UK Treasury knew of US hunt through British bank data
EU investigation closes in
The ECB admitted to the Parliament in November how the "smooth functioning of the global financial system" was dependant on Swift. Indeed, it was an "indispensable precondition" for "two core central bank tasks": to maintain financial and price stability. It said privacy was the concern of the data protection authorities, but its steadfast adhesion to its confidentiality principle suggested they might have a hard time learning of similar indiscretions in the future.
HM Treasury said in a statement: "On the financial stability point/impact on business confidence, we say that there is no greater risk to the financial system that the criminal abuse of or a terrorist attack on the system."
"As you know this is a US project, and we don't comment on this or any other security matter," it added.
It suggested the Home Office would be better placed to comment about Swift's involvement in terrorist finance investigations because it was more of a security than a financial issue.
There is little privacy regulators can do about this apparent lack of transparency bar forcing banks to tell their customers what they, the Treasury and central banks had failed to tell them before: that details of their transactions might be handed over to US investigators - a little like putting a health warning on a cigarette, and perhaps a list of chemical ingredients.
This is precisely what the ECB told the commission two weeks ago that it would do: "As a user of SWIFT services, the ECB will seek the consent of individual counterparties in payment transactions...When asking for this consent, the ECB will explicitly refer to its use of SWIFT and SWIFT's database storage."
As the ECB was reprimanded for failing to tell privacy authorities when it first learned of the Swift subpoenas, and no banking clients are thought to have known that their private financial data was, via Swift, been pawed by the US Treasury, this concession appears to indicate some progress for campaigners like Privacy International, whose complaints to watchdogs across Europe lent the EU reaction to the Swift subpoenas some vigour.
Yet it only looks good on paper, as the ECB pointed out: "Payment orders from natural persons who do not consent to the use of SWIFT will not be processed."
Seeing as by the ECB's own admission there is no alternative way for banking clients to manage their international payments than via Swift, it is likely to have no impact on privacy whatsoever. As for any impact on the financial system, the British Bankers Association said there had been none. HM Treasury's secrecy appears to be vindicated. Was it right, though? ®