President. The next item is the report (A6-0196/2006) by Mr Alvaro, on behalf of the Committee on Civil Liberties, Justice and Home Affairs, on the proposal for a regulation of the European Parliament and of the Council on information on the payer accompanying transfers of funds (COM(2005)0343 C6-0246/2005 2005/0138(COD)).

  Charlie McCreevy, Member of the Commission. Mr President, I would like to start by thanking Mr Alvaro, rapporteur for the Committee on Civil Liberties, Justice and Home Affairs, and Mr Bullmann, draftsman for the Committee on Economic and Monetary Affairs, for their outstanding efforts and readiness to reach an agreement on this technical and complex file.

The proposal for a regulation on payer information accompanying the transfer of funds is an important step towards our aim of cutting off terrorist funding. It shows the EU’s determination to participate fully in the international efforts to combat terrorism.

Nobody can deny that combating terrorism is a key political priority worldwide today. At European level, the commitment to combat all forms of terrorism is clear. The EU plan of action on combating terrorism defines as a priority close cooperation with the Financial Action Task Force and the adaptation of the EU legislative framework to the nine special recommendations on terrorist financing adopted by this body.

The proposed regulation transposes into EU law Special Recommendation VII of the Financial Action Task Force. This recommendation requires that money transfers be accompanied by the identity of the sender with name, address and account number.

This regulation will facilitate the traceability of money transfers through a number of obligations. These obligations apply to payment service providers, mainly banks, but also money remitters. They will be obliged to send information on the payer throughout the payment chain and keep the corresponding records. This information shall be available to the national authorities in order to assist them in their tasks. It will help combating money laundering and terrorist financing.

The agreed deadline for the implementation of this special recommendation is 1 January 2007. Non-coordinated action by Member States alone in the field of cross-border transfers of funds could have a significant negative impact on the smooth functioning of payment services at EU level. It would also damage the internal market in the field of financial services: hence the importance of respecting the deadline.

Parliament, the Council and the Commission have worked hard during the last year to reach an agreement on the text. We all have done our best to find solutions to complex issues and I believe that we have been successful in doing so.

One of the main topics of discussion in our negotiations has been the issue of the EUR 1000 threshold, below which receiving banks in the EU would not be obliged to reject a transfer or to ask the sending bank to complete the information on the payer. The Commission is pleased that this option has finally not been retained. This idea has also been rejected by all Member States in the Council. Terrorists can be financed by a series of small payments below the threshold. I consider this a valid concern if we want to tackle terrorism effectively.

A solution has also been found with respect to the obligation of the receiving banks to stop dealings with foreign banks not sending the appropriate information, and on the obligation to send back low-value payments. I have noted Parliament’s concerns on these points. The circumstances under which these obligations apply have been restricted considerably, making them a solution of last resort.

I am also happy to note that we have been successful in reaching agreement on technical issues, such as the use of systems with technical limitations by intermediaries receiving funds from outside the EU.

Now that an overall agreement on comitology has been reached between Parliament, the Council and the Commission, the adoption of this regulation is an excellent opportunity to put into practice that agreement. I am therefore appealing to the Members of this House not to insist on the inclusion of specific sunset clauses on the Commission’s regulatory powers under this regulation.

All in all I think this proposal is ripe for adoption in a single reading and I hope it will receive support from all of you.

This regulation provides us with means to combat terrorist financing in a consistent manner throughout the European Union. I look forward to hearing your comments.

  Alexander Alvaro (ALDE), rapporteur. – (DE) Mr President, I have exercised the right to sit nearer the front so that you do not have to keep looking up to the back rows, and it might make the debates in this House more lively if we moved closer together. After all, we want to ensure that we engage in proper parliamentary deliberation.

I do not think I need dwell any longer on this technical point. Commissioner McCreevy explained very well what is essentially at stake here. He pointed out that we have an international obligation to fulfil Special Recommendation VII of the Financial Action Task Force. He has dealt with the technical details, and for that reason I need hardly reiterate these.

As he quite rightly said, we have achieved a balanced and reasonable compromise with the Committee on Economic and Monetary Affairs in collaboration with the Commission and the Council, a compromise which, as I see it and in the view of my committee, takes full account of the interests of data protection and data security as well as meeting the concerns of the Committee on Economic and Monetary Affairs. Nevertheless, in the case of such reports, even those that come from international bodies, we should ask ourselves far more frequently whether they actually achieve anything.

