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How the Parliament wants to boost cybersecurity in the EU (interview)

Parliament want to better protect Europeans and businesses against growing cyber threats. Learn more in our interview with MEP Bart Groothuis.

As network and information systems become a central feature of everyday life, cybersecurity threats have expanded. They can cause financial damage and go as far as disrupting water and power supplies or hospital operations. Strong cybersecurity is crucial to protect people, to embrace the digital transformation and to fully grasp the economic, social and sustainable benefits of digitalisation.

On 11 November Parliament adopted its negotiating position on the revision of the directive on the security of network and information systems. We asked Groothuis (Renew, the Netherlands), the MEP in charge of the file, to explain what the Parliament wants.

What are the most prominent cybersecurity threats?

Ransomware is by far the most significant threat. It tripled worldwide in 2020 and we see another peak coming this year. Ten years ago, ransomware targeted individuals. Someone had to pay €100 or €200 to the hacker. Nowadays, the average payment is €140,000. Not only large companies, but also small enterprises are being attacked and they have to pay because they cannot operate otherwise.

It is also the most significant threat because it is an instrument of foreign policy for rogue states.
Ransomware
A type of malware that infects computer systems, preventing the victim from using the system and data stored on it. The victim usually receives a blackmail note by pop-up, asking for the payment of a ransom to regain access.
How does this ransomware pandemic affect the life of a citizen or company?

We see ransomware targeting nearly everything that offers services to citizens. It might be a local municipality, a hospital, a local manufacturer.

The Parliament and Council are working on cybersecurity legislation. The goal is to better protect these entities against these hackers. EU companies that provide essential or important services will have to take cybersecurity measures and governments need to have the capabilities to help these companies and share information with them and other governments.

What does Parliament want?

Parliament wants the legislation to be ambitious. The scope should be wide, we should cover and help entities that are vital to our way of living. Europe should be a safe place to live and do business. And we should not wait: we need this new legislation fast.

Why is speed important?

In cybersecurity, you need to make sure that you are not the weakest. EU businesses are already investing 41% less than companies in the US. And the US is moving fast; Biden is creating emergency legislation and you do not want to be in a situation where Europe becomes more attractive to ransomware hackers in comparison to other parts of the world. Investments in cybersecurity need to be made now.

The second reason is that there are problems in the cybersecurity community that need to be fixed as soon as possible. Cybersecurity professionals often have GDPR concerns: can they or can they not share cybersecurity data? There should be a solid legal basis to share cybersecurity data to help prevent cyberattacks.

What challenges could the Parliament face in the negotiations?

There will be debate on the scope, on which entities should be included, and we will have to discuss the administrative impact on companies. Parliament believes that the legislation should protect companies, but it should also be practical and doable; what can we reasonably ask? Another issue is the core of the internet, the root level domain name service. The European Commission and the Council want to bring this into the scope of the rules and regulate it. I very much oppose that, because Russia and China will want to do the same and we should keep the core free and open and retain our multi stakeholder model.

Why is it important to have common cybersecurity rules in all EU countries?

The basis of this legislation is the functioning of the internal market. It shouldn’t matter if you do business in Slovakia, Germany or the Netherlands. You want to make sure that there is a common level of cybersecurity requirements and that the country that you are in has cybersecurity infrastructure.

Cybersecurity: main and emerging threats in 2021 (infographic)

Cybersecurity threats have been on the rise, with the Covid-19 pandemic having a big impact. Check out our infographic to learn more.

The progress of digital transformation has inevitably led to new cybersecurity threats. Cybercriminals take advantage of the Covid-19 pandemic, in particular by targeting organisations and companies working remotely.

Parliament has adopted its position on a new EU directive that reflects how cybersecurity threats have evolved and introduces harmonised measures across the EU, including on the protection of essential sectors.

