Table of Contents

1. BACKGROUND.. 3

2. PROCEDURAL ASPECTS. 3

3. THE OUTCOME OF THE JOINT REVIEW... 6

3.1. The value of the TFTP Provided Data. 6

3.2. The EU benefiting from TFTP data. 7

3.3. TFTP Provided Data accessed. 9

3.4. Requests to obtain data from the Designated Provider – the role of Europol 10

3.5. Monitoring safeguards and controls – the role of overseers. 13

3.6. Data security and integrity – independent audit. 15

3.7. Retention and deletion of data. 15

3.8. Transparency – providing information to the data subject. 17

3.9. Right of access and to rectification, erasure, or blocking. 17

3.9.1. Requests for access. 17

3.9.2. Requests for rectification, erasure, or blocking. 18

3.10. Redress. 19

3.11. Consultations under Article 19. 19

4. RECOMMENDATIONS AND CONCLUSION.. 21

ANNEX I 23

ANNEX II 24

ANNEX II A.. 41

ANNEX III 44

1. BACKGROUND

The Terrorist Finance Tracking Program (TFTP) was set up by the U.S. Treasury Department shortly after the terrorist attacks of 11 September 2001 when it began issuing legally binding production orders to a provider of financial payment messaging services for financial payment messaging data stored in the United States that would be used exclusively in the fight against terrorism and its financing.

Until the end of 2009, the provider stored all relevant financial messages on two identical servers, located in Europe and the United States. On 1 January 2010, the provider implemented its new messaging architecture, consisting of two processing zones – one zone in the United States and the other in the European Union.

In order to ensure the continuity of the TFTP under these new conditions, a new Agreement between the European Union and the United States on this issue was considered necessary. After an initial version of the Agreement did not receive the consent of the European Parliament, a revised version was negotiated and agreed upon in the summer of 2010. The European Parliament gave its consent to the Agreement on 8 July 2010, the Council approved it on 13 July 2010, and it entered into force on 1 August 2010.

2. PROCEDURAL ASPECTS

Article 13 of the Agreement provides for regular joint reviews of the safeguards, controls, and reciprocity provisions to be conducted by review teams from the European Union and the United States, including the European Commission, the U.S. Treasury Department, and representatives of two data protection authorities from EU Member States, and may also include security and data protection experts and persons with judicial experience.

Pursuant to Article 13 (2) of the Agreement, the review should have particular regard to:

(a) The number of financial payment messages accessed;

(b) The number of occasions on which leads have been shared with Member States, third countries, and Europol and Eurojust;

(c) The implementation and effectiveness of the Agreement, including the suitability of the mechanism for the transfer of information;

(d) Cases in which information has been used for the prevention, investigation, detection, or prosecution of terrorism or its financing;

(e) Compliance with the data protection obligations specified in the Agreement.

Article 13(2) further states that "the review shall include a representative and random sample of searches in order to verify compliance with the safeguards and controls set out in this Agreement, as well as a proportionality assessment of the Provided Data, based on the value of such data for the investigation, prevention, detection, or prosecution of terrorism or its financing."

The first joint review of the Agreement conducted in February 2011[1] covered the period of the first six months after the entry into force of the Agreement (1 August 2010 until 31 January 2011) and the second joint review conducted in October 2012[2] covered the subsequent period of twenty months (1 February 2011 until 30 September 2012).

On 27 November 2013 the Commission adopted the Communication on the Joint Report from the Commission and the U.S. Treasury Department regarding the value of TFTP Provided Data pursuant to Article 6 (6) of the Agreement[3].

This third joint review covers a period of seventeen months (1 October 2012 until 28 February 2014). In line with Article 13 (3), for the purposes of the review, the European Union was represented by the European Commission, and the United States was represented by the U.S. Treasury Department. The EU review team was headed by a senior Commission official and in total consisted of three members of Commission staff and representatives of two data protection authorities, one of whom was also the team's judicial expert. A list of the members of both the EU and US review teams is included in Annex I to this Report.

As to its schedule, the third joint review was carried out in two main steps: on 1 April 2014 in The Hague at Europol's premises and on 8 and 9 April 2014 in Washington at the U.S. Treasury Department (hereinafter “the Treasury”). The following methodology was applied:

– Both review teams first met in The Hague at Europol’s headquarters and were briefed by Europol senior staff and experts on Europol’s implementation of the Agreement. The teams visited the secure location where Europol handles the US requests. Prior to the visit, Europol provided a written contribution to the review, including the relevant statistical information (Annex III).

