TREASURY OFFICIALS UNDERSCORE BASIS, VALUE OF TFTP

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 002829

SIPDIS

SIPDIS

TREASURY FOR JFREIS AND MJACOBSON

E.O. 12958: DECL: 09/25/2016
TAGS: PTER KJUS ETTC EFIN KTFN PGOV GM EU
SUBJECT: TREASURY OFFICIALS UNDERSCORE BASIS, VALUE OF TFTP
("SWIFT" PROGRAM)


Classified By: Minister-Counselor for Economic Affairs Robert F. Cekuta
for Reasons 1.4 (b) and (d)


1. (C) Summary. Treasury Department Deputy Assistant General
Counsel James Freis and Senior Advisor Michael Jacobson
underlined the legal basis and the value of the Terrorist
Finance Tracking Program (TFTP) in several meetings with
German officials September 19. German officials, who are
preparing to answer Bundestag inquiries, said German interest
focused on the program's legality and who in Germany had been
informed. The expert-level officials appeared convinced of
the TFTP's legality under U.S. law, but nevertheless
expressed concern about legality and perceptions under EU
civil legal standards. End Summary.

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U.S. PRESENTATION
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2. (SBU) Freis walked German officials through the legal
underpinnings, drawing from the 1977 International Emergency
Economic Powers Act, the relevant UN Security Council
Resolutions, the President's emergency declaration after
9/11, Executive Order 13224, and OFAC implementing
regulations. On safeguards, Freis stressed the audits by
Booz Hamilton and SWIFT oversight of data inquiries. Asked
about the program's value and successes, Freis and Jacobson
referred to an arrest of a Jemaah Islamiyah leader complicit
in the Bali nightclub bombing.

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GERMAN CONCERNS: LEGALITY, WHO KNEW WHAT
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3. (C) German officials agreed the TFTP had raised some
doubts and questions in German public debate, but they had
been modest and manageable compared to German media and
Bundestag interest in other issues -- they cited the Kurnaz
release from Guantanamo and alleged renditions. Justice
Ministry Deputy Office Director for Securities, Bank and
Stock Exchange Law Carola Schwersmann listed what she sees as
the areas of greatest concern to Bundestag members regarding
TFTP: what are the facts concerning what TFTP is and what it
is not; who in the German Government knew what about TFTP,
when, and why; and is TFTP legal. She cautioned that
legality under U.S. would not be sufficient for some
Bundestag members and cited Guantanamo as an example of an
activity legal under U.S. law but not acceptable to some
Bundestag members. Social Democratic Party (SPD) Bundestag
Interior Affairs Committee Senior Staff Member Sven Berger
said German questions would focus on legality and
authorization.


4. (C) Schwersmann showed Freis and Jacobson a list of 25
questions posed by Bundestag members from the opposition
Greens Party and explained she is advising the Finance
Ministry on the German Government's response. Relatively few
of the questions concerned the TFTP itself; most concerned
German government knowledge of it. Berger said he was
unaware of SPD members expressing any concerns about the
TFTP, but Schwersmann said she expected the opposition FDP
(Free Democrats) to raise doubts similar to the Greens'.
Berger asked why SWIFT had kept information about financial
transactions at its U.S. facility that did not involve U.S.
banks or addresses -- e.g., transfers between two European
banks.


5. (C) Finance Ministry Office Director for Terrorism
Finance, Money Laundering and Financial Crimes Michael
Findeisen feared it would be very difficult to convince
Bundestag members and other European parliamentarians that
SWIFT's cooperation with the U.S. at the same time complies
with stringent European data-protection laws and regulations.
Findeisen and his colleague Christian Mayer, who will be
part of the German Government team to answer Bundestag
questions at a September 27 hearing, also raised the issues
of sovereignty and jurisdiction, noting that SWIFT, as a
Belgian firm, was explicitly subject to Belgian and EU
data-protection laws, so there appeared to be a conflicts of
law problem. SWIFT and its participating financial
institutions would likely still have considerable explaining
to do on the coming weeks and months, Findeisen said.

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TFTP "PROTECTS PRIVACY"; OTHER FAVORABLE COMMENTS
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6. (C) In response to concerns raised about protection for

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personal data in the United States, Freis stressed that
although U.S. laws might be different, there was a
combination of U.S. restrictions on use of data and
safeguards that together create some equivalency with what
exists in the EU to protect data. Moreover, he stressed that
under the EU Privacy Directive itself, there are exceptions
for the sharing of national security information, including
with respect to combating terrorist financing. Findeisen
said that the U.S. team's presentation had convinced him that
TFTP is narrowly focused, has safeguards in place, and has a
sufficient legal basis under U.S. law. At the end of the
meeting, Schwersmann noted that the more she learned about
the TFTP, the more she believed that Germany "would have done
the same thing." Berger commented that the U.S. might argue
that the TFTP actually respects individuals' privacy more
than other law enforcement programs to obtain financial data.
German agencies with proper authorization approach banks
where a suspect has an account, inform bank staff of their
suspicion, and demand information about the suspect's
accounts, Berger explained. Experience had shown that even
if a suspect is eventually exonerated or acquitted, his
reputation at his bank is ruined and banks have denied loans
and other services simply on the basis of the initial police
inquiries. In contrast, Berger concluded, TFTP did not
inform banks of government suspicions.


7. (U) This message was cleared by the Treasury delegation
subsequent to their departure from Berlin.
TIMKEN JR