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|©Parliamentary copyright||Prepared 9th February 2011|
Publications on the internet
General Committee Debates
European Committee Debates
Terrorist Finance Tracking Programme
The Committee consisted of the following Members:
Alison Groves, Committee Clerk
† attended the Committee
Following the September 2001 terrorist attacks, the United States’ Department of the Treasury developed a Terrorist Finance Tracking Programme to identify, track, and pursue terrorists and their financial supporters. The TFTP used payment information carried out by the Society for Worldwide Interbank Financial Telecommunications, a Belgian company, which is the world’s main system for passing international payment instructions between financial institutions. That information was provided on the basis of an administrative subpoena requiring that the US branch of SWIFT should provide the US Treasury with specified financial transaction record data. Changes to the operation of the SWIFT system from the beginning of 2010 placed most payment information outside the scope of US administrative subpoenas, leading to such information being unavailable to the TFTP and seriously impairing its scope and coverage.
In 2009, a temporary agreement—year-long, while a permanent agreement was being negotiated—referred to as the SWIFT agreement, between the EU and the US in order to allow transfer of SWIFT data to the US Treasury for the purposes of the TFTP, was negotiated. The agreement was to come into operation provisionally on 1 February 2010, once
The draft agreement, document A, was the outcome of a subsequent negotiation authorised by the Council. The purpose of the agreement was to maintain the availability of data stored in the EU to the TFTP, and so ensure that the TFTP continues to have coverage of all regions and continues to support counter-terrorism authorities in the US and the EU. The arrangement in the agreement for the transfer of data is a mechanism under which designated providers of international payment messaging services may be compelled to provide data to the US Treasury. The agreement provides for the designation of SWIFT as the provider.
The draft Council decision, document B, was to authorise the Commission to sign, on behalf of the EU, the agreement. After its adoption by the Council, the second draft Council decision, document C, to authorise conclusion of the agreement, was to go to the European Parliament for it to consent to the Council adopting the decision. The decisions were adopted in the summer of 2010 and the UK opted into them, thus becoming bound by the agreement.
When the European Scrutiny Committee considered the documents, in September 2010, it thought that, although the security benefits of the TFTP seemed plain, the agreement was sufficiently important, and its predecessor, the rejected agreement, sufficiently controversial, to warrant the documents being debated. Among the matters the Committee said might be explored in the debate are: the Government’s view of the apparent intention to establish the EU’s own TFTP; whether possible data protection risks arising from the agreement are too heavy a price to pay for the security benefits; a concern that it appears that fast-moving business may often, as in this case, negate the Government’s right to have three months to consider an opt-in decision; and an equal threat to the Government’s commitment to Parliament to allow an eight-week period for scrutiny of such a decision.
I welcome the opportunity to discuss and debate the Government’s approach to the EU-US agreement to share financial payment messaging data for the purposes of the Terrorist Finance Tracking Programme, known as the TFTP. The Government are firmly committed to protecting the security of UK citizens—that is of paramount importance. However, the Government are also committed to restoring and protecting civil liberties. We believe that, as is the case with the TFTP, we can provide security for our citizens while protecting their civil liberties.
Allow me to set out some background to the TFTP. The TFTP was created in 2001 in the wake of the 11 September terrorist attacks. Its aim was to increase our ability to investigate terrorism and its financiers by making targeted searches of the messaging data that accompany cross-border money transfers. Since its inception, the TFTP has provided valuable leads in the fight against terrorism, with more than 1,550 leads shared with EU member states. It has helped in the investigation and prevention of some of the most serious terrorist attacks and attempted attacks of the past decade, including the Bali bombings in 2002, the Madrid train bombings in 2004 and the London bombings of July 2005.
However, when SWIFT, the organisation responsible for providing financial payment messaging services, changed its global messaging architecture in January 2010, the US lost access to the data stored in the EU, reducing the TFTP’s reach and effectiveness, and potentially undermining our ability to investigate and prevent attacks in the UK and Europe. Therefore, the EU came to a permanent agreement with the US in August last year, which, in allowing the transfer of financial payment messaging
Crucially, the agreement provides a valuable contribution to the fight against terrorism while protecting civil liberties. In that regard, the appropriate use of data is vital. That is why the agreement contains a number of crucial protocols that ensure that the amount of data transferred is minimal, and where data are transferred they are subject to robust safeguards and controls to ensure their protection. The UK could not have accepted insufficient protections of data.