Main cybersecurity threats

During the pandemic, companies had to quickly adapt to new working conditions – and thus opened new doors and more possibilities for cybercriminals. According to the European Union Agency for Cybersecurity, there are nine prime threat groups:

Ransomware – attackers encrypt an organisation’s data and require payment to restore access
Cryptojacking – when cybercriminals secretly use a victim’s computing power to generate cryptocurrency
Threats against data – data breaches/leaks
Malware – a software, which triggers a process that affects a system
Disinformation/misinformation – the spread of misleading information
Non-malicious threats – human errors and misconfigurations of a system
Threats against availability and integrity – attacks that prevent the users of a system from accessing their information
Email-related threats – aims at manipulating people to fall victims to an email attack
Supply chain threats – attacking, for example a service provider, in order to gain access to a customer's data

Cryptocurrency dangers and the benefits of EU legislation

Why and how should the EU build crypto-regulation to foster innovation and protect users?

The use of crypto-assets and the technology behind them has provdn to be both immensely promising and problematic. The EU wants to help boost the development of these technologies and their use in the EU, while protecting users.

Risks of crypto-assets

Part of the attraction of crypto-assets is avoiding the need for a central register and institution, enabling safe and simple transactions between two parties without an intermediary. However, this, together with a lack of regulation- (crypto-assets are currently out of the scope of EU legislation - creates substantial risks.

Risks for consumers, companies and markets

When dealing with crypto-assets, people are not covered by EU consumer protection rules and are often not well informed about the risks, which could mean they lose money. The widespread use of crypto-assets without regulation could drive financial instability, market manipulation and financial crime. As transactions are largely anonymous, cryptocurrencies are widely used for criminal activities. In the wake of the Ukraine war, EU countries limited trade with crypto-assets for use in Russia or with a Russian entity.

Environmental impact

The technology uses huge quantities of electricity, resulting in a high environmental footprint. According to estimates, the energy consumption of bitcoin equals that of a small country.

Read more about the Green deal and the EU's actions against climate change

The benefits of new EU crypto-regulation

The EU is working on new rules to boost the potential of crypto-assets and curb the threats: Markets in Crypto-Assets (MiCA). MEPs have reviewed and amended the European Commission's proposal and in March 2022 decided to begin negotiations on the final shape of these rules with EU countries in the Council.

In order to encourage the development and use of these technologies, the new rules aim to provide legal certainty, support innovation, protect consumers and investors and ensure financial stability.

The rules cover transparency, disclosure, authorisation and supervision of transactions. MEPs want the issuing of some of the tokens to be supervised by the European Securities and Markets Authority and the European Banking Authority. Businesses dealing with crypto-assets will have to better inform consumers about risks, costs and charges. By regulating public offers of crypto-assets, the rules would ensure financial stability, while other measures tackle market manipulation, money laundering, terrorist financing and other criminal activities.

To reduce the high carbon footprint of crypto-currencies, MEPs are asking the Commission to prepare new rules to include any crypto-asset mining activities that contribute substantially to climate change in the classification system for sustainable activities.

After the MEPs negotiate the final shape of the bill with EU governments, it must be adopted by the Parliament as a whole as well as by EU countries.

The new rules are part of a wider Digital Finance package that supports the EU's digital transition by encouraging innovation while ensuring protection. In March 2022, Parliament adopted new rules to support testing of the distributed ledger technology in market infrastructures.

In April 2022, Parliament agreed to start negotiations with EU countries on rules that would allow the tracing and identification of transfers of crypto-assets, to prevent their use in money laundering, terrorist financing and other crimes.

Digital transformation: importance, benefits and EU policy

Learn how the EU is helping to shape a digital transformation in Europe to benefit people, companies and the environment.

The digital transformation is one of the EU's priorities. The European Parliament is helping to shape the policies that will strengthen Europe's capacities in new digital technologies, open new opportunities for businesses and consumers, support the EU's green transition and help it to reach climate neutrality by 2050, support people's digital skills and training for workers, and help digitalise public services, while ensuring the respect of basic rights and values.