– To prepare the visit in Washington, the EU team had sent a questionnaire to the Treasury in advance of the review. This questionnaire contained a range of specific questions in relation to all the aspects of the review as specified in the Agreement. The Treasury provided written replies to the questionnaire (Annex II). The EU review team posed further questions to Treasury officials and was able to address all the various parameters of the Agreement.

– The EU team had sent the Treasury a selection of a representative and random sample of searches to be verified during the review visit.

– The review team members were granted access to relevant TFTP facilities. For security reasons, review team members were required to provide advance evidence of their security clearances to access the TFTP facility and to sign a copy of a non-disclosure agreement as a condition for their participation in this review exercise.

– The review teams were given a live demonstration of searches performed on the Provided Data, with the results shown and explained on screen by the analysts, while respecting the applicable US confidentiality requirements.

– The review teams had direct exchanges with Treasury personnel responsible for the implementation of the TFTP program, the Treasury's Office of the Assistant General Counsel for Enforcement and Intelligence, the Director for Privacy and Civil Liberties and the Deputy Assistant Secretary for Privacy, Transparency and Records, the overseers who review the searches of the data provided under the TFTP Agreement, and the auditor of the TFTP employed by the Designated Provider.

– The review teams were given a demonstration of and explanations about dissemination and scrutiny log files.

This report is based on the information contained in the written replies that the Treasury provided to the EU questionnaire, information obtained from the discussions with Treasury personnel as well as information contained in other publicly available Treasury documents. In addition, information provided by Europol staff, during the review, was used and the inspection report of Europol's Joint Supervisory Body (JSB) from March 2013[4] was considered. To complete the information available to it, the Commission also met and received information from the Designated Provider.

Due to the sensitive nature of the TFTP some information was provided to the review team under the condition that it would be treated as classified up to the level of EU SECRET. Certain classified information was only made available for consultation and reading on the Treasury premises. All members of the EU team had to sign non-disclosure agreements exposing them to criminal and/or civil sanctions for breaches. However, this did not hamper the work of the joint review team and all issues identified during the review are included in this report.

As in case of the past reviews, the third review was based on the understanding that it was not its task to provide a political judgement on the Agreement, this being considered outside the scope and mandate under Article 13. The focus of this report is therefore to present the results of the review in a manner which is as objective as possible.

Before, during, and after the review there has been an exchange of views in an open and constructive spirit, which covered all the questions of the review teams. The Commission would like to acknowledge the excellent cooperation on the part of all Treasury and other U.S. personnel, Europol's and the Designated Provider's staff, as well as the two EU overseers.

Finally it should be clarified that this report was prepared by, and reflects the views of, the EU review team, based on the work of the joint review and other work independently conducted on the EU side. However, the modalities for the third review and the procedure for the issuance of this report were agreed with the Treasury, including an opportunity for the latter of prior reading of this report for the purpose of identifying any classified or sensitive information that could not be disclosed to the public.

This report and the recommendations contained herein have been approved by the members of the EU review team.

3. THE OUTCOME OF THE JOINT REVIEW 3.1. The value of the TFTP Provided Data

In line with Article 13 (2) of the Agreement, the proportionality of the TFTP Provided Data should be assessed on the basis of the value of such data for the fight against terrorism and its financing. Understanding the ways in which the TFTP-derived information may be used as well as the provision of numerous concrete examples as underlying evidence is the balanced approach for such an assessment.

Since the entry into force of the Agreement and in response to the Commission's requests, the U.S. authorities have become increasingly transparent in sharing information illustrating the value of the TFTP.

During the first joint review, the Treasury provided numerous classified examples of high profile terrorism-related cases where TFTP-derived information had been used. For the second joint review, the Treasury provided an annex containing 15 concrete examples of specific investigations in which TFTP provided key leads to counter-terrorism investigators.

Pursuant to Article 6 (6) of the Agreement, the Commission and the Treasury prepared a joint report regarding the value of the TFTP Provided Data (Joint Value Report)[5]. The Joint Value Report of 27 November 2013 explains how the TFTP has been used and includes many specific examples where the TFTP-derived information has been valuable in counter-terrorism investigations in the United States and the EU.

In the course of this review, the Treasury emphasised the importance of the TFTP for global counter-terrorism efforts as a unique instrument to provide timely, accurate and reliable information about activities associated with suspected acts of terrorist planning and financing. The TFTP helps to identify and track terrorists and their support networks.

In addition to the examples provided during the past two reviews and in the Value Report, twelve recent cases included in Annex IIA further demonstrate how the TFTP helped international counter-terrorism efforts. The review team heard from the Treasury analysts how the TFTP information is analysed and was given classified presentations of numerous recent examples of counter-terrorism cases around the world in which TFTP information played a decisive or important role.

