Understanding eIDAS and Compliance
The reliance on electronic transactions and documentation has increased considerably Consequently, regulations that govern the trust, validity and security of these processes have become increasingly important. One paramount piece of legislation in the European Union is eIDAS – short for Electronic Identification, Authentication, and Trust Services. For compliance managers, understanding the eIDAS regulation is critical to ensuring that electronic transactions are both legally binding and secure. Introduction to eIDAS The eIDAS regulation ensured that electronic interactions across the EU member states are as secure, reliable, and trustworthy as traditional paper-based processes and that these transactions are accepted as legally binding in all member states. It provides a standardised framework for electronic identification and trust services for electronic transactions within the internal EU market. A “trust service” refers to an electronic service typically offered for a fee, which includes: – The creation, verification, and validation of electronic signatures, electronic seals, electronic time stamps, electronic registered delivery services, and related certificates. – The creation, verification, and validation of certificates for website authentication. – The preservation of electronic signatures, seals, or certificates related to these services. The 2024 revision of eIDAS that came into force in May of that year, added a couple of new Trust Services: Electronic Archiving for guaranteeing the authenticity and long-term availability of documents and data Attribute Attestation to verify credentials or attributes shared by a person These are not all the Trust Services as defined by eIDAS. More importantly, the new version of eIDAS now also provides the framework for the European Digital Identity Wallet, which will rely on the infrastructure provided by the Trust Services to create a true paperless economy. In short, eIDAS paves the way for the increased use of digital services and aims to foster trust in the online environment. It standardises the types of electronic signatures, seals, and records, making cross-border business smoother and more reliable. Explanation of the eIDAS Regulation and Its Objectives The core objectives of eIDAS are to enhance trust in electronic transactions and ensure the digital market’s smooth functioning. This is achieved by: Providing legal certainty for electronic transactions and data Implementing interoperability standards to facilitate seamless cross-border transactions in the digital single market. Creating a safe and secure technical infrastructure for digital transactions. Requirements for Qualified Electronic Signatures Under eIDAS, the highest standard of electronic signature is the Qualified Electronic Signature (QES), which requires a higher level of security and identity verification. The primary criteria include: The use of a qualified signature creation device. The involvement of a qualified trust service provider to certify the signature’s validity. The signature must be linked to the signer to make any subsequent changes to the data detectable (data integrity). Compliance Considerations Any company that needs the highest legal guarantees regarding its signature processes can use qualified electronic signatures. Due diligence and adherence to regulation are imperative for compliance managers when opting for QeS. You must ensure your electronic signature solution conforms to the eIDAS requirements while operating within the EU. Points to consider include: Understanding the requirements of eIDAS. Evaluating current practices and systems in place. Implementing solutions that meet the stringent requirements for QES. Keeping proper documentation and records to demonstrate compliance. Qualified Electronic Signature Use Cases: Business Transactions: When finalizing significant business transactions, such as signing contracts for mergers and acquisitions, joint ventures, or partnerships, a qualified electronic signature ensures the highest level of security and legal recognition. Legal Documents: For signing legal documents, such as testaments, power of attorney, or court filings, a qualified electronic signature provides a robust authentication method that can be crucial for legal validation and compliance. Government Services: When interacting with government services, such as filing taxes, submitting regulatory documents, or applying for permits and licenses, using a qualified electronic signature can streamline processes and ensure document integrity. Employment Contracts: Employers and employees can use qualified electronic signatures to sign employment contracts, non-disclosure agreements, and other HR-related documents, ensuring authenticity and reducing the risk of forgery. Healthcare Consents: In the healthcare sector, qualified electronic signatures can be used for signing patient consent forms, medical records, and insurance claims, ensuring that sensitive information is securely handled and authenticated. Real Estate Transactions: When dealing with real estate transactions, such as signing purchase agreements, mortgage documents, or rental contracts, a qualified electronic signature can provide the necessary security and legal standing. Intellectual Property Agreements: For intellectual property matters, such as patent applications, trademark registrations, or licensing agreements, a qualified electronic signature can help protect the interests of all parties involved. Financial Services: In the financial sector, qualified electronic signatures are essential for signing loan agreements, opening bank accounts, executing investment trades, and other financial instruments, ensuring compliance with stringent regulatory requirements. Corporate Resolutions: When a board of directors or corporate officers need to sign resolutions, meeting minutes, or other official documents, a qualified electronic signature guarantees authenticity and legal acceptance. Supplier and Vendor Agreements: Businesses can use qualified electronic signatures to ensure the authenticity and enforceability of agreements with suppliers and vendors, such as purchase orders, service contracts, and delivery confirmations. Conclusion eIDAS is a digital guideline defining the trust and security standards in electronic transactions. Adherence is important for compliance and building confidence in digital signatures and your organisation’s overall digital transformation plan. It is crucial to stay informed about legal requirements and technological developments to handle the challenges of digital compliance effectively. Dedicate yourself to continuous learning and stay updated on best practices to keep your organisation secure, compliant, and at the forefront of the digital landscape. Remember, eIDAS is not just a legal requirement; it’s also a driving force for making the digital economy more accessible, transparent, and secure.
