Navigating data sovereignty in Canada: ifonica’s CTO, Mehdi Nezarati answers some key questions
As the digital landscape evolves, the conversation around data sovereignty has become more important for Canadian businesses. With the proliferation of international operations and the ever-present concerns of data privacy and security, organizations are closely examining where their data lives and who has authority over it.
As a leading Canadian data center provider, we wanted to shed light on this complex topic and sat down with Mehdi Nezarati, CTO of ifonica, to answer some of the more pressing questions on the minds of business leaders today.
Interview: Data sovereignty in Canada with ifonica’s CTO, Mehdi Nezarati
ifonica Insights: Let’s start with a foundational question. There’s a lot of talk about data sovereignty in Canada. What is the actual legislative landscape in 2025? Are Canadian businesses required by law to keep their data within the country’s borders?
That’s an excellent first question, as there are many misconceptions. For most private sector businesses in Canada, the answer is no, there is no blanket law mandating that all data must be stored within Canada. Our primary federal privacy legislation, the Personal Information Protection and Electronic Documents Act (PIPEDA), is based on an accountability model. This means that an organization remains responsible for the protection of personal information, even if it’s transferred to a third-party processor outside of Canada.
However, this doesn’t mean it’s a free-for-all. Certain provinces have specific requirements. For instance, British Columbia and Nova Scotia have legislation that restricts public sector bodies from storing personal information outside of Canada. More significantly, Quebec’s Law 25, which has drawn comparisons to the EU’s GDPR, imposes stringent conditions on cross-border data transfers, requiring a detailed assessment to ensure the data will be adequately protected. The proposed federal Bill C-27, if passed, aims to further modernize and strengthen our privacy framework, which could have implications for data handling practices. So, while it’s not a universal mandate, the legal and regulatory tide is sure to flow toward greater data protection and localization.
ifonica Insights: Given that there isn’t a strict, all-encompassing mandate for private companies, what are the tangible business advantages for a company to choose a Canadian data center?
That’s the heart of the matter for many of our clients. The decision to host data in Canada often transcends a simple legal checkbox; it’s a strategic business decision. The primary benefits we see are improved performance and lower latency for Canadian customers, enhanced security and critically, building trust with their client base.
A perfect example of this is one of our clients, a large Canadian hotel chain with a global footprint. They have hotels in over 40 countries and booking offices in the U.S., Europe and Asia, but they have made the strategic decision to keep all of their customer data—booking information, loyalty program details, and personal preferences—within our Canadian data centers.
Customer use case: A Canadian hotel chain keeping their data in Canada
The Challenge: A Canadian hotel chain was expanding internationally and using a mix of cloud services with data centers located in various global regions. This created a complex web of compliance issues, particularly with the varying privacy laws in each region. They were also concerned about the perception of their brand, which is built on a foundation of Canadian trust and hospitality. Their marketing team found that a growing number of their Canadian and even European guests were asking where their data was being stored.
The Solution: They decided to combine their primary customer data storage and processing within our Canadian facility. This wasn’t just about data residency; it was about data sovereignty and brand alignment.
The Benefits:
- Simplified Compliance: By centralizing their data in Canada, they streamlined their compliance with PIPEDA and Quebec’s Law 25. This significantly reduced the legal and administrative overhead of managing multiple data privacy regimes.
- Enhanced Customer Trust: The hotel chain now actively markets their commitment to keeping their guests’ data within Canada. This has resonated strongly with their customer base, who view it as a mark of respect for their privacy and a tangible benefit of their loyalty.
- Improved Performance: For their significant Canadian customer base, accessing booking information and their loyalty profiles became faster and more reliable due to the lower latency of accessing data stored domestically.
- Risk Mitigation: While their international offices still access this central data repository, the core information is subject to Canadian privacy laws, which are well-regarded globally. This provides a stable and predictable legal environment for their most sensitive asset: their customer data.
This case demonstrates that choosing a Canadian data center is a proactive strategy to enhance brand value and mitigate risk, regardless of a strict legal obligation.
ifonica Insights: That’s a compelling use case. It touches on the idea of not just where the data is, but who can access it. This brings up a major concern for many international companies: the US CLOUD Act, which can potentially compel US-based companies to provide data to US authorities, even if that data is stored in Canada. How does a Canadian data center provider address this challenge of “true” data sovereignty?
You’ve hit on the most nuanced and critical aspect of this entire discussion: the difference between simple data residency and true data sovereignty. Storing data in Canada with a US headquartered hyperscale cloud provider doesn’t necessarily shield it from foreign laws like the CLOUD Act. This is a major concern for our clients, especially those in sectors with highly sensitive information like finance, healthcare, and legal services.
Our approach to providing true data sovereignty is multi-faceted:
- Canadian Ownership and Operation: This is the foundational element. As a Canadian-owned and operated company, we are subject only to Canadian law. Our legal jurisdiction is clear, and we have no obligations to foreign governments. This is a critical distinction that we emphasize to all our clients. When a client partners with us, they are ensuring that their data is not only resident in Canada but also under the legal sovereignty of Canada.
- Robust Contractual Safeguards: Our contracts are explicit about our commitment to protecting our clients’ data and our legal obligations under Canadian law. We work with our clients to ensure they have the necessary documentation to demonstrate their due diligence in protecting their data.
- Advanced Security and Encryption: We encourage and provide robust encryption solutions, both for data at rest and in transit. This means that even in a hypothetical scenario where access was compelled, the data would be rendered unusable without the client’s encryption keys. This puts the control back in the hands of the data owner.
- Transparency: We are transparent with our clients about our corporate structure, our operational procedures, and the legal framework under which we operate. This allows them to make a fully informed decision and confidently articulate their data governance strategy to their own customers and regulators.
Ultimately, while no solution can offer an absolute guarantee against all theoretical risks, choosing a Canadian owned and operated data center provider offers the highest possible level of data sovereignty within Canada, significantly reducing the risks associated with foreign legislation and providing peace of mind to businesses and their customers.
At ifonica, we’re dedicated to helping our customers navigate the complex world of data sovereignty. Our solutions are designed to ensure that your data remains secure and compliant, no matter where it’s stored.
Talk to an ifonica expert about how to keep your data in Canada
