European Union, U.S. to share banking data to fight terrorism

The European Union has reached an agreement with the United States that will allow European bank data to continue to be shared for counterterrorism purposes, but only after liberal members of parliament secured stronger privacy guarantees.

Under a five-year agreement signed Monday by the European Council, the E.U.'s governing body, U.S. officials can request European financial data relevant to a specific terrorist investigation if they substantiate the need for the data.

The European Parliament is expected to approve the deal by a comfortable margin when it votes on it next week, lawmakers said. The deal would take effect Aug. 1.

"For us it was an exercise of damage limitation," said Sophie in 't Veld, a Liberal Democrat member of the European Parliament from the Netherlands, who said she would vote for the pact.

Privacy concerns had prompted the European Parliament in February to reject a proposal to extend the information-sharing. But in recent weeks, a bloc of Liberal Democrats pushed for concessions from the European Council and the United States.

Under the deal, the United States would be able to retain financial data for five years, and the program would be monitored by an independent overseer. The United States must delete or correct inaccurate data and grant redress in U.S. courts if an individual's financial or personal information is abused.

The data in question consist of financial "messages" between banks that describe transactions such as wire transfers between two individuals' accounts. They might include names, addresses and account numbers.

The U.S. government gained access to European financial data shortly after the Sept. 11, 2001, attacks under a secret George W. Bush administration program to track terrorist financing. The program was disclosed in 2006 by the New York Times, generating significant controversy in Europe.

Apart from the U.S.-E.U. deal, European officials plan on setting up a new continent-wide system with legal authority and technological ability to filter financial data. If that system is not set up in three to five years, Europe may end the bulk transfer of financial data to the United States.

In the meantime, Europe will continue to give the United States data on transactions stored in Europe and maintained by a Brussels-based bank consortium, the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.

"Currently, U.S. authorities submit a request for a needle and we send them the whole haystack," in 't Veld said. "In the future, we will no longer send the entire haystack. If the Americans are looking for a needle, we will find the needle and send it to the U.S. authorities."