I recognise that the urgency to fill a real security gap that expedited the negotiation and conclusion of the agreement put pressure on the time allowed for Parliament’s right to scrutinise the dossier. There will always be exceptional cases when the EU needs to act quickly to address a particular issue, and the scrutiny arrangements recognise that by allowing the use of an override in exceptional cases. However, such cases are rare.
The Government have made clear their commitment to parliamentary scrutiny, and are always clear with the EU about the right of national Parliaments to scrutinise EU business and the importance of their doing so, and I wish to reiterate that today. The Government are strongly in support of the terrorist finance tracking programme and of the EU-US agreement. They bring significant security benefits while providing the protection of personal data through safeguards, controls and avenues for redress. I welcome the opportunity today to answer the Committee’s questions and debate the issues.
Mr David Hanson (Delyn) (Lab): I welcome you to the Chair, Dr McCrea. I confess that despite 19 years in this House, this is my first European Committee B—or even A—so it should be a novel experience and I hope it will be fruitful.
First, the Minister referred to the fact that European Commission is examining a potentially different approach to article 11. I am interested in what the time scale is for that approach, what the Government are doing to take a more targeted approach, and what the Minister understands by the phrase “more targeted”. What does he expect the differences to be in relation to the approach under article 11?
Mr Hoban: The right hon. Gentleman raises an interesting point. There is significant debate within the EU on whether it should be reliant on a US system, or whether it could construct its own arrangements for looking at the data. Those discussions are at an early stage. Clearly, it would mean that information would not be passed to the US in the first instance, and that the data could be accessed directly by EU member states. That addresses some of the data protection issues
Mr Hanson: I do not think that the Minister answered the question about the time scale for consideration. When does the European Union expect to have considered whether it wants a more targeted approach? Will he indicate the time scale for that possible change to the policy?
Mr Hoban: The Commission is due to bring forward a legal and technical framework for an EU TFTP proposal by 1 August 2011. Expert meetings are already under way to inform member states, to add to our discussions and to feed back on the options. I appreciate that that is not a deadline but, as the right hon. Gentleman knows, Europe sometimes works extremely slowly and sometimes extremely quickly. I am not sure into which category this falls.
Mr Hanson: As the Committee will note, article 12 establishes the monitoring of safeguards and controls, included in which is the independent oversight of the process. Will the Minister tell the Committee who the independent overseer is likely to be? How is the independent overseer—or overseers—appointed? What are the terms of reference? To whom are they accountable and how can they be removed?
The scrutineer is an EU appointment, and their role will be to look at not only data requests as they are made, but historical requests. Interestingly, they will be based in the US Treasury, so they will be right at the heart of the process. That is an important safeguard to ensue that searches are proportionate and meet all the data protection safeguards laid out in the agreement. The increased number of safeguards is one of the strengths of the programme, but it is the role of the scrutineer to ensure that they are kept to. The role is important. The Commission is running the recruitment at the moment, and it is negotiating with the Council and European Parliament on how the mechanics will work in practice.
Mr Hanson: I would still welcome further clarification on the individual’s terms of reference. Article 12 says that they can look at all searches of data retrospectively, but under what authority? What powers will they have to ensure that they can independently scrutinise such actions?
I support the measure—I am not saying that I do not—because it is a valuable asset for preventing terrorist activity at home and abroad, but if we are to have an independent reviewer, we need to know what their terms of reference will be, to whom they will report, who will finance them and how they are accountable. What form will their reports and accountability exercises take, given that this is an appointment, as the Minister said, to the whole European community? How do the Minister and other Governments get reports from the reviewer? Those are important issues for how the duty is fulfilled.
Mr Hoban: Indeed they are important issues, but the modalities—to use a word loved by the EU—are still being worked on. The Commission will appoint someone to undertake the role, and it is important that the work is done to a thorough and detailed level. That is why the inspector general of the US Treasury Department will ensure that oversight is in line with appropriate international standards. The Commission has set out the job spec for the scrutineer on its website, so if the right hon. Gentleman wants to look at it, he should be able to find it. We will know by the end of the month how the interim arrangements are working. Clearly the issue is important, and the Commission will be accountable to member states in the usual way.
Kelvin Hopkins: Given that Britain has the largest financial centre in the EU and one of the largest in the world, if terrorist finance is moving through banking exchanges, it is likely that some of it will come through London. Is the special position of Britain and London recognised in the EU negotiations? Are we separate from what is going on? Will the Minister elaborate a little on our relationship with the EU negotiations?
