News
EU Privacy Laws Impede Customer Screening, Say Consultants
By Matt Squire
printA renewed emphasis on customer data privacy in the European Union is making it difficult for U.S. financial institutions to conduct background checks on EU customers, and in some cases has exposed them to fines, according to legal consultants. "As we get farther away from 9/11, [EU authorities] are becoming more aggressive" on privacy issues, said Judith Lee, a partner with Gibson Dunn & Crutcher in Washington, D.C. This aggressiveness can lead to legal hassles and fines for unwary financial institutions. Even screening potential European Union customer names against the U.S. Treasury Department's list of blocked foreign nationals can be...
TO READ THE FULL STORY
Related News
Several of the world's largest financial institutions are years into the process of rethinking and updating how they share the personal information of their customers across borders to thwart illicit finance.
As the European Union weighs a new raft of data protection standards, some bankers believe that they can't meet both anti-money laundering demands and Europe's privacy expectations, according to an academic.
An expected strengthening of data privacy standards in Europe and elsewhere could hinder efforts by multinational banks to share information on suspicious clients with their foreign affiliates, say current and former U.S. officials.
The EU is pushing the United States for answers following reports that the National Security Agency siphoned bank messaging data held in the European Union, possibly in violation of a July 2010 treaty.
Defense attorneys are hoping to overturn convictions against their clients in dozens of money laundering, drug and other cases that they say may have been based on undisclosed national security data.
The top European Union official for civil rights said Wednesday that the U.S. Justice Department has yet to answer all of her concerns about a controversial American surveillance program.
Ongoing negotiations between the United States and European Union on a broad data-sharing arrangement will likely be complicated following the leaked disclosure this month of a transnational American surveillance program.
U.S. officials will soon ask an influential intergovernmental group to call on its members to relax laws preventing bank affiliates from sharing data on suspected financial crimes, say sources.
An international anti-money laundering watchdog group is likely to face resistance to plans to loosen stringent privacy laws on bank data, say analysts.
Government data mining programs are failing to find terrorists and often lead to unproductive false leads, said a U.S. government-sponsored study released on Tuesday.
European Union justice ministers agreed Friday on guidelines for the sharing of personal data among law enforcement agencies and European courts, giving European citizens greater assurances of privacy in terrorism and criminal cases.
Because data protection laws in Europe and elsewhere make it difficult for a multinational financial institution to share data among all of its branches, the laws "will be the biggest impediment to protection from terrorism," the officials said.
The agreement, announced June 27, resulted from months of negotiations after an EU advisory panel found that the consortium's sharing of information with the United States violated EU data protection laws.