Global Trends by Martin
Monday 26 June 2006
Uproar over privacy of bank data
A controversy is brewing
over news that the data of bank transactions using the famous “SWIFT
Code” has been handed over to the US government for its use against
terrorism. Critics say it violates personal data privacy as well as
legal confidentiality. Were the 7,800 banks and other institutions
that use the SWIFT system told their data is not secret?
When bank customers transfer
funds, especially to abroad, they have to provide the “SWIFT Code” of
the bank in which the account they are transferring to is located.
Data of these transactions
is thought to be confidential. But it now turns out that the SWIFT
banking consortium that handles transactions between financial institutions
has been providing their vast data to the United States government.
The vast SWIFT database was
handed over in 2001 to a secret US program (run out of the Central Intelligence
Agency and overseen by the Treasury Department) to track terrorism-related
funds, according to news reports last week. Since 2001, SWIFT continued
to provide data.
The news has started an international
controversy over banking privacy, and the legality of both SWIFT’s actions
and the US programme.
SWIFT (Society for Worldwide
Interbank Financial Telecommunication) is a Belgium-based cooperative
that links about 7,800 banks and brokerages and handles billions of
transactions a year.
Described as “the nerve center
of the global banking industry”, it routes about $6 trillion daily between
banks, brokerages, stock exchanges and other institutions.
On 23 June, the New York Times (NYT) ran an article that US officials
have gained access to SWIFT’s database and examined hundreds of thousands
of banking transactions.
Stuart Levey, senior official
at the US Treasury Department, said the programme provided the US with
a window into the operations of terrorist networks, and is a legal use
of government authority.
But NYT commented that the program is a significant departure from typical
practice in how the 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.
Several officials told the Times that the access to vast confidential
data was highly unusual and stirred concerns inside the administration
about legal and privacy issues. A former senior counterterrorism official
admitted "the potential for abuse is enormous."
Investigators have used the SWIFT data to do "at least tens of
thousands, maybe hundreds of thousands of searches" of people and
institutions suspected of having ties to terrorists, said Levey.
Many of those transactions
occurred entirely on foreign soil; some are international transfers
of money by individuals and groups under suspicion inside the US.
After identifying a suspect,
Levey said, "You can do a search, and you can determine whom he
sent money to, and who sent money to him.”
He also told Washington Post:
“The way the SWIFT data works, you would have all kinds of concrete
information -- addresses, phone numbers, real names, account numbers,
a lot of stuff we can really work with, the kind of actionable information
that government officials can really follow up on.”
Swift executives have been
uneasy at times about their secret role, and in 2003 they considered
pulling out, according to NYT. They were worried about legal liability,
but agreed to continue providing the data after American officials including
Alan Greenspan, the chairman of the Federal Reserve, intervened.
An uncomfortable spotlight
has been put on SWIFT’s behaviour. In a statement, SWIFT said it was
obligated to comply with a valid subpoena, and had worked to narrow
the range of data it provided.
the US Treasury secretary, John Snow, said last Friday that after the
Sept. 11 attacks, Treasury Department officials initially presented
SWIFT with "really narrowly crafted subpoenas all tied to terrorism."
at Swift responded that that they did not have the ability to "extract
the particular information from their broad database." Said Snow:
"So they said, 'We'll give you all the data,' "
According to NYT, within
weeks of the 11 September bombings, Swift began turning over records
to the US. "At first, they got everything, the entire Swift database,"
one person close to the operation said.
Swift provides electronic instructions on how to transfer money among
7,800 financial institutions worldwide. It is owned by more than 2,200
organizations, and virtually every major commercial bank, as well as
brokerage houses, fund managers and stock exchanges, uses its services.
Swift routes more than 11
million transactions each day, most of them across borders. Customers'
names, bank account numbers and other identifying information can be
While Swift's 25-member board of directors was told of the program,
it is unlikely the 2,200 organisations that own Swift, and the 7,800
financial institutions that use Swift, know that the data generated
by their activities are in the possession of the US agencies.
As news of the secret programme
hit the headlines, the US Vice President Dick Cheney criticized the news media
for disclosing an operation he said was legal and "absolutely essential".
to next paragraph
civil liberty groups were quick to attack the programme. "Our data
has been effectively hijacked by the U.S. under cover of secret agreements
and entirely undisclosed terms," said Simon Davies, the director
of Privacy International, based in London. "There will be a snapping
point, and this may be it."
The executive director of
the American Civil
Liberties Union, Anthony D. Romero, condemned the program, calling
it "another example of the Bush administration's abuse of power."
Republican Senator Arlen Specter, chairman of the
Senate Judiciary Committee, said he has sent letters to the Treasury
Secretary and the Attorney General, indicating concern about the legal
authority for the operation.
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