Mr Hoban: The hon. Gentleman asks an important question. He will be aware—perhaps more so than most members of the Committee—that the UK has an opt-out on justice and home affairs matters. However, because of the importance of the issue, particularly for security, the UK has exercised its right to opt in and take part at various points. That is important, as it is how we access the data.
As in every such situation, member states’ voices are determined by their voting size, not their degree of interest. However, it is right, especially given our experience of terrorism, that the UK should play a leading role in negotiating and working out how things will work in practice.
Kelvin Hopkins: That is an interesting and helpful answer. To what extent do we have more expertise in such negotiations? Are we taking a leading role in the discussions, and have we ever? Are we ensuring that our interests are secured, whatever the final arrangement?
Mr Hoban: I would always hope that hon. Members believe that the UK Government are taking a leading role in all the discussions and are influential in shaping the process. Our experience of terrorism suggests that we have a particular set of relevant views, which was why it was important that the UK opted in at the negotiating stage. Instead of sitting back and letting others do the heavy lifting on our behalf, we exercised our opt-in so that we were able to engage in that process. Obviously, we will engage fully in discussions about the EU TFTP, which is particularly important.
“Any person has the right to obtain, following requests made at reasonable intervals, without constraint…at least a confirmation transmitted through his or her data protection authority in the European Union as to whether that person’s data protection rights have been respected”.
I have two questions about that. If an individual’s data rights have not been respected, what information is given to them? I ask that from two perspectives. The first is the perspective of undertaking investigations into serious terrorist activity across Europe and abroad. Would giving that information compromise those investigations? The second is the individual’s perspective. How will they know initially and have access to potential breaches, and what mechanisms are in place to give them that information? This is important for civil liberties, in terms of information and access, as well as due to the wider point of putting the operations for which the measure was designed at risk.
“Disclosure to a person of his or her personal data processed under this Agreement may be subject to reasonable legal limitations applicable under national law to safeguard the prevention, detection, investigation, or prosecution of criminal offences, and to protect public or national security, with due regard for the legitimate interest of the person concerned.”
Mr Hanson: I am pleased that the Minister says that because, in a sense, that is my point. If individuals ask for information, we will not, by and large, want to give it to them, because we will not want to tell the types of individual we are monitoring that they are being monitored. If those who ask for information are not in the first category, they might be asking for the purpose of finding out whether they are being monitored, and by and large, they will not be. On both counts, the process is relatively ineffective, because we will not tell the people whom we need to tell, because they are dangerous to society at large, and the other inquiries will usually be vexatious.
Mr Hoban: I do not think people checking to see how their data are being processed should necessarily be treated as being in either of the two categories that the right hon. Gentleman mentions. People will legitimately want to understand how their data are protected. This creates a right to access that information, to find out how it has been processed and whether rights have been respected, while the caveat is based on ensuring that people who are suspected of terrorist acts are not able to find out those data. That is the right balance. We must ensure that people have a general right to find out how their information is being processed, albeit with that very important restriction.
UK citizens can request that the Information Commissioner asks the US whether their rights have been respected. The US privacy officer makes all the necessary verifications and notifies the data protection authority whether any personal data has been rectified, erased or blocked. That notification is given in writing. That is why we have this two-stage process—calling it a double lock would be an overstatement—in which a common-sense approach can be adopted in response to such queries. If article 15 had not been included, the right hon. Gentleman would have complained, and I believe that it sets the right balance.
Mr Hanson: I am coming to the end of my questions. In relation to the overall reporting, which includes the issues that we have just dealt with, what is the mechanism for the European Community, the United States Government and the UK Government to receive information about the number of examinations of trading accounts and the number of complaints or requests made? What is the reporting mechanism for that, and what information do we expect to get and when?
Mr Hoban: As I said in response to an earlier question, the Commission will receive an interim report at the end of February on how the arrangements are working. When we have that information, we will be in an appropriate position to give further information on the nature of reporting. We are at an early stage in a complex process. A huge number of transactions are processed. I think that 1,550 inquiries have been made to date, so the set of powers is not used extensively in the EU.
I will provide the right hon. Gentleman with more details as I receive them. In this age of transparency, he will not need to rely on WikiLeaks—the report will be published on the US and EU websites. A key criterion that has helped to inform the debates—this was an important UK criterion in discussions—is the need to make sure that that is as full as possible so that people are as aware as possible of how the process works and of the volumes of data that are involved. I hope that that reassures the right hon. Gentleman.