As this document has been on the table since last year and its existence has been common knowledge since some time around November 2005, I took the liberty of taking it with me on a trip to Israel, where I had talks with an expert at a university who specialises in the study of countermeasures to freeze the flow of funds to terrorists. He used to be an agent and a lieutenant in the Israeli armed forces and had worked for Mossad. He looked at this document and, to be perfectly honest, did not really see the value of it. I can quite understand his reaction.

My own background is as follows: I have worked in a bank, and I have studied law. I know that terrorist funding does not involve Terrorist A going into a high street bank, depositing his money and hoping that someone will draw it from a bank based in Damascus. There are completely different ways of channelling funds to terrorists. We are perhaps closing a window of opportunity, and we shall no doubt catch some small fry as a result – so much seems certain – but it is not the proper sharp instrument we need to combat terrorism. I am honestly convinced of that.

I naturally believe it is right and reasonable to try to curb and dry up the flow of funding to terrorists. That is an absolute must. There might be other ways to achieve that goal. The fact is, however, that instead of standing here I would probably be going up to receive the Nobel Prize if I knew exactly how to do it. Things being as they are, I believe we have at least a good starting point here.

For all that, we have engaged in lengthy discussions. We have spoken about this report with many different institutions, including the European Central Bank. With regard to our talks with the ECB, it was hugely disappointing to learn from the press that the ECB had long been aware of the system for which we are now creating a legal basis and which has been publicised in the media and that the ECB knew what SWIFT was doing with the United States. I am not trying to link two issues here, but it is surely obvious that what we are doing here is rubber-stamping a fait accompli by creating a system after the event and putting it on a legal basis.

It would have been very helpful – and this is not addressed to the Commission, because the fault does not lie with it – if an institution like the ECB had said ‘We know that such things are happening, and we want to cooperate with you to develop a sound legal basis on which to create provisions that protect the fundamental rights of our population, particularly in relation to the United States’.

The United States is, of course, a transatlantic partner of ours. I would never question that, particularly as a German. Yet we are starting to think things over. It is not only the recent disclosure of events in connection with SWIFT. There was also the issue of storing aircraft passengers’ personal data, we suspected the existence of secret prisons, there were secret flights, and we had the discussion on data retention. These things are steadily escalating.

For precisely this reason, I personally would have inserted a sunset clause – irrespective of the fact that this is an international instrument – so that we could check after five years whether the whole system had achieved anything, whether it had proved useful or whether we had created unnecessary legislation, for that cannot be our function as a parliament.

If I call in a painter, I want him to paint the wall properly when he comes. I do not want him to come back twice more to paint some of the bits he has missed. The public have exactly the same expectation of our legislative activity. In this respect, I would like to see the sunset clause stay in place – and I am aware that there has been an agreement on committee procedure – so that we in Parliament have an obligation to review what we are actually doing. Nevertheless, I shall hold discussions with my colleagues from the Group of the European People’s Party (Christian Democrats) and European Democrats and the Socialist Group in the European Parliament to determine our general approach to the subject of SWIFT in the context of transfers of funds.

At the end of the day, however, my thanks go to the Commission for cooperating in a spirit of mutual trust, and I would ask whether it might also exert some influence on the European Central Bank to encourage it to cooperate in the same spirit as the Commission itself.

IN THE CHAIR: MR DOS SANTOS
Vice-President

  Udo Bullmann (PSE), draftsman of the opinion of the Committee on Economic and Monetary Affairs. – (DE) Mr President, ladies and gentlemen, the reservations expressed by the rapporteur, Mr Alvaro, were explained and discussed in detail by both of the committees to which this matter was referred.

What we have here is a small piece of legislation, namely the implementation of Special Recommendation VII, defining the information that should accompany money transfers. Precisely because it is a small piece of legislation, though highly political and with the potential to intrude extensively into people’s private and business affairs, this Parliament has wisely and rightly decided to ask in earnest what needs regulation, what is worth regulating and what constitutes an appropriate response. We did not simply bow to the fact that there was already a prior understanding between the Commission and the Council. Both committees did their best to find proper answers.

This applies to the question of the threshold for incoming funds, which will remain traceable, while the threshold will prevent legal over-reaction against the participating banks on the issue of possible international threshold values.

It also applies to anonymous donations, which are made in several countries, such as Austria, the country of the outgoing Council presidency. They are not to be prohibited if a Member State wants to keep that option open. A threshold of EUR 500 has, however, been set, and larger anonymous donations are only permissible if they are made to absolutely bona fide organisations.