In May 2021, Parliament adopted a report on shaping the digital future of Europe, calling on the European Commission to further tackle challenges posed by the digital transition and especially take advantage of the opportunities of the digital single market, improve the use of artificial intelligence and support digital innovation and skills.

Funding of the EU's digital priorities
Digital plays an essential role in all EU policies. The Covid crisis accentuated the need for a response that will benefit society and competitiveness in the long run. Digital solutions present important opportunities and are essential to ensuring Europe's recovery and competitive position in the global economy.

The EU's plan for economic recovery demands that member states allocate at least 20% of the €672.5 billion Recovery and Resilience Facility to digital transition. Investment programmes such as the research and innovation-centred Horizon Europe and infrastructure-centred Connecting Europe Facility allocate substantial amounts for digital advancements as well.

While the general EU policy is to endorse digital goals through all programmes, some investment programmes and new rules specifically aim to achieve them.

Digital Europe programme

In April 2021, Parliament adopted the Digital Europe programme, the EU’s first financial instrument focused specifically on bringing technology to businesses and people. It aims to invest in digital infrastructure so that strategic technologies can help boost Europe’s competitiveness and green transition, as well as ensure technological sovereignty.

It will invest €7.6 billion in five areas: supercomputing (€2.2 billion), arfitifical intelligence (€2.1 billion), cybersecurity (€1.6 billion), advanced digital skills (€0.6 billion), and ensuring a wide use of digital technologies across the economy and society (€1.1 billion).

Platform economy

Online platforms are an important part of the economy and people's lives. They present significant opportunities as marketplaces and are important communication channels. However, there also pose significant challenges.

The EU is working on new digital services legislation, aiming to foster competitiveness, innovation and growth, while boosting online security, tackling illegal content, and ensuring the protection of free speech, press freedom and democracy.

Read more on why and how the EU wants to regulate the platform economy

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PETER JOHNSON
Peter Johnson has been a solicitor for 47 years and is a partner in the firm Alexander JLO Solicitors

After gaining his law degree at the University of Cambridge, Peter worked at the international law-firm Herbert Smith in the City of London before leaving to open the first solicitors' office in Docklands and he now operates from water-front offices on the Isle of Dogs. He is a member of Resolution and undertakes private client work, commercial work and litigation in the High Court and County Court. Peter also advises both employers and employees and is a member of the Employment Lawyers Association. Peter's wide-ranging experience benefits those clients who face issues that cannot be pigeon-holed, whether the company director seeking a divorce, or worried about a challenge to the business, the Canary Wharf worker concerned to save his or her job, as well as those who are coping with the trauma of family and business disputes. As Senior Partner of the firm, Peter works closely on a particular matter with other members of his team whilst retaining the overall control and connection with any client. When he is not in the office he will always remain a phone call away for his clients - even when on his fishing boat on the Cornish seas!

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Alexander JLO firmly believes in a “hands-on” approach to the law backed by personal attention to detail. Our experienced solicitors offer a friendly service, and are dedicated to providing highly professional and successful services by gaining an accurate understanding of each customer’s individual case and objectives. Our client-base includes small and medium-sized companies, large multinationals, as well as individuals.

At Alexander JLO we have a client-for-life philosophy that is instilled in all our employees from the day they join. All of our solicitors and lawyers are trained to the highest standards in their speciality area and are dedicated to following best practices, to ensure that we offer legal services that not only satisfy but delight our customers. We are proud to be members of Resolution and are accredited by the Law Society as Family Law specialists. Alexander JLO is delighted to be listed in the Good Lawyer Guide for a number of areas. View our entry here.

Our success and customer satisfaction is evident through the independent feedback our solicitors receive via the Good Lawyer Guide website. At Alexander JLO it’s all about offering an efficient, responsive, friendly, and high-quality service and it’s these four differentiating factors that encourage our clients to come back to us time after time for different services.