The Commission welcomes the efforts of the Treasury to collect, analyse and make available to the review team and to the public examples demonstrating the important value of the TFTP despite the limitations given by the nature of highly sensitive counter-terrorism investigations. On the basis of the information provided by the Treasury, Europol and EU authorities over the time, the Commission is of the view that the TFTP remains an efficient instrument contributing to the fight against terrorism and its financing in the United States, the EU and elsewhere.

3.2. The EU benefiting from TFTP data

Reciprocity is a basic principle underlying the Agreement and two provisions (Articles 9 and 10) are the basis for Member States as well as, where appropriate, Europol and Eurojust to benefit from TFTP data.

Pursuant to Article 9, the Treasury shall ensure the availability to law enforcement, public security, or counter-terrorism authorities of concerned Member States, and, as appropriate, to Europol and Eurojust, of information obtained through the TFTP. Article 10 stipulates that a law enforcement, public security, or counter-terrorism authority of a Member State, or Europol or Eurojust, may request a search for relevant information obtained through the TFTP from the US if it determines that there is reason to believe that a person or entity has a nexus to terrorism or its financing. There is no legal obligation for the Treasury and Member States to channel Article 9 and 10 TFTP-derived information and requests through Europol. The review team noted that while Europol was involved in all Member States' requests under Article 10, the provision of spontaneous information under Article 9 was, in most cases, made directly to Member States authorities.

The use of this mechanism by Member States and the EU has increased since the initial phase of the implementation of the Agreement. There were fifteen requests from Member States and the EU received by the Treasury under Article 10 during the six-month period covered by the first review report. During the twenty months covered by the second review Member States and the EU submitted 94 requests to the Treasury. 70 requests were received by the Treasury during the seventeen months covered by this review. Europol has initiated in total 31 Article 10 requests since the beginning of the Agreement, of which 17 were during the current review period. There were no new requests by Eurojust covered by this review.

The number of leads generated by the TFTP in response to Article 10 requests has increased significantly. During the review period there were 3,929 leads contained in the 41[6] responses provided to Member States and Europol as compared to 606 leads contained in the 57 responses provided to Member States and Europol during the period of the second review.

Annex IIA also includes examples of terrorism-related investigations by European authorities. During the review period the TFTP provided leads relating to numerous terrorist suspects, including foreign fighters travelling to or returning from Syria and the support networks facilitating or funding their movements and training.

As a written contribution for the review, Europol provided two recent cases in which it received valuable TFTP-derived information in response to its Article 10 requests.

In 2013, Europol’s TFTP team initiated an Article 10 request regarding several money transactions suspected of being part of the financing of the Liberation Tigers of Tamil Eelam (LTTE). The financial leads retrieved were considered to be current and corroborated available information. Furthermore, the leads generated previously unknown information (foreign bank accounts and contact information) and previously unknown individuals as well as suspects. The 91 financial leads retrieved were shared with 6 Member States and a third state. The two main suspects were arrested on 18 March 2013.

In an additional case, the initial trigger for using the TFTP was provided by investigations in several EU Member States and the US which had shown that a company and its subsidiaries as well as associated business structures were key actors and facilitators of a money laundering and terrorist financing scheme, involving a number of members and supporters of Hezbollah's military wing. Through the TFTP, it was possible to track down the financing streams. Overall, Article 10 searches in this case resulted in over 700 financial intelligence leads, with a combined value of over €46 million. Close to 300 leads were related to European countries. In March 2014, Europol hosted various law enforcement officials from several Member States and a third country to discuss the TFTP leads obtained. Discussion focused on how law enforcement can use TFTP leads to investigate the illicit activities of Hezbollah's military wing.

Throughout the implementation of the Agreement, Europol has played an active role in raising the awareness of the possibilities available under the TFTP by promoting the reciprocity provisions through dedicated campaigns in Member States. In June 2014, Europol organised a practitioners meeting with the aim of maximising the use of the TFTP, both in the interests of the US authorities and of Member States.

Pursuant to Article 9, U.S. investigators supplied 55 TFTP-derived reports consisting of 1,492 leads during this review period. This figure includes both the information provided to/through Europol and directly to Member States' authorities. Usually the information provided directly would be shared in the context of an investigation of a counter-terrorism case of mutual concern for the U.S. and a Member State.

During the review, the Treasury explained that the U.S. authorities often lack feedback on the usefulness of the TFTP leads supplied to Member States under Articles 10 and 9 of the Agreement. Such information would help to understand Member States' needs better, the desirability of a follow-up of cases and would further improve the future provision of TFTP leads. The Commission proposes that Member States consider providing regular feedback on the TFTP data received from the Treasury, which could further improve the quality and the quantity of information exchanged under Articles 9 and 10 of the Agreement.

