VZCZCXRO9192
OO RUEHAG RUEHROV
DE RUEHBS #1421/01 1171016
ZNY CCCCC ZZH
O 271016Z APR 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC IMMEDIATE
RUEAWJA/DEPT OF JUSTICE WASHDC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 04 BRUSSELS 001421 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR EUR/ERA FOR WALKER, EB FOR LAMBERT 
TREASURY FOR FREIS AND PACK 
 
E.O. 12958: DECL: 04/18/2017 
TAGS: ECON EFIN KTFN PTER EUN
SUBJECT: TREASURY DISCUSSIONS WITH EU ON SWIFT NARROW KEY 
ISSUES 
 
REF: BRUSSELS 1038 AND PREVIOUS 
 
Classified By: EMIN JOHN SAMMIS FOR REASONS 1.4 (b) AND (d) 
 
¶1.  1.  (C/NF)  Summary and comment.  On April 25, FinCEN 
Director James Freis, Director General for Justice, Freedom 
and Security at the European Commission, Jonathan Faull, and 
Berthold Leber, Deputy Director General at the German 
Ministry of Finance, continued discussions to resolve EU 
concerns with respect to SWIFT and Treasury,s Terrorist 
Finance Tracking Program (TFTP) via DVC.   In comments to 
Treasury,s draft discussion paper of April 13, the EU side 
proposed that Treasury delete SWIFT data that is not used as 
part of a counter-terrorism investigation after two years. 
Freis said that for the US having any data deletion 
requirement is a concession.  He stated that there is no 
consensus yet in US as to what a reasonable data retention 
period would be, but that it would need to be much longer 
than two years.  Freis stated that 10 years could possibly be 
an appropriate period.  At Freis, urging, Faull agreed to 
consult further with EU authorities dealing with financial 
intelligence to see what they would consider to be a 
necessary retention period.  Both sides acknowledged that 
failure to agree on data retention has the potential to be a 
deal breaker and if that is the case the issue might need to 
be discussed at the upcoming US-EU summit.   The EU side also 
proposed that members of Europol,s Joint Supervisory Body 
(JSB) verify Treasury,s representation of how data is 
handled and safeguarded under the TFTP.   Freis said that he 
would have great difficulty in recommending that the JSB be 
charged with oversight because it is made up of EU data 
protection officials who would not have the necessary law 
enforcement and security backgrounds.  As an alternative, the 
EU agreed to draft language to create a joint review 
mechanism similar to the one in the PNR agreement.  Another 
possibility would be to identify an &eminent person8 to 
conduct the verification.  Faull was not able to provide any 
further clarification about how the US representations would 
be taken into account on the EU side.  Both sides agreed to 
work on some new language to resolve the remaining issues and 
to speak again via conference call on Friday, April 27. 
 
¶2.   (C/NF)  The overall tone of the DVC was positive and a 
number of small issues were resolved.  Despite the reference 
to raising SWIFT at the upcoming summit, at this point the 
main issues (data retention and oversight) seem bridgeable. 
The more worrying question is lack of EU clarity as to what 
form the final resolution might take.  This is essentially an 
EU problem tied up in the legal question of whether this is a 
first pillar (commercial) or third pillar (law enforcement) 
data transfer.  Our sense is that the EU wants to have a deal 
and so will ultimately come up with a solution.  End summary 
and comment. 
 
Data retention 
 
¶3.  (C/NF)  Freis began the discussion by asking the EU to 
explain how they had arrived at the proposed two year data 
retention period.  Faull and Leber listed pieces of EU 
legislation that include various retention periods ) the 
telecom data retention directive (6 months to 3 years), the 
EU money laundering directive (5 years) and the wire transfer 
regulation (5 years).  They also cited data retention 
requirements used by Interpol, Europol and a Council of 
Europe recommendation regarding data in the police sector. 
Faull said that given these varying periods the EU considered 
two years to be fair.  Freis responded saying it is not 
appropriate to compare telecom and financial data.  Freis 
also pointed out the need to distinguish between data 
retention periods in a multilateral context (such as Europol 
and Interpol) and periods that are necessary at the primary 
or national level.  Freis said that in his discussions with 
officials from European financial intelligence units (FIUs) 
there is a movement to expand data retention periods.  From 
an operational perspective, Freis emphasized that two years 
is &entirely unreasonable8.  Freis indicated that he did 
not think that European officials would accept a two year 
retention period and that Faull could have trouble obtaining 
member state agreement on such a retention period. 
 