The same applies, moreover, to the technical matter of an intermediary bank involved in the transfer of funds. Here too, we have come up with sound solutions. In Member States where complete information cannot be transmitted for technical reasons, it will still be possible, acting jointly and with the consent of the bank of final destination, to hold intermediary banks accountable too.

Last but not least, it also applies to the question of outgoing payments from the European Union. We did not make the mistake of creating too much red tape or imposing too many requirements; on the contrary, we made a conscious distinction between payments with the risk of a terrorist link and payments that might simply be made by migrant workers who have not the slightest connection with terrorism. This distinction was important, because we support the Commission in its desire to extend the licensing system to the more informal providers of payment services that operate in grey areas and thus to bring them to the surface in order to obtain as much knowledge as possible, thereby avoiding unnecessary bureaucracy and ensuring that no undue restriction of civil rights occurs.

On behalf of the Committee on Economic and Monetary Affairs, I thank the rapporteur and the shadow rapporteurs of the political groups for their excellent cooperation. I believe the remaining problems can be resolved by the time of Thursday’s vote, because the committee procedure, on which we were still at odds with the Council, actually relates to only a small section of the draft, namely the matter of an ad hoc committee to which associated territories have to be admitted. It does not concern the sensitive issue of thresholds or politically sensitive provisions.

Allow me to make one more point. We are creating transparent legislation that is clearly understood by the people of Europe, reliable legal provisions, not unilateral declarations by individual states in this world that seek to induce private companies – even international organisations with cooperative property rights – to do things that may or may not be compatible with national law. We are asking the same questions as the Belgian Government, and we will assist them in their search for answers to these questions, because those answers must be found.

For this very reason we should continue to legislate and build the foundations for international agreements on the basis of the rule of law and not give way to the law of the jungle. Together with the rapporteur, we shall find suitable ways to pursue that approach.

  Mihael Brejc, on behalf of the PPE-DE Group. – (SL) Mr President, this regulation is one of a number of efforts by the European institutions to improve our effectiveness in combating terrorism and money laundering. Analysis of terrorist attacks in Europe has shown that terrorist groups use various methods to collect funds for their activities. One such method is the use of payment orders for varying amounts of money made both outside the European Union and within its borders.

This regulation will mean that money transfers will henceforth be subject to greater supervision, and banks will have to ensure that for each transfer of a prescribed amount of funds, all information relating to the payer is available. Even if this results in a slight increase in the workload of the banks, this regulation should not be allowed to reduce the efficiency of payment transactions.

Although initially it appeared that this was one of many regulations – and may I mention in passing that there are around 60 regulations of this type aimed at combating terrorism – although this is one of a number of regulations that we initially thought would be rapidly completed, this has not yet happened. A series of proposed amendments have emerged, and more often than not the subject of our discussions has been what level of funds should be subject to transfer supervision.

After a lengthy process of coordination with the rapporteur, the Commission and the Council, we finally have an agreed 15 proposed amendments supported by the Group of the European People’s Party (Christian Democrats) and European Democrats. We also support the proposed amendments that relate to the so-called ‘review clause’, and the fixing of a threshold for payment orders.

Towards the end of the discussions another question arose, namely the gathering of information by the US intelligence agency, the CIA, which would obtain data on bank transfers using the SWIFT code and the kind of consequences this might have for data protection. We in the Group of the European People’s Party believe that this issue is not a subject of the regulation, and we do not therefore support a debate in the context of this report.

Moreover, although a large number of regulations, directives and so forth relating to the fight against terrorism have been produced since 2001, within our political group we believe that this regulation will make its own contribution towards the easier identification of financial ... (the President cut off the speaker).

  Andrzej Jan Szejna, on behalf of the PSE Group. – (PL) Mr President, the Member States of the European Union have committed themselves to implementing the Special Recommendation VII of the FATF concerning money transfers at a European level, with the aim of successfully preventing the funding of terrorist activities. Therefore in order to ensure an exchange of information concerning the person making the transfer at each stage of the transfer process, we have to introduce a system which obliges the financial services suppliers to include specific and accurate information about the person making the transfer in the financial transfer documents.

We must fight terrorism and adopt measures to make the funding of terrorism impossible. However, it is also important to make sure that the bodies responsible for combating money laundering or the funding of terrorism act in accordance with national criminal law and respect fundamental rights. The five-year period proposed by the Commission for storing information deserves our support. However, as far as the implementation of the regulation is concerned, some exceptions, such as those proposed by the rapporteur, have to be included. Certain definitions must also be made more specific and more complete.

