to in that paragraph will be published on the website of the Board in accordance with paragraph 5 of this Article. The final decision shall attach the decision referred to in paragraph 1 of this Article.
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2.2.3. Section 115 DPA establishes that the Commissioner is the UK's supervisory authority for the purposes of the GDPR. Section 115 DPA
provides, inter alia, that the Commissioner's powers under Articles 58(2)(i) (the power to impose administrative fines) and 83 GDPR are exercisable only by giving a penalty notice under section 155 DPA.
Penalties
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2.24. Section 155(1) DPA provides that, if the Commissioner is satisfied that a person has failed or is failing as described in section 149(2) DPA, the Commissioner may, by written notice (a "penalty notice"), require the person to pay to the Commissioner an amount in sterling specified in the notice.
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2.25. Section 149(2) DPA provides:
(1) The first type of failure is where a controller or processor has failed, or is failing, to comply with any of the following -
(a) a provision of Chapter II of the GDPR or Chapter 2 of Part 3 or Chapter 2 of Part 4 of this Act (principles of processing);
(b) ...
(c) a provision of Articles 25 to 39 of the GDPR or section 64 or 65 of this Act (obligations of controllers and processors)...
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2.26. Section 155 DPA sets out the matters to which the Commissioner must have regard when deciding whether to issue a penalty notice and when determining the amount of the penalty.
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2.27. Section 155(2) DPA provides that, subject to subsection (4), when deciding whether to give a penalty notice to a person and determining the amount of the penalty, the Commissioner must have regard to the matters listed in Article 83(1) and (2) GDPR.
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2.28. Schedule 16 includes provisions relevant to the imposition of penalties. Paragraph 2 makes provision for the issuing of notices of intent to impose a penalty, as follows:
(1) Before giving a person a penalty notice, the Commissioner must, by written notice (a "notice of intent") inform the person that the Commissioner intends to give a penalty notice.
(2) The Commissioner may not give a penalty notice to a person in reliance on a notice of intent after the end of the period of 6 months beginning when the notice of intent is given, subject to sub-paragraph
(3).
(3) The period for giving a penalty notice to a person may be extended by agreement between the Commissioner and the person.
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2.89. Paragraph 5 sets out the required contents of a penalty notice, in accordance with which this Penalty Notice has been prepared.
Guidance
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2.30. Section 160 DPA requires the Commissioner to produce and publish guidance about how she intends to exercise her functions. With respect to penalty notices, such guidance is required to include:
(a) provision about the circumstances in which the Commissioner would consider it appropriate to issue a penalty notice;
(b) provision about the circumstances in which the Commissioner would consider it appropriate to allow a person to make oral representations about the Commissioner's intention to give the person a penalty notice;
(c) provision explaining how the Commissioner will determine the amount of penalties;
(d) provision about how the Commissioner will determine how to proceed if a person does not comply with a penalty notice.
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2.81. Pursuant to section 161 DPA, the Commissioner's first guidance documents issued under section 160(1) DPA had to be consulted upon and laid before Parliament by the Secretary of State in accordance with the procedure set out in that section. Thereafter, in issuing any altered or replacement guidance, the Commissioner required to consult the Secretary of State and such other persons as she considers appropriate. The Commissioner must also arrange for such guidance to be laid before Parliament.
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2.82. On 4 May 2018, the Commissioner opened a consultation process on how the Commissioner planned to discharge her regulatory powers under the DPA. The consultation attracted responses from across civil society, commentators, and industry (including the finance and insurance, online technology and telecoms, and charity sectors). The consultation ended on 28 June 2018. Having taken all the views received during the consultation process into account, the Regulatory Action Policy (the "RAP") was submitted to the Secretary of State and laid before Parliament for approval.
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2.83. Pursuant to section 160(1) DPA, the Commissioner published her RAP on 7 November 2018. Under the hearing "Aims", the RAP explains that it seeks to:
- "Set out the nature of the Commissioner's various powers in one place and to be clear and consistent about when and how we use them";- "Ensure that we take fair, proportionate and timely regulatory action with a view to guaranteeing that individuals' information rights are properly protected";- "Guide the Commissioner and our staff in ensuring that any regulatory action is targeted, proportionate and effective..."<sup>10</sup>
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2.84. The objectives of regulatory action are set out at page 6 of the RAP, including:
- "To respond swiftly and effectively to breaches of legislation which fall within the ICO's remit, focussing on [inter alia] those adversely affecting large groups of individuals".- "To be effective, proportionate, dissuasive and consistent in our application of sanctions", targeting action taken pursuant to the Commissioner's most significant powers on, inter alia, "organisations and individuals suspected of repeated or wilful misconduct or serious failures to take proper steps to protect personal data".
