Privacy chiefs have given Europe's banks a September deadline for alerting customers that their financial transactions could be tracked by US security agencies. Customers must be warned that even transactions within Europe could be monitored, they said.
The new rules come from the Article 29 Working Party, a committee of European data protection officials, and it has said that banks must inform customers when there is a danger that transactions could be monitored by authorities in the US.
The recommendation comes in the wake of a controversy over the fact that European inter-bank payment agency SWIFT was found to have allowed US authorities access to transaction details. The US claimed to need access in its counter-terrorism activities following attacks in the US on 11th September 2001. They were given access but account holders were not informed. SWIFT is a consortium owned by its member banks.
"The Working Party took stock of the progress made by SWIFT and financial institutions," said a statement from the Working Party following a meeting last week.
"The Working Party met again with representatives of SWIFT, who reported on progress achieved so far. The discussion with representatives of European banking associations focused in particular on the legal obligation of financial institutions to provide appropriate information to their clients on the fact that US authorities might have access to personal data when money is transferred within the European Union," it said.
Data protection officials said that banks and financial institutions had not yet gone far enough, and imposed a deadline on them.
"Although progress has been made, further action is still necessary to remedy the concerns the Working Party expressed previously. For that reason the Working Party set the 1st September 2007 as the deadline for financial institutions to take all necessary steps to improve the current situation," it said.
SWIFT has said that it felt obliged to comply with requests from US authorities because some of its servers are located in the US.
The handing over of transaction data has been criticised by the Working Party and by privacy regulators. The Working Party said that the move broke the privacy laws of the EU and of Belgium, where SWIFT is located.
The Swiss and the Belgian data protection commissioners each said that SWIFT had broken the law in passing details on without telling the parties involved.