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European Privacy Laws Hindering War Against Terrorism, Money Laundering, Say Ex-FinCEN Officials
By Brian Orsak
printEuropean and other non-U.S. data protection and privacy laws will seriously impede international efforts to stymie financial crimes, two former U.S. regulators said Thursday. William Langford and William Fox, both former officials with the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), the agency responsible for setting federal anti-money laundering rules, made the remarks during a financial crime conference in New York sponsored by the Financial Times. Because data protection laws in Europe and elsewhere make it difficult for a multinational financial institution to share data among all of its branches, the laws "will be the biggest impediment to protection...
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Several of the world's largest financial institutions are years into the process of rethinking and updating how they share the personal information of their customers across borders to thwart illicit finance.
As the European Union weighs a new raft of data protection standards, some bankers believe that they can't meet both anti-money laundering demands and Europe's privacy expectations, according to an academic.
An expected strengthening of data privacy standards in Europe and elsewhere could hinder efforts by multinational banks to share information on suspicious clients with their foreign affiliates, say current and former U.S. officials.
Despite tightened controls on interbank messaging, some bankers looking to hide the role of their blacklisted clients in international wires need only type a single key on their keyboard, according to experts.
The EU is pushing the United States for answers following reports that the National Security Agency siphoned bank messaging data held in the European Union, possibly in violation of a July 2010 treaty.
Defense attorneys are hoping to overturn convictions against their clients in dozens of money laundering, drug and other cases that they say may have been based on undisclosed national security data.
The top European Union official for civil rights said Wednesday that the U.S. Justice Department has yet to answer all of her concerns about a controversial American surveillance program.
Ongoing negotiations between the United States and European Union on a broad data-sharing arrangement will likely be complicated following the leaked disclosure this month of a transnational American surveillance program.
Proposals to bar Iranian financial institutions from a global interbank messaging service would impose additional costs on Iran's banks without entirely blocking them from accessing Western financial institutions.
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An international anti-money laundering watchdog group is likely to face resistance to plans to loosen stringent privacy laws on bank data, say analysts.
The United States and European Union tentatively agreed Monday to a plan allowing the sharing of interbank messaging data as part of investigations into terrorism.
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A renewed emphasis on customer data privacy in the European Union is making it difficult for U.S. financial institutions to conduct background checks on EU customers, and in some cases has exposed them to fines, according to legal consultants.
In the push by global governments for greater financial transparency and greater privacy guarantees, large financial institutions are left struggling to reconcile these two competing principles. The conflict is most striking for banks dealing with so-called secrecy jurisdictions.
Romania and Bulgaria, the two newest members of the European Union, are among a number of EU nations that are unlikely to adopt sweeping new anti-money laundering measures by a December 15 deadline, according to public officials and AML professionals.
European Union justice ministers agreed Friday on guidelines for the sharing of personal data among law enforcement agencies and European courts, giving European citizens greater assurances of privacy in terrorism and criminal cases.
The Bush administration suffered a setback Friday when a federal judge rejected its effort to block a civil lawsuit against an international banking consortium that provides the administration with data for terrorist investigations.
The agreement, announced June 27, resulted from months of negotiations after an EU advisory panel found that the consortium's sharing of information with the United States violated EU data protection laws.