SWIFT/TFTP: TREASURY EXPLORES NEXT STEPS WITH THE

C O N F I D E N T I A L SECTION 01 OF 02 THE HAGUE 000163 SIPDIS SIPDIS STATE FOR EB/ESC/TFS, EUR/ERA (PWALKER) STATE ALSO FOR EUR/UBI, EUR/PGI, S/CT, IO/PSC TREASURY FOR TFFC AND OFAC TREASURY ALSO FOR JFREIS, MJACOBSON USEU FOR JUNDERWOOD E.O. 12958: DECL: 01/17/2017 TAGS: KTFN EFIN ECON PTER PGOV EUN NL SUBJECT: SWIFT/TFTP: TREASURY EXPLORES NEXT STEPS WITH THE DUTCH REF: A. 06 THE HAGUE 2572 ¶B. 06 THE HAGUE 2645 Classified By: ECONOMIC COUNSELOR KAREN ENSTROM, REASONS 1.4 (B) AND (D) ¶1. (C) SUMMARY. A Dutch interagency group told visiting Treasury officials that there is a general consensus within the GONL and the Dutch Central Bank on the need to shift the current debate on SWIFT procedures away from only data privacy issues to broader national security interests. Treasury officials urged the Dutch to make these arguments when responding to EU Commission queries on SWIFT and the Terrorist Finance Tracking Program (TFTP) and to consider a public statement supporting the SWIFT/TFTP process. While Finance Minister Zalm believes such a statement would be counterproductive at this point, continued U.S.-Dutch exchanges on this issue could help to develop possible next steps. This message has been cleared by Treasury officials Freis and Jacobson. END SUMMARY. ¶2. (C) On January 15, Treasury officials James Freis, Deputy Assistant General Counsel for Enforcement and Intelligence, and Michael Jacobson, Senior Advisor in the Office of Terrorism and Financial Intelligence, met with an interagency Dutch group and Dutch Central Bank representatives to discuss potential cooperation on SWIFT and safeguarding of the Terrorist Finance Tracking Program (TFTP). EconCouns also attended the meeting. The Dutch group, led by the Ministry of Finance (MOF),included: - Erik van Andel, Head of the Financial Integrity Division, MOF - Paul ten Westeneind, Senior Policy Officer, Financial Integrity Division, MOF - Minke Gort, Legal Advisor, MOF - Andre van Wiggen, Deputy Head of the Terrorism and New Threats Division, Political Affairs Department, Ministry of Foreign Affairs (MFA) - Frank Wijnandts, Senior Policy Officer, Office of the National Counterterrorism Coordinator (NCTb) - Simon Kappelhof, SWIFT Coordinator, Dutch Central Bank - Anita Serra, Legal Advisor responsible for Privacy Issues, Dutch Central Bank GONL SHARES USG CONCERNS -------------- ¶3. (C) Van Andel reconfirmed GONL concerns (reported refs A �0A;and B) that the November 2006 EU Article 29 Working Party (WP) report narrowly focused on data privacy and neglected states' obligations to counter terrorist financing and to provide for an effective international payments system. He said there was a general consensus within the GONL (MOF, MFA, NCTb) and Dutch Central Bank about the need to ensure a proper balance between security and data protection issues. Van Andel noted, however, that the Dutch Data Privacy Commission, which sits on the EU Article 29 WP, had agreed with the WP report's findings that SWIFT violated the EU's Data Privacy Directive. The Commission had recently issued a letter instructing Dutch banks to comply with the Directive and Dutch legislation. While the Commission had the authority to sanction banks found to be in violation, Gort said different operating jurisdictions for Dutch private banks and SWIFT had raised questions about the implementation of any such sanctions. ¶4. (C) In formulating a GONL response to EU Commission queries about SWIFT and the TFTP (November letter from EU Commission Director General Jonathan Faull),ten Westeneind said his Ministry would be meeting week with officials from the Dutch Data Privacy Commission. While there was still some uncertainty about the outcome of these talks, he said a GONL reply would argue that existing SWIFT procedures did not violate EU privacy directives. Van Andel said the Dutch also sought short-term solutions that would ensure a continuation of the TFTP. Such solutions might include the development of "informed consent" measures by participating banks, exemptions for banks from Dutch data protection laws that would allow them to transfer data to third countries, and the enhancement of program safeguards (although he didn't have any specific proposals for this). THE HAGUE 00000163 002.2 OF 002 ¶5. (C) Concerning a question previously raised by the European Commission and a number of EU member states about a possible U.S.-EU agreement or treaty on the issue, Freis cautioned that the U.S. could not enter into any agreement that might restrict how the U.S. exercised its domestic legal authority, noting that the TFTP involved USG access to business records kept by the SWIFT U.S. facility in the normal course of business. He added that the SWIFT/TFTP process was consistent not only with U.S. law, but also in furtherance of investigations into terrorist financing necessary to carry out global obligations under UN Security Council Resolutions. When asked about "subsidiarity and proportionality" concerns, he stressed that under TFTP SWIFT data was strictly used for counterterrorism purposes. It could not be used for investigations of money laundering, tax evasion, or other purposes. Individual transaction messages, he explained, could only be viewed if they were directly responsive to targeted searches on the basis of preexisting terrorism investigations. There could be no trolling or data mining. Jacobson added that safeguards built into the program, both at the search and release stage, preserved the privacy of individuals not engaged in terrorism. Such safeguards included a review by SWIFT employees and an independent auditor to confirm that the data was only accessed in this limited way for counterterrorism purposes. SENDING THE RIGHT MESSAGE -------------- ¶6. (C) Freis conveyed on behalf of the Treasury Department thanks to Finance Minister Zalm and his ministry for their support thus far on this issue. He stressed the importance of like-minded countries, such as the Netherlands, responding early and fully to the EU Commission query (due January 15) in order to shift the focus of the debate away from solely data privacy issues to include broader national security interests. Freis noted Belgian Prime Minister Verhofstadt's September 2006 public statement, reiterated in December 2006, that the TFTP should continue. He strongly urged the Dutch to consider a similar public statement supporting 1) efforts to provide greater disclosure to bank customers as a means of addressing privacy concerns; 2) SWIFT/TFTP as an important matter of national security for Europe; and 3) the benefits of SWIFT/TFTP to both the U.S. and Europe and the need for its continuation. These Dutch officials noted that in September 2006 Minister Zalm stated in response to parliamentary questions about TFTP that he did not see any violation of Dutch law. They added that this also could be viewed as a public sign of support for the program continuing in a responsible way, although they admitted that quite some time had passed since then. (NOTE: In a separate January 18 meeting with Ambassador Arnall, Minister Zalm said that such a statement might be counterproductive at this point, given the current debate in the media. END NOTE.) NEXT STEPS -------------- ¶7. (C) Both sides agreed on the need for future exchanges on the issue, especially following the Treasury delegation's upcoming talks with the European Commission and discussions within the EU on Article 29. The Dutch said they would welcome suggestions on how to work together towards a solution. Post will report separately follow-up meetings with working level contacts on the outcome of MOF talks with the Dutch Data Privacy Commission. ARNALL