Last June American newspapers revealed that the Belgium-based Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, has provided the CIA with data on financial transactions for over four years as part of the war against terrorism in the US. Probably the Bush administration decided to go to SWIFT after certain banks turned down their requests for information.

This news stirred up a tempest in the United States and in the European Union. But is there a real cause for concern here?

According to various sources, SWIFT has granted the US Department of the Treasury and the CIA access to data concerning millions of financial transactions involving € 6 billion daily at the request of the US authorities. If we think that up to 12.7 million messages about money transfers, between more than 7,800 banks and financial brokers in over 200 countries, pass through SWIFT every day, it is self-explanatory that watching SWIFT means tracking a huge amount of data.

The CIA access to large amounts of confidential financial information, including names and account numbers of those sending and receiving funds, causes concerns about legal and privacy issues since the potential for abuse is enormous.                                 

It is not surprising, however, that according to US Treasury Department Under-Secretary, Stuart Levey, the data provided by SWIFT “has provided us with a unique and powerful window into the operations of terrorist networks and is, without doubt, a legal and proper use of our authorities.”

But let’s pause for a moment and try to see where things stand. 

The SWIFT-CIA special program is a significant departure from common practice in how the US government acquires Americans' financial records. Treasury officials did not seek individual court-approved warrants or subpoenas to examine specific transactions, instead relying on broad administrative subpoenas for millions of records from SWIFT.

In a press release on June 26, 2006 the Belgium National Bank (BNB), which is the main supervisor on SWIFT and, in turn, is overseen by the Belgian Ministry of Finance, acknowledged that it knew of the transfers, but claimed it could do nothing about them because its primary task is to oversee the soundness of financial transactions, not that of data transfers. According to press reports, the Belgian finance minister was informed about the monitoring 'informally' in April 2006.

In an early statement on the data transfer program set up between SWIFT and the CIA, an EU Commission representative said that this was not a breach of EU law since "the data protection directive does not apply to data transfers for security purposes" and, furthermore, "it does not apply to transfers from a private entity to a state, but only between states".

The EU Parliament did, however, adopt a resolution on July 6, 2006 asking EU governments, the Commission and the European Central Bank "to explain fully the extent to which they were aware of the secret agreement between SWIFT and the authorities of the US".

The BNB has recently released a statement on compliance outlining SWIFT's involvement with the CIA and the background to the data transfer (the statement is available on www.swift.com). According to the statement, "SWIFT is not a bank, nor does it hold accounts of any customers... SWIFT takes its role as a key infrastructure in the international financial system very seriously and cooperates with authorities to prevent illegal uses of the international financial system. Where required, SWIFT has to comply with valid subpoenas".

The compliance document explains that following the terror attacks of September 2001 in the US, SWIFT responded to compulsory subpoenas for limited sets of data from the Office of Foreign Assets Control of the US Department of the Treasury. The statement goes further: "Our fundamental principle has been to preserve the confidentiality of our users’ data while complying with the lawful obligations in countries where we operate. Striking that balance has guided SWIFT through this process with the United States Department of the Treasury. It is more than likely that their office of Terrorism and Financial Intelligence, which was established on 28 April 2004, is involved."

According to the statement, SWIFT negotiated with the US Treasury over the scope of the subpoenas and received "significant protections and assurances as to the purpose, confidentiality, oversight and control of the limited sets of data produced under the subpoenas. Independent audit controls provide additional assurance that these protections are fully complied with".

The document also makes clear that all actions have been undertaken with advice from international and US legal counsel and according to the procedures on compliance established by the SWIFT Board. In addition, SWIFT confirmed to have reported the matter to its supervising senior committee which is made up of the G10 central banks.

So SWIFT was doing the right thing...

In the fight against international terrorism, of course, the arsenal used cannot be limited to conventional weapons of warfare. The fact that the confidential financial data from SWIFT is obtained by the US Department of Treasury and then passed over the CIA for analysis and dissemination raises, however, a number of crucial legal and privacy issues.

Actually, the subpoenas, to which SWIFT refers in its compliance statement, have administrative nature as they come from the US Department of Treasury (the parent of the US Financial Crimes Enforcement Network which collects and analyzes all suspicious activity reports from banks in the US). Furthermore, the US Department of Treasury involved the CIA which, in principle, is not an investigation agency.

According to the National Security Act which established the CIA in 1947, the role of the CIA is to collect "intelligence through human sources and by other appropriate means, except that it shall have no police, subpoena, or law enforcement powers or internal security functions". Its responsibilities include the correlation and assessment of intelligence related to national security and providing appropriate dissemination of such intelligence. The CIA, consequently, has no powers of subpoena but it is responsible for assessing and disseminating intelligence.

Having said that, however, it must be highlighted that according to a statement on the CIA’s website, 'As changing global realities have re-ordered the national security agenda, the CIA has met these challenges by creating special, multi-disciplinary centers to address high-priority issues, such as non-proliferation, counter-terrorism, counter-intelligence, international organized crime and narcotics trafficking, environment, and arms control intelligence". The statement reads also that the CIA forms "stronger partnerships between the several intelligence collection disciplines and all source analysis" and takes an 'active part in intelligence community analytical efforts and produces analysis on the full range of topics that affect national security'.

This is an increasing aspect of the overall US national strategy for combating terrorism and we must acknowledge that this strategy may, in certain cases, include the international cooperation in handling of confidential financial information although to the great disadvantage of financial secrecy which is fundamental for legitimate business.

In the US government struggle to cut off terrorist funds, the Americans are facing daily a kind of dismantlement of fundamental principles. So far, it seems that a large part of the American public opinion has favored the sacrifice of constitutional and fundamental rights in the name of national security. The secret SWIFT-CIA scheme is a good example for that. It proves in fact that, at least under the Bush administration, the US Department of Treasury does not have to rely on individual court-approved subpoenas to obtain confidential financial data and that the CIA is legitimated also to act as the Americans’ Confidential Information Agency…

Comments Index (Total Messages: 1)

!!!!! Written by Guest on 2006-09-01 01:50:48

Powered by a Zone-H(ified) version of AkoComment 3.0!