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2.85. The RAP explains that the Commissioner will adopt a selective approach to regulatory action.11 When deciding whether and how to respond to breaches of information rights obligations she will consider criteria which include the following:
"the nature and seriousness of the breach or potential breach"; "where relevant, the categories of personal data affected (including whether any special categories of personal data are involved) and the level of any privacy intrusion"; "the number of individuals affected, the extent of any exposure to physical, financial or psychological harm, and, where it is an issue, the degree of intrusion into their privacy"; "whether the issue raises new or repeated issues, or concerns that technological security measures are not protecting the personal data"; "the cost of measures to mitigate any risk, issue or harm"; "the public interest in regulatory action being taken (for example, to provide an effective deterrent against future breaches or clarify or test an issue in dispute)".12
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2.86. The RAP explains that, as a general principle, "more serious, high- impact, intentional, wilful, neglectful or repeated breaches can expect stronger regulatory action".13
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2.87. Pages 24- 25 of the RAP identify the circumstances in which the issuing of a Penalty Notice will be appropriate. They explain, inter alia, that in "... considering the degree of harm or damage we may consider that, where there is a lower level of impact across a large number of individuals, the totality of that damage or harm may be substantial, and may require a sanction." The RAP stresses that each case will be assessed objectively on its own merits. However, it explains that, in accordance with the Commissioner's risk- based approach, a penalty is more likely to be imposed in, inter alia, the following situations:
- "a number of individuals have been affected";- "there has been a degree of damage or harm (which may include distress and/or embarrassment)"; and- "there has been a failure to apply reasonable measures (including relating to privacy by design) to mitigate any breach (or the possibility of it)
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2.38. The process the Commissioner will follow in deciding the appropriate amount of penalty to be imposed is described from page 27 onwards. In particular, the RAP sets out the following five- step process:
a. Step 1. An 'initial element' removing any financial gain from the breach.
b. Step 2. Adding in an element to censure the breach based on its scale and severity, taking into account the considerations identified at section 155(2)-(4) DPA.
c. Step 3. Adding in an element to reflect any aggravating factors. A list of aggravating factors which the Commissioner would take into account, where relevant, is provided at page 11 of the RAP. This list is intended to be indicative, not exhaustive.
d. Step 4. Adding in an amount for deterrent effect to others.
e. Step 5. Reducing the amount (save that in the initial element) to reflect any mitigating factors, including ability to pay (financial hardship). A list of mitigating factors which the Commissioner would take into account, where relevant, is provided at page 11-12 of the RAP. This list is intended to be indicative, not exhaustive.
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3.4. Marriott acquired Starwood in September 2016. During the acquisition process, Starwood shareholders received 0.8 shares of Marriott, as well as $21 per Starwood common stock. After the acquisition, the Marriott and Starwood computer systems were kept
separate, and they remained separate throughout the relevant period. Marriott did, however, plan on integrating aspects of the Starwood network into the Marriott network over an 18- month period in order to create a single, unified network within Marriott's security footprint.
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3.2. Upon acquisition, but prior to decommissioning the Starwood network, Marriott made enhancements to the security of Starwood's existing IT network.
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background
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3.3. During the acquisition process, Marriott states that it was only able to carry out limited due diligence on the Starwood data processing systems and databases. For the avoidance of any doubt, the Commissioner is not making any finding of infringement in respect of the period between Marriott's acquisition of Starwood and the entry into force of the GDPR on 25 May 2018. Accordingly, the Commissioner has not determined whether or not it was possible for Marriott to conduct due diligence during a takeover. There may be circumstances in which in- depth due diligence of a competitor is not possible during a takeover.
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background
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3.4. This Penalty Notice concerns the extent to which, after the GDPR came into effect on 25 May 2018, Marriott adequately prepared the Starwood systems to protect personal data. In particular, it is necessary to assess whether the Attack disclosed a failure to ensure compliance with Articles 5.4(f) and 32 of the GDPR following its entry into force.