EU Terrorist Finance Tracking System (EU TFTS)

Article 2 of the Council Decision on the conclusion of the Agreement invited the Commission to submit, within one year of the date of entry into force of the Agreement, a legal and technical framework for the extraction of data on EU territory and, within three years of the date of entry into force of the Agreement, to present a progress report on the development of an equivalent EU system. Article 11 of the Agreement states that during the course of the Agreement, the Commission will carry out a study into the possible introduction of an equivalent EU system allowing for a more targeted transfer of data.

The Commission’s Communication on the European Terrorist Finance Tracking Programme of 27 November 2013[7] builds on the study contracted in 2010, the Commission Communication of 13 July 2011[8] and on the Commission's own Impact Assessment of the options for an EU TFTS with regard to their necessity, proportionality, cost-effectiveness and respect of fundamental rights. As a result of this assessment the Commission concluded that at this stage the case to present a proposal for an EU TFTS was not clearly demonstrated and asked for the views of the European Parliament and the Council on its conclusion.

In the absence of an EU TFTS, the reciprocity dimension of the TFTP becomes even more important. The Commission suggests that Europol continues its efforts to actively promote the awareness of the TFTP and supports Member States seeking its advice and experience in devising Article 10 Requests. The Commission also encourages Member States to exploit to the full the possibilities available under the TFTP.

The Commission acknowledges that the close cooperation between the US authorities, Europol and EU counter-terrorism authorities in assessing and communicating on terrorism-related threats bring assurances that the threat from the EU perspective is also addressed when defining the U.S. requests as described in 3.4 below. Such cooperation should remain clearly distinct from the verification role of Europol under Article 4 of the Agreement.

3.3. TFTP Provided Data accessed

Article 13 of the Agreement stipulates that the review should have a particular regard to, inter alia, the number of financial payment messages accessed.

As explained in Annex II and during the review, on the one hand, the same financial payment messages may respond to multiple searches needed in one or more investigations, while on the other hand, there are searches that return no results. Searches that yield multiple results may allow analysts to determine from the search results whether individual messages should be viewed, and thereby accessed, or whether they need not be accessed. The overwhelming majority of messages that are accessed will never be disseminated; most will be viewed for a few seconds to determine their value and then closed, with no further action or dissemination. For these reasons, the most realistic and pragmatic way to measure the actual usage of TFTP data is to consider the number of searches run on the data.

During the review period, TFTP analysts conducted 22,838 searches of the TFTP, for an average of 1,343 searches per month as compared to 1,590 searches per month in the previous reporting period. This number includes searches involving data stored in and obtained from the United States, as well as data stored in and obtained from the EU pursuant to the Agreement. This number includes searches of financial payment messages from financial institutions around the world, most of which involve neither the EU nor its residents.

The Treasury maintains its view that disclosure of overly detailed information on data volumes would in fact provide indications as to the message types and geographical regions sought (in combination with other publicly available information) and would have the effect that terrorists would try to avoid such message types in those regions. It is not an obligation, under the Agreement, for the U.S. side to provide information on the volume of financial messages transferred under the Agreement.

As in the past, the Treasury agreed to provide trends giving some indications on the actual overall amount of data transferred without compromising the effectiveness of the TFTP. According to the information shared by the Treasury, the trend of the number of financial messages received from the Designated Provider has been slightly higher over the course of the 17 months of the review period. The increase was primarily the result of an increase in the volume of the message types responsive to the requests transiting the Designated Provider’s system.

3.4. Requests to obtain data from the Designated Provider – the role of Europol

The Agreement gives an important role to Europol, which is responsible for receiving a copy of data requests, along with any supplemental documentation, and verifying that these U.S. requests for data comply with conditions specified in Article 4 of the Agreement, including that they must be tailored as narrowly as possible in order to minimise the volume of data requested. Once Europol confirms that the request complies with the stated conditions, the data provider is authorised and required to provide the data to the Treasury. Europol does not have direct access to the data submitted by the data provider to the Treasury and does not perform searches on the TFTP data.

The requests under Article 4 were received, on average, every month, and covered a period of four weeks. During the period under review, Europol received eighteen requests from the Treasury. The statistical information provided by Europol to the review team is attached as Annex III.

Given that the supporting documentation for Article 4 requests has continuously developed further from a quantitative and qualitative perspective, much of it in response to requests from Europol and the following up of recommendations made to Europol by the JSB, during the review period, Europol was not required to ask for supplemental information in order to complete its verification under Article 4 of the EU-US TFTP Agreement. Europol issued a delay notification to the Designated Provider on one occasion because the verification process was expected to take longer than two working days.

