MEPs veto deal to let US access bank transfers

Washington said the move disrupted an important source of information for anti-terror investigators.

MEPs in Strasbourg voted 378-196 against the deal, with 31 abstentions.

The parliament's president, Jerzy Buzek, said the assembly wanted more safeguards for civil liberties and believed human rights were compromised in the name of security.

The US mission to the European Union said it was disappointed, calling the move "a setback for US-EU counter-terror co-operation".

MEPs were contacted in recent days by several top US officials – including Vice President Joe Biden, Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner – "about the importance of this agreement to our mutual security".

Its rejection means the US must now rely on national agreements with each of the EU's 27 nations to access financial data - which can mean different legal conditions for each nation.

European governments will have to renegotiate the deal with the parliament, which will allow data sharing for the next nine months while the EU seeks a longer-term deal with the US. They also want such an agreement to let European authorities see US banking information.

MEPs have been very critical of EU government moves to share information with the US with few conditions, warning it could breach privacy rules.

EU governments rushed through an interim deal in November, a day before a new treaty came into force that would require them to consult the parliament. Following an outcry, they agreed to let the EU parliament have a say.

The European socialist party said its opposition to the deal was "constructively driven towards improving the current agreement". It said a better agreement would limit data retention periods, bulk transfers of data and give Europeans the right to legal redress.

The deal would have formalised a secret programme launched after the 9/11 terror attacks that skirted Europe's strict privacy rules. It did that by transferring millions of pieces of personal information from the US offices of the bank transfer company Swift to American authorities.

Swift had no immediate reaction to yesterday's vote.

Since news of the US anti-terror programme broke in 2006 – angering European politicians – American authorities have promised the information it collected from the databases was properly protected and used only in anti-terror investigations. They said "data mining" – or open-ended searching – was strictly forbidden.

American officials say the data helped to provide new leads,

corroborate identities and uncover relationships between suspects in an al-Qaida-directed plot to blow up transatlantic flights in 2006.

They also said it helped to identify financial transactions made by an al-Qaida terrorist.

The programme has generated some 1,450 tips to European governments, officials said.

Swift, the global electronic payments consortium used by banks worldwide, is moving its data stores from the US to Switzerland by the end of this year, which means the US needs an international agreement to keep its data flow going.