A Belgian banking organisation has been rebuked and threatened with sanctions by the EC for handing over data to the US.
The Society for Worldwide Interbank Financial Telecommunication SCRL (Swift) violated European Union and Belgian data privacy laws by turning over information to US authorities for terrorism investigations, an independent EC panel concluded. It should cease violating data protection laws or face sanctions, the panel said.
Swift, a cooperative owned by around 8,000 financial institutions, runs a messaging service that enables worldwide financial transactions between banks.
After the 11 September 2001 attacks, Swift responded to court orders to hand over messaging information to the US Treasury Department to track financial transactions by suspected terrorists. Press reports revealed the long-running operation earlier this year.
The panel, known as the Article 29 Working Group, said Swift's actions could undermine the financial stability of the payment system. "Any measure taken in the fight against crime and terrorism should not and must not reduce standards of protection and fundamental rights which characterize democratic societies," the panel said.
European data protection laws forbid the transfer of personal data outside the EU to countries that are considered to have weaker data protection measures. That list includes the US.
Swift, based in Belgium, keeps the same data in two information storage facilities, in the US and the Netherlands, which it says are each subject to local laws.
A spokesman for Swift said the organisation turns over specific subsets of data to the Treasury based on narrow court-ordered requests and doesn't allow indiscriminate access: "People have this misunderstanding that the US government has access to the totality of our traffic."
The company said it did not violate EU law in handing over the information because it obtained guarantees from the Treasury Department to protect the confidentiality of the limited sets of data turned over. The company was "clearly caught in the middle", it argued, trying to help with financial intelligence for terrorism investigations and trying to ensure data was protected.
The panel also called on financial institutions within the EU to notify clients how their personal data has been used and inform clients that US authorities could potentially have access to the data.
The panel's report will be studied by the Commission, a spokesman for the Directorate-General for Justice, Freedom and Security said Friday. The report is non-binding, however, the spokesman said.
Belgian authorities also conducted a two-month investigation into the matter, and concluded in September that Swift had violated EU and Belgian data privacy laws.