¶4.  (C/NF)  Faull responded saying that they had queried 
member state law enforcement authorities, but that the 
answers being provided were not particularly helpful.  He 
said that their answers tended to be that they keep the data 
for as long as possible in accordance with national law. 
Faull then asked Freis what he would consider to be a 
 
BRUSSELS 00001421  002 OF 004 
 
 
necessary data retention period.  Freis stated that agreement 
on a data retention period would require consultation with 
other US agencies and that any deletion requirement would be 
a concession on the US side.  Stressing that there is no 
consensus yet within the US, Freis indicated that 10 years 
could possibly be acceptable.  Faull agreed to consult 
further with EU law enforcement authorities that have 
operational responsibilities on this question.  Freis agreed 
to draft additional language that would explain how Treasury 
continually refines and narrows its requests for SWIFT data 
and to provide the criteria used to determine what data can 
be deleted. 
 
¶5.  (C/NF)    Both sides acknowledged that failure to agree 
on data retention periods could mean that we would need to 
find another way to resolve the issue.  It has been 
understood that the issue would not be raised at the April 30 
US-EU summit as long as there is progress towards a 
resolution.  If it seems that a deal is not possible, then 
Freis and Faull said they would need to flag that for their 
principals by Friday, April 27.  Freis, Faull and Leber 
agreed to review this issue during a conference call on 
Friday. 
 
Independent oversight 
 
¶6.  (C/NF)  Freis, first comment on the EU proposal to have 
Europol,s Joint Supervisory Body (JSB) provide oversight was 
that this information should be included at the end of the 
document.  Freis explained that the document is a 
representation of how the TFTP currently operates and this 
oversight is something that is new and being done to address 
EU concerns and should come at the end of the document. 
Faull agreed on this question of placement. 
 
¶7.  (C/NF)  Turning to substance, Freis confessed that he was 
surprised and concerned because the JSB is made up of EU data 
protection authorities (DPAs).  Freis said he would have 
great difficulty in recommending this as a solution.  Faull 
explained that they had proposed the JSB because these are 
individuals experienced in both data protection as well as 
law enforcement mattrs.  all said that the EU was not 
necessarily wedde to this solution but that it was a 
convenientbody that provided the interface between law 
enforcement and data protection authorities.  Gilles de 
Kerchove from the Council Secretariat noted that if the 
oversight is done only by the police, they would not have the 
necessary credibility on the EU side with respect to the data 
protection issues.  Freis said that it would be difficult to 
accept this solution given that the EU does not yet have 
agreement on data protection requirements with respect to law 
enforcement.  Freis noted that in general discussions with 
the DPAs on this issue have been difficult and that involving 
the JSB would be &throwing us to the wolves8.  Leber 
responded that the Commission needs to address the concerns 
raised by the Article 29 working party (which is made up of 
EU member state DPAs) and that probably the Article 29 
working party itself would like to take charge of this 
oversight. 
 
¶8.  (C/NF)  Freis responded noting that from his perspective 
the oversight mechanism was meant to address not only the 
data protection concerns but to also to provide greater 
operational information sharing.  Freis said that if the 
oversight were to be done by data protection authorities then 
this operational information sharing objective would not be 
achieved.  Faull agreed that having someone who could both 
reassure the European Parliament and the public with respect 
to data protection and increase the national security 
benefits of the program would be ideal. 
 
¶9.  (C/NF)  As alternatives to the JSB, Faull proposed either 
a joint review mechanism that would involve the Commission 
and member states along the lines of the PNR agreement or an 
eminent person.  Freis indicated that these would likely be 
more acceptable.  Freis flagged that in any case Treasury 
would need to vet the individual and that this was 
non-negotiable.  Freis suggested adding &in consultation 
with the US8 for the selection of the individual doing the 
oversight. 
 
¶10.  (C/NF)  Regarding the remit of the oversight, Freis said 
that in principle it was agreed that the purpose of the 
oversight is to verify compliance by Treasury with the 
representations.  Freis said that he had some concerns with 
the wording proposed by the EU.  For example, Freis explained 
 
BRUSSELS 00001421  003 OF 004 
 
 
that the word &audit8 has specific legal connotations in US 
law that do not apply in this context. 
 