Mr Hanson: I accept what the Minister has said and I take it in good faith because these things are still being developed. Will he confirm that the independent oversight will regularly produce a similar report on any discrepancies there might be in, or concerns that it may have about, the operation of the scheme?
Mr Hanson: Finally, in relation to article 2 on territorial application, will the Minister confirm that the territorial application includes all overseas territories such as those of France and Spain; what the position of Jersey, Guernsey and the Isle of Man is in relation to these issues; and what the relationship is with any other potential offshore but supervised banking operations that fall within the European Union remit? If we are to have the scheme, it needs to operate universally, so that people cannot siphon resources through loopholes to other areas.
Mr Hoban: The right hon. Gentleman raises an important point. It is worth pointing out that SWIFT collects data globally, so all transactions that go through its systems will be collected. There is no carve-out for particular jurisdictions. As he rightly points out, if we allow a carve-out, we will have a problem because people will exploit the gap in the data. Indeed, the agreement was put in place earlier this year partly because a change in the structural processing of information by SWIFT led to a potential gap in the information as a consequence of changes in its data centres. This second set of legislation tackles that issue and ensures universal coverage.
Kelvin Hopkins: I will pursue a different tack now. Many of my constituents come from south Asia, the subcontinent and elsewhere. They transfer money using smaller, private money transfer organisations. I have called for such organisations to be more regulated and for more money to be transferred through the larger, more transparent banks. Does the Minister have any thoughts on whether those organisations might be used and somehow sneak under the radar because they are small scale and not so noticed but regularly used by people from minority communities?
Mr Hoban: The hon. Gentleman raises an important point, which exercises me greatly as a consequence of a constituency case. One of my constituents has lost a significant sum of money through one of those transmission systems. I am discussing the issue with my officials to understand more about its implications, but I share his concerns.
Stephen Phillips (Sleaford and North Hykeham) (Con): Will the Minister deal with the overriding of the scrutiny reserve in relation to the documents in a little more detail? It is a matter of concern, given the effect of the documents on civil liberties, in particular, and—picking up on a point raised by the hon. Member for Luton North—given the position of the City of London and the financial services sector in this country, that Parliament did not have a proper and full opportunity to consider the documents prior to the Council’s decision being adopted and, as I understand it, the UK opting in. Will the Minister explain the Government’s position in that regard and, indeed, make it clear on his own behalf and on behalf of his officials, which is important from the perspective of the European Scrutiny Committee, that the scrutiny reserve is taken seriously and that the overrides, as in this case appears to be the position, will be used only rarely?
Mr Hoban: My hon. Friend raises an important point about the scrutiny of the legislation. I would say two things. First, we take the scrutiny reserve very seriously. There have been instances where, in ECOFIN, I have had to point out that in the documents the scrutiny reserve still applies and that we could not consent, because the scrutiny reserve was still in place. It is important that Parliament has the opportunity to scrutinise European documents and proposals. As a Treasury Minister with a certain engagement with Europe, I spend a fair proportion of my time sending to both the Lords and Commons Scrutiny Committees explanatory memorandums setting out our position on these matters and engaging in discussion with the relevant Committee. So we take it seriously, and my right hon. Friend the Minister for Europe made a written ministerial statement last month setting out the opt-ins under judicial home affairs and the opt-outs on Schengen enhanced scrutiny arrangements to ensure that the House was properly informed and that Members have the opportunity to engage in debate.
Two issues in respect of this measure and the operation of scrutiny cause concern. The first problem is the House’s own procedures. A significant part of the development of the negotiating mandate and the discussions with the United States took place—even the final agreement—before the European Scrutiny Committee
On 25 June, my right hon. Friend the Chancellor of the Exchequer wrote to the then shadow Chancellor, the right hon. Member for Edinburgh South West (Mr Darling) and to my hon. Friends the Members for Croydon South (Richard Ottaway), the Chairman of the Foreign Affairs Committee, and for Chichester (Mr Tyrie), the Chairman of the Treasury Committee, to ensure that those Committees with an interest in matters covered by this proposal were informed, pending the establishment of the European Scrutiny Committee in this Parliament after the election.
We take this very seriously. This is an exceptional set of circumstances that led to scrutiny override. My right hon. Friend the Minister for Europe said in his written statement that we need to think carefully about the processes where there is urgency, but also during recesses and dissolution. EU business does not stop during a Whit break, or when a coalition Government form or when the processes of the House are trying to get round to setting up a scrutiny Committee. We need to bear that in mind. I am grateful to my hon. Friend for that question, which addresses an important issue about how we scrutinise these issues in the House.