We must limit the use of stored and transmitted information to the defined scope of application in order to prevent general storage of information on citizens and to minimise the infringement of fundamental rights on the basis of this regulation. We also have to prevent executive powers being used to introduce changes and the comitology procedure.

Changes in legislation which were subject to the codecision procedure should also take place within the framework of the codecision procedure. The Member States should ensure the creation of lists of organisations in their countries to which the regulation applies and make sure that these lists are updated and always made accessible to an interested Member State. Moreover, three years after the regulation enters into force, we should introduce a revision clause relating to money transfers and mobile payments as well as a sunset clause of five years after the regulation comes into force.

Finally, I would like to congratulate the rapporteur on an excellent report on a very complex and important issue for the European Union.

  Sophia in 't Veld, on behalf of the ALDE Group. – (NL) Mr President, as a member of both the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home, I have to say, wearing both hats, that I am starting to get really concerned. From the perspective of civil liberties, I wonder where we are heading if we are going in for some sort of permanent and comprehensive monitoring of all citizens. In that way, the whole principle of presumption of innocence goes straight out the window!

As a member of the Committee on Economic and Monetary Affairs, I am worried about the burden on industry. I find it actually extraordinary that the Commissioner for the Internal Market should give an introduction that only covers the fight against terrorism, because we should actually also be discussing industry.

After all, commercial enterprises that simply go about their commercial activities, are increasingly burdened with the collection of data for police and judicial purposes. I would, by way of example, also draw your attention to the Directive on data storage and passenger name records. The effectiveness of all those measures is questionable. We appear to have some kind of blind faith in technology and that, as long as we collate as much data as possible on members of the public, we are bound to pick out a terrorist sooner or later. A recent report in the United States, however, makes an equally strong case for the fact that in reality, terrorists do not use standing orders to collect their criminal funds, but use all kinds of different channels for this. If we adopt measures of this kind, then I wonder in all honesty whether we may well force those money flows underground.

I hope in any case that we have made the proposal somewhat more workable for the enterprises that have to use it. I am, for example, pleased that the clauses about the EUR 1 000 and USD 1 000 thresholds are included. I would question whether the EUR 150 threshold for donations to charity organisations is not rather low after all. In this context, I would once again like to stress the importance of what we call purpose limitation, namely that those data are only used for the purpose for which they are collected.

Finally, I should like to add my voice to those who have already expressed their concern in no uncertain terms about the ‘Swift’ scandal that has recently come to light, and I think it is really high time for a much more fundamental debate on how we here in Europe want to fight terrorism effectively without affecting fundamental rights.

  Hubert Pirker (PPE-DE). – (DE) Mr President, Commissioner, ladies and gentlemen, as you are all aware, the European Union has already taken a host of measures in connection with the war on terrorism. One of the most effective measures needs further improvement, and that is why we are now looking at this means of checking the flow of funds.

In the war on terrorism we must not only assist the competent authorities in combating money laundering but must also go further by enacting measures to improve the surveillance of electronic payment transactions where these are being used to finance terrorism. For this reason, the authorities must be able to trace electronic payment transactions from start to finish. We do, however, need a practical solution, in other words a solution that helps the authorities without making unreasonable demands on providers of payment services. In the tabled proposals we have struck a decent balance between these requirements.

One of the problems is posed by donations. My own country of Austria is one of those in the spotlight here. We know that the donation system is being abused to finance terrorism. On the other hand, we cannot stop donations being made to charitable organisations or for academic or research purposes. This is why I am in favour of these practicable proposals being implemented for non-profit organisations, including those engaged in educational and scientific activities.

I also welcome the practicable solution of the reduced thresholds. This is another advance that came out of the negotiations. In general terms, I am convinced that this will give us a small but important additional instrument to cut off terrorist funding and to raise security standards in the European Union still higher.

  Wiesław Stefan Kuc (PSE). – (PL) Mr President, the proposed regulation is yet another piece of legislation which harms, that is to say limits, fundamental rights. The previous regulations dealt with population records, the introduction of microchips and so on. This measure aims to limit financial freedom. It continues the measures started in 1978 by OLAF (then called UKLAF) to combat large-scale tax fraud that damaged Community finances, a practice closely linked to organised crime.