The planned integration of the Starwood and Marriott networks
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3.5. The integration of Starwood into the Marriott hotels group began following the acquisition. While this involved the transferring of data from the Starwood systems to the Marriott network, the systems accessed by the Attacker remained segregated from the Marriott network.
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background
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3.6. As a result, the Attack did not involve access to the wider Marriott network and the Attacker would not have had access to personal data that was processed only on non- Starwood systems. The planned migration and the decommissioning of the Starwood
systems was expedited by Marriott after discovery of the Attack and the decommissioning of the relevant Starwood systems was completed on 11 December 2018.
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3.7. What follows is a summary of the key stages of the Attack.
Pre- acquisition infiltration of the Starwood IT systems
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3.8. The Attacker installed a web shell on a device within the Starwood network on 29 July 2014. This device was used to support an Accolade software application. That application was used by Starwood to allow employees to request changes to any content of Starwood's website.
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background
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3.9. The installation of a web shell on the server gave the Attacker the ability to remotely access the system, therefore allowing for the accessing and editing of the contents of that system. This access was exploited in order to install Remote Access Trojans ("RATs") - malware which enables remote administrator control of the system. Administrator access allows a user to perform actions above that permitted by a normal user. As a result, the Attacker would have had unrestricted access to the relevant device, and any other devices on the network to which that administrator account would have had access.
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3.4.0. On an undetermined date, the Attacker installed and executed "Mimikatz". This is a post- exploitation tool which allows login credentials temporarily stored in the system memory to be harvested. It scanned the server for all the usernames and passwords stored in this manner in the system and allowed the Attacker to continue to compromise user accounts, which were secured using a mixture of single and multi- factor authentication. These accounts were then used to perform further reconnaissance and, ultimately, to run commands on the Starwood reservation database, as described below.
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3.11. On 15 April 2015, a file named "Reservation_Room_sharer.dmp" was created on a Starwood device. This file could have been created
by the Attacker with a view to exfiltrating all the data contained in the table at once. $\mathsf{e}^{6}$
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3.4.2. On 21 April 2015, a file named "Consumption_Roomtype.dmp" was created. This file could have been created by the Attacker with a view to exfiltrating all the data contained in this table at once. $\mathsf{e}^{7}$
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3.4.3. On 17 May 2016, a file named "reservation_Room_Sharer.dmp" was created. This file could have been created by the Attacker with a view to exfiltrating all the data contained in this table at once. $\mathsf{e}^{8}$
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background
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3.4.4. Following Marriott's acquisition of Starwood, on 31 December 2016 or 1 January 2017, $^{19}$ additional malware which searched devices for payment card data, known as "memory- scraping malware", was installed on multiple Starwood Devices. Marriott believes, but cannot be certain, that this action was carried out by a different attacker to the one responsible for the actions described immediately above. The memory- scraping malware was executed on 10 January 2017 on eight property management systems, but the malware was not successful in collecting payment card data from any of the devices. The eight properties involved were not in the European Union.
Continued Attack, post- acquisition and following the GDPR coming into force
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3.4.5. On 7 September 2018, the Attacker performed a "count" on the "Guest_Master_profile" table, which would have told the Attacker how many rows the table contained.
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background
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3.4.6. This count triggered an alert on the Guardiansystem placed on the database ("the Guardians Alert"). Such alerts were applied to tables which included card details. $\mathsf{e}^{0}$ The other tables mentioned above did not contain payment card information and were not protected by Guardiansoftware. Thus, no alarm could be triggered by the actions of the Attacker.
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3.4.7. The Attacker also exported the "Guest_Master_profile" table into a "dmp" file (as had previously occurred in relation to the other tables referred to above).
Discovery and reporting of the breach
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3.4.8. On 8 September 2018, Accenture, the company managing the Starwood Guest Reservation Base, contacted Marriott's IT team regarding the Guardium alert of the previous day. This was the first Guardium alert relating to the Attack that Marriott had received since its acquisition of Starwood.
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background
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3.4.9. On 10 September 2018, the "PP_Master" table was exported to a "dmp" file on the Starwood system.
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background
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3.4.10. Following the Guardium alert, on 9/10 September 2018, Marriott instigated its Information Security and Privacy Incident Response Plan. On 12 September 2018, Marriott began to deploy real- time monitoring and forensic tools on 70,000 legacy Starwood devices. The purpose of this measure was to monitor the local system and identify potentially malicious activity in real- time, with findings reported back to Marriott's central monitoring server.
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background
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