EU concerns for US plans to increase the amount of bank transfer data

By EDRi · October 6, 2010

This article is also available in:
Deutsch: [EU-Bedenken über US-Pläne zur Ausweitung des Zugriffs auf Bankdaten |]

The EU Commission and MEPs have requested clarifications from US
Administration regarding the plans to extend existing anti-terrorism
programs targeting bank transfers which would make the EU-US so-called Swift
agreement invalid.

The Washington Post announced on 27 September 2010 that the Obama
administration wanted to require U.S. banks to report all electronic money
transfers into and out of the country thus helping the authorities in
spotting transfers that might finance terrorist attacks. The expanded
financial data would allow anti-terrorist agencies to better understand
normal money-flow patterns in order to track down abnormal activities.

According to the Financial Crimes Enforcement Network’s (FinCEN) rulemaking
proposal, the US Financial institutions will be required to report to the
Treasury Department the smallest transfers. Presently, only transactions in
excess of 10 000 USD and others transactions considered as suspicious are

US authorities plan to gather information about 750 million transfers per
year into a database that will be used by law enforcement and regulatory
agencies. The data attached to such transfers usually include the name,
address and account number of the sender and recipient and for money-service
businesses, a driver’s license or passport number. The proposal also
requires the banks to provide the Social Security numbers for all
wire-transfer senders and recipients on an annual basis.

“By establishing a centralized database, this regulatory plan will greatly
assist law enforcement in detecting and ferreting out transnational
organized crime, multinational drug cartels, terrorist financing and
international tax evasion,” was the explanation given by James H. Freis Jr.,
director of FinCEN.

FinCEN’s proposal comes as a result of the requirements of the Intelligence
Reform and Terrorism Prevention Act of 2004 which asked the Secretary of the
Treasury to study the feasibility of requiring such financial institutions
as the Secretary determines to be appropriate to report to the Financial
Crimes Enforcement Network on certain cross-border electronic transmissions
of funds, if the Secretary determines that reporting of such transmissions
is reasonably necessary to assist the efforts of the Secretary against money
laundering and terrorist financing.

This move has created great concern in the EU. “We urgently seek
clarifications from the US if these plans are an infringement of the Swift
agreement and the EU commission promised to demand further information on
it,” stated MEP Sophie in’t Veld after a closed-door meeting with Commission
officials on 27 September.

Under the present Swift agreement that came into force on 1 August 2010, US
officials can request European data relevant to a specific terrorist
investigation from Swift but the request must be approved by the Europol,
EU’s police co-operation unit, and has to meet certain requirements.
However, in view of the new US plans, the transactions between the European
and USA banks would be captured even if there is no substantiated need.

“We see so many data transfers – passenger name records, Swift data,
credit card information connected to the travel fee – that we are wondering
where all this ends,” stated Sophie in’t Veld who added “We are all getting
a bit tired of being taken by surprise all the time. The US is our friend
and ally, so we shouldn’t be treated this way.”

The plans are criticised in the USA as well. “This regulation is outrageous.
(….) I believe you need to show some evidence of criminality before you
are granted unfettered access to the private financial affairs of every
individual and company that dares to conduct financial transactions
overseas,” said lawyer Peter Djinis, former FinCEN executive assistant
director for regulatory policy.

Money transfers could face anti-terrorism scrutiny (27.09.2010)

FinCEN Proposes Regulatory Requirement for Financial Institutions to Report
Cross-Border Electronic Transmittals of Funds (27.09.2010)

MEPs demand explanation on US plan to monitor all money transfers (28.09.2010)