Redress 
 
¶11.  (C/NF)   Freis stated that it is very difficult to see 
how redress would work operationally.  He explained that 
there is redress in the US system further downstream in cases 
in which SWIFT data is used, for example, to designate 
someone as a terrorist pursuant to UN Security Council 
Resolutions.  If someone feels they have been wrongly 
designated, there is a redress mechanism.  Freis stressed 
that the SWIFT data is an investigatory tool and as such 
there is no redress mechanism. Faull countered that there is 
concern that if there are mistakes in the data, there could 
be false positives and there needs to be some way to correct 
that.  He also noted that there is nearly agreement in the 
High Level Contact Group on the right of redress.  Mark 
Monborne, General Counsel from Treasury, noted that real 
targets of investigations will sometimes makes requests for 
their information and that it is important to bear this in 
mind when deciding what information will be provided.  Faull 
indicated that the EU side would look at this issue again 
understanding that in this case  it is difficult to apply the 
standard redress mechanism.  He also said that if the joint 
review mechanism is used, then the Commission could simply 
raise any redress questions in the context of the review. 
 
General discussion of other EC comments 
 
¶12.  (C/NF)  Freis asked why the EU had deleted the section 
of the draft discussion paper on International 
Counterterrorist Financing Principles.  Freis said that he 
considered this section important in providing to the public 
the appropriate context for the program.  Freis said that 
this section also illustrates that the US is not operating 
outside international norms, but rather implementing the 
norms that have been agreed internationally.  Faull said that 
the section could stay, that it had been taken out simply to 
shorten and simplify the document. 
 
¶13.  (C/NF)  Freis also said that he would like to delete 
references to concerns raised by Canada and within the US. 
Freis said there are not concerns in the US about the program 
at this time and it would be inappropriate to include a 
reference to a third country in this document.  Faull agreed. 
 
¶14.  (C/NF)  Responding to EU proposed text regarding copies 
of SWIFT data, Freis said that he could agree in principle, 
but that there should be additional language  to cover copies 
that are made as part of the normal security backup system. 
Faull agreed that as long as the concept of no copies was 
retained there was no problem to add language about normal 
emergency back-up systems. 
 
¶15.  (C/NF)  Faull explained that MEPs have stressed that 
data needs to be necessary and not simply useful  To address 
this, throughout the text exchanged &useful8 for 
&necessary8.  Turning to another issue, Freis noted that 
access to SWIFT data cannot be limited to analysts because 
occasionally there is a need for other senior officials to 
see the data.  Faull conceded and agreed that language should 
be found to cover that. 
 
¶16.  (C/NF)  The EU asked for further precision with respect 
to the fraction of data that is accessed by Treasury.  Freis 
pushed back, saying that it would be hard to provide a figure 
and that in any case it is not static.  Faull said that the 
current formulation will generate questions as to what the 
fraction is.  Freis agreed to refine this language. 
 
¶17.  (C/NF)  The EU added &onward transfers8 to the section 
entitled dissemination and Freis questioned the meaning of 
this phrase.  Alternatives such as &information sharing8 or 
&forwarding8 were discussed.  Freis said that he would need 
to look at the language regarding use of the SWIFT 
information by other US agencies.  Freis indicated that it is 
only for counter-terrorism purposes, but that in some cases 
the Justice Department charges the individual with other 
crimes.  Freis rejected the EU suggestion to delete the 
phrase &in the global war on terror8 
 
¶18.  (C/NF)  Responding to an EU question, Freis explained 
that if a person is removed from a US terrorism designation 
list, that person,s SWIFT-related data would not be deleted. 
 Freis emphasized that under US law, data used in a final 
 
BRUSSELS 00001421  004 OF 004 
 
 
administrative decision to designate an individual will be 
retained permanently.  Freis stressed that this is required 
under US law and could not be changed as part of these 
discussions with the EU.  Monborne elaborated by saying that 
removal from the list does not imply that they were wrongly 
designated or improperly placed on the list in the first 
place. 
 
¶19.  (C/NF)  The EU side also added a sentence to say 
Treasury will print the representations in the Federal 
Register and agrees to their publication in the EU Official 
Journal.  Monborne noted that as a legal matter, Treasury 
could not require the FR to publish the representations, but 
that he did not foresee a problem with publication.  He 
suggested that the language be modified to say that Treasury 
would endeavor to publish the representations in the FR. 
Faull agreed and noted that on the EU side there was no 
problem to commit to publication in the EU,s Official 
Journal. 
 
¶20.  (C/NF)  Freis asked Faull if he had any additional 
information as to how as a legal matter the EU planned to 
treat the representations.  Faull replied that there has been 
no final determination as to what would be the appropriate 
legal form.  Faull said that the EU would rely on the 
representations and would consider them as a binding 
commitment of the USG.  Faull did say that there was no 
expectation that the result would be a treaty.  Freis 
stressed that he would be looking forward to hearing more on 
this critical point from the EU side. 
 
¶21.  (U)  This cable has been cleared by Treasury. 
Gray 
.