Introduction to digital signatures
Legal and financial transactions increasingly happen online, and as such, electronic signatures become essential for businesses worldwide. Compliance managers are facing the challenge of understanding the legal context and how to implement these technologies while meeting legal standards and ensuring smooth operations. This article is the first part of three to explore electronic signatures and their importance in modern business. Overview of Electronic Signatures Definition and Importance in Modern Business An electronic signature, as any signature, represents a person’s intent to agree to the contents of a document or data set. Electronic signatures are handy because they can replace handwritten signatures, facilitating faster and (more) secure document approval processes for businesses worldwide. The need to legally sign documents online is clear. However, verifying the authenticity of these signatures can be challenging, as controlling the identity of the person signing becomes more complex. Brief History and Evolution of Electronic Signatures The concept of electronic signatures isn’t novel—it dates back to the telegraphy era, when parties used coded exchanges as a form of agreement. However, the significant evolution of electronic signatures only transpired with the proliferation of personal computers and the Internet. One of the major milestones was the passage of legislative acts, such as the ESIGN Act in the United States and eIDAS regulation in Europe, which granted legal recognition to electronic signatures. These laws were pivotal in adopting e-signatures in day-to-day business transactions—Fast-forward to today, where legal signatures need to adhere to multiple legislation and thus requirements. Types of Electronic Signatures Simple Electronic Signatures vs. Advanced Electronic Signatures Not all electronic signatures are created equal. There are essentially three types: An electronic signature refers to “data in electronic form which is attached to or logically associated with other data in electronic form and which is used by the signatory to sign. This means that even something as basic as typing your name at the end of an email or checking a box can be considered an electronic signature. An advanced electronic signature, according to eIDAS Article 3, includes additional features: – It is uniquely linked to and capable of identifying the signatory. – It is created in a manner that ensures the signatory has control over it. – It is connected to the document in such a way that any alterations to the data are detectable. The most commonly employed technology to achieve these features is a public-key infrastructure (PKI), which uses certificates and cryptographic keys. A qualified electronic signature, as defined by eIDAS Article 3, is an advanced electronic signature that also: – Is created using a qualified signature creation device. – Is based on a qualified certificate for electronic signatures. A Qualified Electronic Signature guarantees the signatory’s identity, confirming their true identity and preventing unauthorised usage. The biggest difference with an Advanced Signature, is that a Qualified Electronic Signature gives elevated levels of legal certainty, with reversal of the burden of proof and non-repudiation: A QES automatically gets the same legal value as a signature on paper. Understanding the differences in legal standing is critical for compliance managers. While SeS are convenient for less critical documents, AeS and QeS offer higher security levels for more important documents, providing more robust protection against forgery and disputes over validity. In some cases, the law requires you to sign using a QES. Legal Framework Compliance managers must familiarise themselves with the legal frameworks governing electronic signatures. GDPR, for instance, impacts how personal data is collected during the signing process, requiring privacy-conscientious practices. On the other hand, the eIDAS regulation in the EU creates a framework to provide Trust and Security for electronic identification and trust services, including electronic signatures, for secure and seamless electronic transactions across member states. Benefits and Use Cases Advantages of Using Electronic Signatures The benefits of integrating electronic signatures into business operations are numerous: Examples of Common Use Cases Across Industries Every industry can leverage the advantages of electronic signatures: Final Thoughts Understanding electronic signatures is non-negotiable for compliance managers navigating the complexities of legal frameworks and technological advancements. By knowing their types, legal implications, and benefits, you can make informed decisions that protect your organisation while boosting efficiency and productivity. Electronic signatures are not only the present but also the future of business transactions. Consider the insights provided as your springboard into deeper explorations of regulatory and practical aspects of electronic signatures. Continue learning about digital signatures in the next chapter.