In addition to information received both orally and in writing from the Treasury and Europol, the review team examined two Article 4 requests' classified supporting documentation and on that basis discussed with the Treasury the procedures for the preparation and handling of their requests and scope.

The process for preparation, verification and validation of Article 4 requests by the Treasury remained the same as in the previous review. Taking into consideration the most recent terrorist threats and vulnerabilities, counter-terrorism analysts assess the scope of the request and update the supplemental documentation for Europol to include recent specific and concrete examples of terrorist threats and vulnerabilities, as well as the uses of TFTP data and how they relate to the request. Treasury policy staff then provide relevant policy updates and review the documents for accuracy and completeness. Next, the Treasury counsel conducts a thorough legal review to ensure that the request, including the supplemental documents, complies with the criteria of Article 4. Finally, the Director of the Treasury’s Office of Foreign Assets Control reviews the documents and confirms that the Article 4 standards are satisfied and that the request reflects current counter-terrorism reports and analyses.

Article 4 requests take into account the results of the Treasury's regular evaluation of the extracted data received and the utility and necessity of the data for counter-terrorism purposes. A large-scale audit and analysis of the extracted data is conducted every year, analysing on a quantitative and qualitative basis the types of data most relevant to counter-terrorism investigations, and the geographic regions where the terrorist threat is particularly high or most relevant or susceptible to relevant terrorist activity.

The audit and analysis occurs in several stages. First, a comprehensive electronic assessment of the extracted data is conducted to determine the message types and geographic regions that are the most and least responsive to TFTP searches. Second, those message types and geographic regions that have been the least responsive are scrutinized to determine their qualitative component – namely, whether the relatively few responses returned nevertheless contained high-quality information or were of particular value for the purposes of the prevention, investigation, detection, or prosecution of terrorism or its financing. Third, those message types and/or geographic regions that, from a quantitative or qualitative standpoint at the time of the evaluation, do not appear necessary to combat terrorism or its financing are removed from the Article 4 request.

The Treasury conducted two such large-scale evaluations during the review period, concluding in October 2012 and December 2013. In October 2012, the Treasury refined and narrowed the message types included in its requests, based on a determination during the Treasury’s comprehensive annual audit and analysis that particular message type(s) did not provide sufficient value to counter-terrorism investigations at that time. The Treasury completed a subsequent comprehensive annual audit and analysis in December 2013, in which the Treasury determined all of the message types included in its requests at the time to be necessary for the purpose of the prevention, investigation, detection, or prosecution of terrorism or terrorist financing.

The Treasury modified the geographic regions responsive to its requests three times during the review period as a result of evolving threat data (each time slightly expanding the geographic regions responsive to the request).

Europol outlined its well established verification process under Article 4 of the Agreement to the review team, which also includes obtaining advice from its Data Protection Officer. The assessment of security needs and operational considerations, on which the requests are based and against which the requirement for requests to be tailored as narrowly as possible is examined, remains core for an efficient verification. Europol, as a law enforcement agency, has the necessary knowledge and ability to cover these aspects.

The Commission acknowledges the benefits of the close cooperation between the US authorities, Europol and EU counter-terrorism authorities in assessing and communicating on terrorism-related threats. It is important that such cooperation, while certainly desirable and beneficial, remains distinct from Europol's verification role under Article 4 of the Agreement.

The review team considered the JSB Report of 18 March 2013 noting the clear improvements in content, relevance, accuracy, accountability and readability of the Treasury's requests. The report states that Europol implements its task under the terms of the Agreement to the best of its abilities, in line with the JSB's recommendations.

The review team received information from the Designated Provider on the security measures put in place in order to ensure the protection of data that is subject to the Agreement. The Designated Provider also confirmed that it had not encountered any issues in relation to the transfer of data under the Agreement.

Both Europol and the Treasury explained that no SEPA data has been requested or transmitted, which was also confirmed by the Designated Provider.

Based on the explanations and information provided by Europol and the Treasury during the review, and also from the Designated Provider, it can be concluded that Europol is fully accomplishing its tasks pursuant to Article 4.

Request for public access – Involvement of the European Ombudsman

In the reporting period, following Europol’s decision not to grant public access to the classified part of the second inspection report of the JSB on Europol’s handling of Article 4 requests (from 2012), a member of the European Parliament (EP) lodged a complaint with the European Ombudsman in 2013. Europol provided its observations to the European Ombudsman, including Europol’s views on the case which are releasable to the complainant.