That the Committee takes note of European Union Documents No. 11048/10, relating to a draft agreement. No. 11173/10, relating to a draft Council Decision on the signature of the agreement, and No. 11172/10, relating to a draft Council Decision on the conclusion of the agreement between the European Union and the United States of America on the processing and transfer of financial messaging data from the European Union to the United States for purposes of the Terrorist Finance Tracking Program; agrees that the program is an extremely important tool in the global counter-terrorism effort, providing valuable contributions to numerous high profile cases, and notes that the program has achieved an appropriate balance between counter-terrorism and data protection.—(Kelvin Hopkins.)
Kelvin Hopkins: Briefly, as no one else appears to want to speak, I should like to say a few words. I can assure the Committee that I will not speak for long. All this originated because of the globalisation of finance and the free movement of people. Had that not happened, we would not be in this position now. I am a globalisation sceptic. I remember exchange controls being removed in 1979, when Mrs Thatcher first came to office. I opposed that then. We cannot go back and put the genie back in the bottle; but with the financial crisis of two or three
Going back even further to the days of Harold Wilson during the 1960s, there was a restriction on the money that could be taken abroad for our holidays. There was a £200 limit, which does not sound very much, but it was a lot of money in those days. No other member of the Committee is as old as I am, so they will not remember these things. Obviously, globalisation has created something of a playground for criminals and terrorists. A bit more regulation in all these matters would help not just to restrict terrorism and crime across the world, but to make managing our economies more sensibly a greater possibility.
Mr Hoban: I will respond in kind and be very brief. It is important for the record to make a few short points. I should like to touch on the data protection issues, which are important. I want to set out some of the safeguards that are in place to ensure that people’s civil liberties are protected and that steps are taken to respect the sensitivity and integrity of the data that are in use. The TFTP agreement contains very robust data protection standards. Data requests made by the US Treasury must be narrowly tailored and fully substantiate the requirements for the purpose of prevention, investigation, detection or prosecution of terrorism or its financing. The TFTP is not permitted to make use of data mining or automated computer profiling.
All searches of data provided to the US Treasury must be based on pre-existing information or evidence that demonstrates a reason to believe that the subject of a search has a connection to terrorism or financing. Again, that “reason to believe” ties in with some of the legislative safeguards in place in the UK. It is important that searches are narrowly tailored and logged. The data must obviously be held in a physically secure environment, with limited access. Data are prohibited from being subject to manipulation or alteration, and no copies of the data are allowed, other than for back-up purposes. Clear limits are laid down by the agreement for the period for which data can be retained.
All that is overseen by the EU scrutineer who is on site at the US Treasury. As I said in response to the right hon. Member for Delyn, the aim of that scrutiny process is to be as open and transparent as possible, so we can have comfort that the data are used appropriately. As I said in my opening remarks, it is important to recognise the contribution that the list plays in the fight against terrorism and its financiers. It has helped to investigate numerous high-profile terrorist attacks and attempted attacks, and it has provided valuable leads in the fight against terrorism, including the Bali bombings, the Madrid train bombings and the London bombings of July 2005.
This is a very important agreement and the safeguards are right. Clearly, the purpose to which it is put is also important. I am grateful to the Committee for identifying that for debate. We have touched on important scrutiny
Mr Hoban: I was about to conclude; I had almost got to my last sentence. If I had not decided to highlight the importance of European scrutiny, I would have got away with it, but I will give way one last time to the right hon. Member for Delyn.
Mr Hanson: I did not say much in the wider debate. I want to be clear in relation to scrutiny. We talked earlier about the reporting mechanisms. Will the Minister give an indication of how those issues will be formally reported to the House? He mentioned that there will be a report from the independent overseer, based in the American Treasury, and that Europe-wide information
Mr Hoban: The right hon. Gentleman asks a very important question, which must be borne in mind, and I will reflect on it. As a prolific tabler of questions in opposition, I always encourage Members to table questions frequently. Tabling questions is one of the jobs of Opposition Members. We will write to the European Scrutiny Committee and advise on all developments, particularly the discussion about the European Union TFTP. We will endeavour to keep the European Scrutiny Committee engaged in the process.
|©Parliamentary copyright||Prepared 9th February 2011|