European financial data will eventually stop being sent in bulk to the US, according to the European Parliament.
The parliament voted on Thursday to approve an agreement over the transfer of banking information to the US via the Swift data service.
The agreement, which is meant as a counter-terrorist measure, will see Europe analysing data on its own territory, according to a European Parliament statement.
The EU will build a European data-processing centre within 12 months, to start a programme similar to the US Terrorism Finance Tracking Program (TFTP), said the statement. The centre will allow the EU to transfer data to the US relating to a particular investigation.
The agreement prohibits US data-mining of any transferred data or using automated systems to profile people. An EU representative will be sent to the US to check whether the data is being used for counter-terrorism purposes. Europol will be able to block the transfer of data to the US if it thinks the requests are disproportionate, and any data that is sent over will be retained for a maximum of five years, in line with the EU Directive on money laundering.
However, six MEPs objected to the agreement on the grounds that the five-year data retention period is too long, arguing that the maximum retention period should be six months, in line with the European Data Retention Directive.
UK Independence Party MEP for London Gerard Batten also voted against the provision. Batten told ZDNet UK on Friday that he objected on the grounds that individual European governments had no choice in the matter of data transfer.
"This should be a national agreement entered into by sovereign states," said Batten. "The threat of terrorism is being used as a cloak to extend the power of the EU and interfere with the privacy of the individual."
The US and EU in June signed a preliminary accord over the transfer of banking data.