Europol informed the Commission that it is confident that the public access request was assessed in accordance with the applicable regulatory framework in a diligent manner, in consultation with the US authorities (as data originator of the underlying classified information). The complainant’s original application, as well as the confirmatory application for public access, were given thorough consideration. Accordingly, from Europol’s perspective, there were no grounds to deviate from the original decision on the basis of the complaint, i.e. to uphold the decision to deny public access. In its reply to the Ombudsman Europol explained, contrary to the assumption expressed by the complainant, that the JSB did not agree to publish the classified part of the second inspection report, given that the JSB proposed to release the classified part of the inspection report to the LIBE Committee through ‘restricted access’, not to publish it (public access). Europol also highlighted to the Ombudsman that legal requirements and practical modalities for access by the European Parliament to classified information processed by Europol are not in force.

Europol informed the Commission that it expects the deliberations on the case by the European Ombudsman in the course of 2014.

3.5. Monitoring safeguards and controls – the role of overseers

Article 5 provides for safeguards to ensure that the provided data is only accessed in cases where there is a clear nexus to terrorism or its financing, and where the search of the data is narrowly tailored. The Treasury is responsible for ensuring that the Provided Data is only processed in accordance with the Agreement. These safeguards are intended to ensure that only the data responsive to specific and justified searches on the subjects with a nexus to terrorism and its financing is actually accessed. This means in practice that while all data provided pursuant to Article 4 is searched, only a small proportion of the data is actually viewed and accessed. Therefore the data of persons not retrieved in a specific counter-terrorism search will not be accessed and the fact that the data was transferred to the U.S. authorities will thus not produce any effect on these persons.

The review team verified that the safeguards described in Article 5 have been put in place and function as intended. To this end, the review team also checked a representative sample of searches selected in advance of the review and found no instances of non-compliance with the provisions of the Agreement. In addition, the review team specifically looked at the functioning of the oversight mechanism described in Article 12.

Technical provisions have been put in place which aim at ensuring that no search can take place without the entry of information on the terrorism nexus of the search. The Commission is satisfied that data is processed exclusively for the purpose of preventing, investigating, detecting or prosecuting terrorism or its financing (Article 5 (2)).

The review team saw a practical demonstration of a search at the Treasury. The analysts operating the searches demonstrated that specific measures have been taken with the objective that the searches are tailored as narrowly as possible by meeting both operational and data protection considerations. The Treasury highlighted the fact that the operational effectiveness of the system would be reduced by searches which are not narrowly tailored, since these would return too many results and thus too much irrelevant data.

The respect of these safeguards is ensured through the work of independent overseers, as referred to in Article 12.

The review team had the opportunity to speak to both the Designated Provider's and the EU's overseers. The second overseer appointed by the EU became fully operational in the course of the review period. The review team was informed that the overseers verify all the searches performed on the provided data. In accordance with the provisions of the Agreement, they have the possibility to review in real time and retroactively all searches made of the Provided Data, to request additional information to justify the terrorism nexus of these searches, and the authority to block any or all searches that appear to be in breach of the safeguards laid down in Article 5.

The overseers confirmed that they had made full use of these powers: all overseers, including the overseers appointed by the EU, had had requested additional information on an on-going basis and also blocked searches. The overseers performed real-time and retrospective reviews. It was confirmed to the review team that, even in cases of retrospective review, the Treasury does not disseminate any data before notification by the overseers.

During the review period the overseers verified all 22,838 searches conducted by the analysts, queried 621 searches and blocked 30 searches, the search terms of which were considered to be too broad. The overseers verified the vast majority of the searches as they occurred and all of the searches, including those reviewed as they occurred, within one working day.

The overseers work in a complementary way by supporting each other in order to accomplish their tasks. The fact that a search has been selected for scrutiny by one of the overseers is visible to the other overseers, who would generally not select the same search in order to avoid the duplication and maximize the efficiency of the oversight. For this reason the information about the searches queried and blocked by the overseers was provided as a total figure in Annex II.

During the consultations conducted under Article 19 of the Agreement in 2013 (see 3.11. below), the Commission and the Treasury agreed to intensify efforts to keep the implementation of the Agreement under close scrutiny. In this context they agreed on measures further supporting the role of the EU overseers.

The EU overseers now have the opportunity to:

- discuss general developments, day to day cooperation and any operational matters relating to the TFTP during the quarterly meetings with the management of the Treasury;

- receive monthly threat briefings on terrorist financing methods, techniques and operations relevant to the TFTP in order to have up-to-date knowledge useful for the fulfilment of their function;

- discuss the results of the Designated Provider's oversight and audit functions during the quarterly and ad-hoc meetings.

The Commission is satisfied that the oversight mechanism is functioning smoothly and is effective in ensuring that the processing of data complies with the conditions laid down in Article 5 of the Agreement.

