[Infowarrior] - SWIFT sides with US in data spat with EU

[Richard Forno]

SWIFT sides with US in data spat with EU
Safe Harbor - safe from storm?
By Mark Ballard → More by this author
Published Saturday 24th February 2007 23:06 GMT
http://www.theregister.co.uk/2007/02/24/swift_safe_harbour/

The Belgian firm stuck in the middle of a transatlantic spat over the US
infringement of civil liberties by the agents of its war on terror is
throwing its lot in with the Americans.

In open defiance of European privacy officials, the Society for Worldwide
Interbank Financial Telecommunication (Swift), has declared that it has
applied to the US Federal Trade Commission (FTC) for 'safe harbour'
protection for the data it holds on US soil.

Swift had handed data containing the details of private international
financial transactions to US terrorist finance investigators under a secret
arrangement since late 2001. Since the transfers came to light last June,
Europe's data protection authorities have declared that Swift is a data
controller and, as such, it should take responsibility for the privacy of
the data it administers for its banking clients.

Swift claims it is not a controller, but a mere processor and cannot be held
responsible for what European authorities say is the illegal transfer of
data to US Treasury agents.

A Swift spokesman told The Register: "We are working on what the Americans
call safe harbour to make SWIFT comply with EU legislation - that is a
process Swift has started with the US government."

"We have received confirmation that we come under the distinction of the FTC
and we are therefore eligible for safe harbour," he said.

"The reason we are doing this is to address the claims from the data
protection commissioners that Swift is a controller of the data. Our
interpretation of the law was that we are a processor," he said.

Another point of contention between Swift and the European authorities is
whether it is a financial organisation. Swift maintains that it a mere
messaging service, as it only handles messages that facilitate the
international transactions of banks. Hence, it can apply for safe harbour.
If the FTC has indeed told Swift it is eligible for safe harbour protection,
that could imply that it also accepts its assertion that it is a mere
messaging service - financial institutions are not eligible for safe
harbour. Yet the Europeans maintain that Swift a financial institution.

Accordingly, the spokesman said this was a "really, really complex" legal
matter -it's like splitting hairs in four".

An officer of one of the European data protection offices said he knew that
Swift was considering safe harbour, but that it wouldn't be enough to
satisfy the authorities: "Safe harbour makes data safe once it's
transferred, but it doesn't make the transfer legitimate."

According to European regulators, the only way for Swift to avoid infringing
data protection law would be to pull its data out of the US. Meanwhile, both
sides insist they want to work together to find a solution and they are
pinning their hopes on the US and EU agreeing an overarching instrument that
would satisfy both anti-terror investigators on the West-side of the pond
and data protection wonks on the East.

The FTC was not available for comment.