If you're not a U.S. citizen, don't have a U.S. bank account, and don't invest in U.S. assets, you might assume that the United States has no right to snoop into your financial affairs. But if you believe that, you're wrong.
That's a consequence of a top-secret U.S. initiative called the Terrorist Finance Tracking Program (TFTP). Shortly after the 9/11 attacks, the U.S. Treasury Department issued a secret administrative subpoena to the Society for Worldwide Interbank Financial Telecommunication, or SWIFT. This international banking consortium routes more than US$6 trillion daily between nearly 8,000 financial institutions. While SWIFT is based in Belgium, it currently uses U.S.-based servers that mirror all the financial transfers overseen by the Belgian parent.
The Treasury subpoena demanded that SWIFT provide essentially unrestricted access to its records. And SWIFT complied without apparent complaint until The New York Times revealed the existence of the TFTP in 2006.
Then, all hell broke loose. Officials at the Bush White House briefly considered an indictment of the Times and its editors for treason. The Belgian government, which was content to ignore the monitoring until it became public knowledge, threatened to shut down the TFTP as a violation of EU privacy laws.
After considerable diplomatic maneuvering, Belgium and the EU permitted the program to continue. The United States promised strict controls over the data it extracted, although the entire program continued to operate in near-total secrecy. In February 2009, the European Commission announced that the United States had abided by these promises and recommended that the program be allowed to continue. And on November 30, the EU Home Affairs Ministers agreed to a nine-month extension of the monitoring program.
The agreement is only in effect until September 2010. By then, SWIFT anticipates that it will complete a transition of its U.S. databases and servers to Switzerland. Presumably, U.S. officials will then have to negotiate a new agreement with Switzerland to access its data.
I'm not holding my breath that Switzerland will be any more protective of SWIFT data after next September than under the current agreement. Only a few months ago, Switzerland dramatically expanded the grounds under which it would release Swiss banking information to foreign tax authorities. Why should we believe it will behave any differently when the United States demand it provide unfettered access to information about global financial flows?
Copyright © 2009 by Mark Nestmann
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