3.6. Data security and integrity – independent audit

The review team visited the location where TFTP-related searches are carried out and data is handled. In addition, questions related to this issue in the questionnaire – as well as those raised orally in the course of the on-site visit – were replied to comprehensively and convincingly by the Treasury.

The review team had the opportunity to speak to a representative of the Designated Provider responsible for auditing procedures to test data security and integrity which give additional assurances as to the compliance of the TFTP with the provisions of the Agreement. He provided a detailed presentation and replied to all subsequent questions raised by the team.

Based on all this, the Commission considers the measures taken to ensure data security and integrity as commendable. The various presentations to the joint review team demonstrate that utmost care has been and is being taken by the US authorities to ensure that the data is held in a secure physical environment; that access to the data is limited to authorised analysts investigating terrorism or its financing and to persons involved in the technical support, management, and oversight of the TFTP; that the data is not interconnected with any other database; and that the Provided Data shall not and even cannot be subject to any manipulation, alteration or addition as the Designated Provider or the issuing bank would be the only ones having the actual capability to do so. In addition, no copies of the Provided Data can be made, other than for recovery back-up purposes.

The independent auditors’ representative, who monitors the implementation of these safeguards on a daily basis, confirmed that they execute regular security tests related amongst others to application, physical, logistical, network and database security. They also closely monitor and verify the deletion processes. These auditors report back to the Designated Provider every three months, including on whether there have been any discrepancies or atypical occurrences related to the data traffic.

Following these thorough explanations, it can be concluded that Article 5 has been implemented appropriately.

3.7. Retention and deletion of data

The review team received detailed explanations on the deletion process and its challenges due to the technical complexity of the system, the need to ensure strict compliance with the Agreement's safeguards and the danger of causing any accidental harm to the functioning of the whole system as well as on data not yet designated for deletion. The deletion process is closely monitored and verified by the independent auditors’ representative. For these reasons this complex deletion exercise cannot be implemented as an automated process.

In order to fully comply with provisions of Article 6 (4) of the Agreement and in response to the recommendation of the second joint review, the Treasury now deletes the data on a semi-annual basis in order to ensure that all non-extracted data is deleted at the latest five years from receipt. All non-extracted data received prior to 30 June 2009 had already been deleted at the time of the review, well ahead of the due date.

Article 6 (1) requires that the Treasury should undertake an ongoing and at least annual evaluation to identify non-extracted data that is no longer necessary to combat terrorism or its financing. Where such data is identified, the Treasury should delete it as soon as technologically feasible.

Message types or geographic regions identified by the regular evaluation of the extracted data received described under 3.5. as not appearing necessary to combat terrorism or its financing are not only removed from future Article 4 requests, but also permanently deleted from the retained non-extracted data during the course of a semi-annual deletion process. The Treasury confirmed that this deletion has occurred with respect to all data received in response to message types or geographic regions removed from Article 4 requests.

Article 6 (5) requires the Treasury to undertake an on-going and at least annual evaluation to assess the data retention periods specified in Article 6 (3) and (4) to ensure that they continue to be no longer than necessary to combat terrorism or its financing.

The Treasury assesses the data retention periods as part of the regular evaluation of the extracted data received described under 3.5 which includes investigators' interviews, reviews of counter-terrorism investigations, and an evaluation of current terrorist threats and activity. Based on its results, the Treasury is of the view that the current retention period is appropriate. The Joint Value Report adopted by the Commission on 27 November 2013 concluded that the reduction of the TFTP data retention period to less than five years would result in a significant loss of insights into the funding and operations of terrorist groups.

According to Article 6 (7) the information extracted from the Provided Data, including information shared under Article 7, shall be retained for no longer than necessary for specific investigations or prosecutions for which they are used. The review team discussed with the Treasury the reasonable and efficient implementation of this provision, which does not impose a specific retention period.

The Treasury explained that, with regard to the disseminated information, it notifies law enforcement and intelligence agencies that receive leads derived from the TFTP data to retain them for a period no longer than is necessary for the purpose for which they were shared. Furthermore, counter-terrorism analysts using the TFTP receive training on the safeguards, dissemination, and retention procedures required by the Agreement prior to use of the system. In addition U.S. Government agencies are obliged to develop and implement retention schedules describing the disposal of their records.

As regards the extracted data retained in the TFTP database, the Treasury informed the review team that it assesses the necessity of extracted data in the sense of Article 6 (7) during its regular evaluations described under 3.4., and in relation to, inter alia, ongoing investigations and prosecutions. In order to ensure that extracted information will be deleted if no longer necessary to retain, the Commission recommends that this aspect is included and specified in the Treasury's instructions for the regular evaluations and continues to be monitored in the future.

