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29th Mar 2024

Finance chiefs blame 9/11 for EU bank snoop affair

Belgian financial company SWIFT and the European Central Bank (ECB) have told MEPs they did nothing wrong in a secret deal to send European bank data to the US, with Washington's war on terror putting increasing pressure on EU civil liberties since the 9/11 terrorist attacks.

"We are still convinced we conformed with European laws," SWIFT finance boss Francis Vanbever told MEPs in a hearing on Wednesday (4 October), calling for an international convention to clarify data protection rules after Belgium in September said SWIFT violated EU law while trying to conform with a US subpoena on its American branch.

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The SWIFT scandal broke in the New York Times in June, when a leak revealed that the Belgian firm - which manages financial transfers from all over Europe - passes information in almost-real time to US intelligence agents, who scan long lists of European bank transfers looking for names of suspects in ongoing terrorist investigations.

"This [US subpoena] was done in October 2001 - you can imagine what the US judge's reaction would have been if we had refused, they would have asked for all data, so we took the better path," Mr Vanbever explained, adding that under a secret "memorandum of understanding" with the US, any bank data transfer is surrounded by safeguards on use.

"There is no question of the US getting a competitive advantage [via SWIFT-related industrial espionage], it can only be used against terrorist financing, not even other crimes," he added. "You can never be 100 percent sure, but we have done everything we could to limit the risks to an absolute minimum."

Trichet puts terrorism first

The SWIFT position was backed up on Wednesday by ECB president Jean-Claude Trichet, with the ECB itself having drawn fire for keeping its knowledge of the SWIFT deal quiet from the European Commission - a move that risked damaging the privacy credentials of EU banks.

"We know terrorist activity has an impact on financial stability, because we all experienced 9/11," Mr Trichet stated. "We are not dealing with something that happened in 2001, we are dealing with something that is still an issue today," he added, saying "there is a case" for forging a global agreement on bank data and the war on terror.

"People don't like it, but actually this house can't impose EU law on the US," British socialist MEP Michael Cashman stated amid heckles from colleagues. "We should stop arguing and start negotiating [on an international bank data agreement]."

But most MEPs rejected the pro-US line, complaining that the US security agenda is hijacking European rights and that nobody is taking responsibility for a situation in which US agents and SWIFT employees poke about in private financial transactions with no right of legal redress or notification for the European citizens to whom the data belongs.

Following the hearing, MEPs decided to set up an ad-hoc working group to look into the SWIFT questions, bringing together cross-party members of the European Parliament's civil liberties and economic affairs committees.

US law more important than EU

"It is not a case of a conflict of two legal regimes, it is a case of one jurisdiction, the US, taking precedence over another, the European jurisdiction," Greek socialist Stavros Lambrinidis stated in an emotional address. "The memo of understanding [governing privacy safeguards agreed by the US and SWIFT] should be made public and it should be made public now."

The European Commission - which says it knew nothing and has not issued any critical statements on SWIFT - also came in for flak for its supine acceptance of the bank snoop scheme, with justice commissioner Franco Frattini and president Jose Barroso recently pushing for tougher US-type powers for Brussels in Europe's own anti-terror campaign.

The SWIFT affair has parallels in a current EU-US dispute over which types of personal data [PNR] must be given to the US on European passengers flying to the states. European airlines alerted EU authorities to increased demands for information in a case that ended up in the European Court of Justice.

"I find it remarkable that the airline authorities did notify the EU authorities, but the European Central Bank did not," Dutch liberal Sophie in 't Veld said. "I have a feeling that the phone companies will be next," she added, raising the question of how EU phone data will be shared with international partners.

The European Parliament is also chasing information on NGO allegations that the CIA has illegally kidnapped European citizens suspected of terrorism and kept them in secret prisons, or flown them to third countries which practice torture, with the full collusion of EU member state governments.

Meanwhile, the EU is cracking down on terror internally with a recent new bill requiring phone and email companies to store personal phonecall data for police use. The European Commission plans to spend €540 million next year on counter-terror projects such as stopping people discussing bomb-making techniques on the internet.

European bank urges US to clarify snooping activity

The European Central Bank has called on the EU and the US to urgently clarify the line between data protection and fighting terrorism, saying there is currently no alternative to the SWIFT money transfer system where the US has received personal information on EU citizens since 2001.

SWIFT broke EU data laws, panel says

Belgian money transfer company SWIFT violated EU data protection laws when it gave US intelligence information on millions of private European financial transactions, an independent EU panel has said, calling on the firm to immediately halt the data transfer.

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