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
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