Any time an International currency transaction occurs, banking institutions connect to the SWIFT network, which identifies the source and details of a transaction. The data is then stored on network servers based in Switzerland and the U.S. The SWIFT network is used by over 8,000 different banks around the world. The infrastructure is an ideal way for intelligence agencies to track terrorist financing and has been the main instrument used to investigate such funding since 9/11. The U.S. had direct access to European transactions immediately after the attack. Since then, that agreement has expired and new negotiations implementing a long term agreement are underway. In the mean time, the U.S. and other countries needed an interim solution.
The EU announced the rejection of an interim agreement and direct access of the SWIFT network by U.S.;
Parliament refused on Thursday to give its consent to the EU's interim agreement on banking data transfers to the USA via the SWIFT network, amid concerns for privacy, proportionality and reciprocity. This move renders the text signed between the US and the 27 EU Member states legally void. MEPs propose to negotiate a new agreement. The resolution rejecting the agreement was approved by 378 votes to 196, with 31 abstentions. It also asks the Commission and the Council to initiate work on a long-term agreement with the USA on this issue. MEPs reiterate that any new agreement must comply with Lisbon Treaty requirements, and in particular the Charter of Fundamental Rights.
The use of the SWIFT network offered fast and unencumbered access to financial data to track terrorist organizations and who they were financed by. Clearly there are concerns since data is collected without reasonable grounds for search. President Jerzy Buzek of the European Parliament explained why it was rejected;
"The majority view in the European Parliament is that the correct balance between security, on the one hand, and the protection of civil liberties and fundamental rights, on the other, has not been achieved in the text put to us by the Council," said Jerzy Buzek.
The U.S. and other countries have other options, such as the use of existing bilateral Mutual Legal Assistance agreements for investigative purposes. These legal avenues are successfully used for terrorism intelligence but take time and potentially delay action. The elimination of direct access to the SWIFT network suggests that agencies outside the control of the U.S. would be made aware of targeted individuals the U.S. wishes to track and monitor. Intelligence organizations are not accustomed to sharing their investigation information or explain why they are tracking certain individuals.
A key concern for the EU parliament is how the SWIFT network data is used. Financial information analysis include collecting and sourcing entire datasets of financial background information that then are run through analytical software programs in which the datasets are analyzed and processed. This automatically puts all the information into categories including name, amount of the transaction and locations (even if that person is not a target of any specific query) and stores it in their systems - permanently. The MEPs believe that is in violation of several sections of the Lisbon Treaty concerning human rights.
There may be other reasons that renewal and negotiation of an agreement has been halted. The EU countries are still picking up the pieces from the financial meltdown ignited by Wall Street in 2008. Banking reform between the U.S. and Europe has not brought about any changes or agreements. At the recent G7 Finance meeting held in Iqaluit, Canada, the meetings focused on economic recovery rather than reforms. The EU may be conveying its displeasure on the lack of progress regarding International financial regulatory reform which Europe and other countries have demanded. A key reason why renewal was not reached was the lack of reciprocity.