How is the proposed regulation supposed to prevent money laundering and the funding of terrorism? By monitoring the billions of transactions our citizens make and storing them for a five-year period? I am sure it cannot do that! It is good that both the rapporteur and those bodies providing their opinions, namely the Committee on Economic and Monetary Affairs, the European Economic and Social Committee and the European Central Bank, have pointed out the serious flaws in the proposed regulation. To conclude, let us read it over once again and avoid creating a regulation that benefits the financial and secret services. Let us hope that we can avoid becoming their collaborators or victims in the future, something that is happening in Poland today.

  Charlie McCreevy, Member of the Commission. Mr President, for the record I wish to confirm that the Commission accepts all amendments that reflect the agreement allowing the adoption of this proposal in a single reading. I have arranged for a list of the Commission’s position on all amendments to be handed to the secretariat for inclusion in the record⁽¹⁾.

Some Members raised subjects this evening that are reflected in amendments that the Commission is not in a position to accept and these relate to the following. A threshold of 1000 euros or dollars for incoming transfers would deprive authorities in charge of fighting money laundering and terrorist financing of an effective means to do their job. Below the threshold, information on the payers would not have to be collected or recorded. The risk is that these funds could be used for financing new terrorist attacks.

Terrorist acts can be organised with little money. It has been estimated that the cost of the Madrid attacks only amounted to about EUR 8000 and any threshold for incoming transfers can easily be abused by dividing the amount to be transferred into several payments below the threshold.

The general sunset clause that would limit the applicability of this regulation in time: this was not accepted by the Council either. Such a clause could be useful in certain cases in the context of better regulation, but the Commission does not see added value in including this general clause in this regulation. Inserting this clause would mean that users and providers of payment services would be deprived of the necessary legal certainty.

A comprehensive review clause is no doubt better suited for this regulation. If it turns out in the light of the review that changes are needed, the Commission will set them in motion and I therefore appeal to the House to accept this sensible solution.

The comitology procedure under the provisions of this regulation covers a special procedure of authorisation by the Commission for Member States to conclude bilateral agreements with territories or countries outside the Community. Member States authorised to include such agreements will benefit from derogations from the obligations under the regulation. Such waivers will allow Member States to treat transfers of funds between that country or territory and the Member State concerned as transfers of funds within the Member State.

Amendment 103 limits in time, until 1 April 2008, the possibility for the Commission to grant such authorisations. Imposing such a sunset clause is clearly not in line with the recent agreement on the revised comitology procedure. As part of this deal both the Council and Parliament agreed not to limit in time the powers granted to the Commission. For the same reasons, Amendments 20, 22 and 24 are not acceptable either.

Some of you have raised the SWIFT crisis widely reported in the media during the last few weeks. You are aware that the issue is on Parliament’s agenda later this week and my colleague Mr Frattini will make a declaration on behalf of the Commission. We will make sure that we have all the facts of this case before taking any decision on further action.

As far as this regulation is concerned, the Commission considers that it contains the appropriate standards on data protection and access by the competent authorities to such data. Your rapporteur had the foresight to submit the proposal to the European Data Protection Supervisor, who gave a positive assessment. No problems were detected on data protection issues.

Let me stress once more that non-compliance by 1 January 2007 with the agreed international standards to ensure an effective fight against the financing of terrorism will not only send a negative message to the financial community on Europe’s commitment to fight terrorism. Non-compliance would also have significant economic consequences due to disruption of money flows from and to the European Union.

The Commission has been ready to take the concerns on board. The compromise found is a good one. It will make Europe a safer place and show that Europe lives up to its responsibilities in the world. I count on your support in bringing this dossier to a successful conclusion now at first reading, thus avoiding lengthy discussions and probably less satisfactory results at second reading.

  President. The debate is closed.

The vote will take place on Thursday at 12 noon.

Annex – Position of the Commission

Alvaro report (A6-0196/2006)

The Commission can accept the following amendments in full: 1, 2, 3, 4, 5, 7, 8, 12, 13, 15, 16, 17, 25, 27, 30, 31, 32, 33, 35, 37, 39, 41, 43, 45, 47, 48, 50, 53, 55, 56, 58, 60, 62, 64, 66, 69, 71, 73, 75, 77, 80, 86, 90, 91, 94, 96, 98, 99, 101, 106, 108, 110, 112, 114, 115, 117, 119, 121, as well as amendments 126 to 140, both inclusive.

The Commission is not in a position to accept any of the other amendments.