The new Personal Data Protection Law in El Salvador.
By Rebeca Galdámez – Consortium Legal.
I- Introduction
The impact of digitization has revolutionized the handling of personal data in various economic sectors, most notably the fintech sector. In this context, the approval of the Personal Data Protection Law (LPD) in the country, which came into force on November 23, 2024, marks a crucial regulatory milestone. This law establishes a series of obligations aimed at protecting people’s privacy and guaranteeing the proper processing of their personal data.
For the Fintech sector, whose operation largely involves the management of personal data, the LPD represents a significant challenge, but also an opportunity to strengthen its reputation and build trust among users. This article explores the main challenges and opportunities that this regulation brings for Fintech companies in El Salvador.
II- Main challenges for the Fintech sector
The implementation of the LPD represents a substantial change in the way that Fintech companies handle their users’ information. One of the biggest challenges presented by this new law is the management of and compliance with ARCO-POL rights. These rights, which cover access, rectification, cancellation, opposition, portability, oblivion and limitation, give holders unprecedented control over their personal data. Fintech companies must implement effective mechanisms that allow users to exercise these rights quickly and efficiently, which means establishing clear procedures for the rectification of inaccurate information or the deletion of data that is no longer necessary.
Another critical obligation is the appointment of a data protection officer, who will play an essential role in monitoring regulatory compliance and risk mitigation. This professional, whose appointment is required by art. 15 of the LPD, must not only supervise regulatory compliance within the organization, but also act as a point of contact between users, the authorities and the company itself. Likewise, they will oversee managing requests from data subjects and guaranteeing that the company’s operations are aligned with legal principles.
In the field of cybersecurity, Fintech companies are obliged to implement robust measures to protect the confidentiality, integrity and availability of personal data. These measures include the use of advanced technologies such as encryption, intrusion detection systems and restricted access protocols. Furthermore, they must be prepared to report any security breach within 72 hours of detection, in accordance with the provisions of art. 25. In addition, periodic audits are required to assess regulatory compliance, as well as training programs to ensure that all staff are aware of and correctly apply data protection measures.
III- Opportunities for the Fintech sector
Although the challenges are significant, the LPD also presents a unique opportunity for Salvadoran Fintech companies to position themselves as benchmarks for ethical and responsible innovation. Complying with the law will send a clear message to customers about the company’s commitment to protecting their privacy, which could translate into greater trust and loyalty on the part of users. This factor is essential in such a competitive sector.
Furthermore, by demonstrating ethics and transparency in the handling of personal data, they will stand out not only for the quality of their services, but also for their commitment to the protection of privacy. This could open doors to new collaborations and investment opportunities.
Compliance with the LPD also strengthens the international competitiveness of Salvadoran Fintech companies, preparing them to comply with global standards such as the European Union’s General Data Protection Regulation (GDPR). Complying with local regulations that reflect international principles facilitates expansion and global collaborations, strengthening the competitiveness of Salvadoran Fintech companies in an interconnected digital environment.
IV- Sanctions and consequences of non-compliance
Failure to comply with the LPD can result in considerable financial penalties, depending on the severity of the offense. Fines can range from 10 to 40 minimum wages for minor and serious offenses, respectively. In addition, the reputational consequences can be devastating, affecting customer relationships and business sustainability.
This reality underlines the importance of a proactive approach to compliance. Beyond avoiding sanctions, Fintech companies must integrate data protection as a strategic pillar in their business model.
V- Conclusion
The Personal Data Protection Law in El Salvador marks a turning point in the way Fintech companies must manage personal information. Although the challenges are significant, there are also invaluable opportunities to build trust, improve competitiveness and ensure expansion into international markets.
In an environment where data protection is no longer optional, but an ethical and legal imperative, Fintech companies can lead by example, adopting the LPD as a catalyst for responsible digital transformation. Far from being a burden, these regulations can become a strategic advantage for companies willing to prioritize privacy as a valuable asset for their sustainability and growth.