3.8. Transparency – providing information to the data subject

As required by Article 14, the Treasury has set up a specific website with information on the Terrorist Finance Tracking Program, to be found at http://www.treasury.gov/tftp. The website also contains a document containing questions and answers about the TFTP, which was last updated in March 2014 (and again in May 2014, following the review period).

Apart from the website, the Treasury also has an e-mail service available, as well as a telephone hotline. The telephone hotline has a special option in the dial menu which leads to more information on the TFTP. The automatic message the individual receives refers to the Treasury website and includes the possibility of leaving a voicemail message. The review team was given a demonstration on how this works in practice. The Treasury confirmed that its personnel will call back the individual, if possible, within 24 hours. During the review period, none of the recorded voicemail messages were related to the TFTP. The Commission welcomes the Treasury's practice of recording voicemail messages as this provides better safeguards for accountability.

The Treasury personnel responded to several emails received in the assigned e-mail account (tftp@treasury.gov) containing questions about the scope of the TFTP.

3.9. Right of access and to rectification, erasure, or blocking

Upon the entry into force of the Agreement, the Treasury set up procedures for individuals to seek access to their personal data under the TFTP Agreement and to exercise the rights to rectification, erasure or blocking of their personal data under the Agreement. These procedures are described in Annex II and can also be found on the Treasury website. They have to comply with US national law as well as the Agreement.

During the review period, the Commission and the Treasury continued working together and in cooperation with the EU's Article 29 Working Party to establish uniform verification procedures and common templates to be applied by all National Data Protection Authorities (NDPAs) when receiving the requests from EU citizens. These procedures have been agreed upon and put in place as of 1 September 2013. Prior to that the Article 29 Working Party informed all its members and requested that they make the information and the forms available on their respective websites.

3.9.1. Requests for access

Pursuant to Article 15 (1) of the Agreement, any person has the right to obtain at least a confirmation transmitted through his or her NDPA as to whether that person's data protection rights have been respected in compliance with the Agreement and, in particular, whether any processing of that person's personal data has taken place in breach of this Agreement. This does not provide for the right of persons to receive a confirmation as to whether that person's data has been amongst the TFTP Provided Data. Otherwise, Provided Data not previously accessed in the course of a terrorism-related investigation would have to be accessed, and that would be considered a breach of the purpose limitation provisions of the Agreement.

As of 28 February 2014, the Treasury had received one compliant request, through a European NDPA, in which an individual sought to exercise the provisions described in Article 15 of the Agreement. The Treasury is in the process of responding to this request.

The Treasury also received an email from a European NDPA, through the TFTP email address posted on the Treasury Department’s TFTP web page (www.treasury.gov/tftp), stating that an individual is seeking to exercise the provisions described in Article 15 of the Agreement. The Treasury Department responded via email outlining the relevant procedures for the NDPA to submit the request. By the time of the review the Treasury had not yet received this second request.

The Treasury explained to the review team the process and the technical aspects of preparing a responsible and correct response to a request. When verifying whether the data of the requester have been accessed, the Treasury needs to ensure strict compliance with the Agreement's safeguards. During the process monitored and verified by the independent auditors' representative, the Treasury would review all search logs and extracted data in order to respond on whether the requester's data protection rights have been respected in compliance with the Agreement and in particular whether any processing of that person's data has taken place in breach of the Agreement in accordance with Article 15 (1). The review team and the Treasury also discussed how to apply reasonable limitations foreseen in Article 15 (2). The Commission will continue discussion on the interpretation of Article 15 concerning the right of access in light of the actual responses Treasury will provide in the future.

3.9.2. Requests for rectification, erasure, or blocking

Article 16 (1) provides for the right of any person to seek the rectification, erasure, or blocking of his or her personal data processed by the Treasury pursuant to the Agreement where the data is inaccurate or the processing contravenes the Agreement.

No requests for rectification, erasure or blocking of personal data under the TFTP had been received by the Treasury by the time of the review.

In response to the recommendation of the second review, the Treasury included information about the implications of Article 5 (4) d), which forbids any manipulation, alteration, or addition of the TFTP Provided Data, on the process of rectification in the TFTP questions and answers document published on the Treasury website[9].

3.10. Redress

According to Article 18, individuals have several possibilities for redress, both under European law and under U.S. law. During the review, only the U.S. redress mechanism was discussed. As since the entry into force of the Agreement there has not been any case of a claim for redress addressed to the U.S., the possible options have not been asserted in practice.

The Agreement provides that any person who considers his or her personal data to have been processed in breach of the Agreement may seek effective administrative or judicial redress in accordance with the laws of the EU, its Member States, and the United States, respectively. The United States has agreed that the Treasury should treat all persons equally in the application of its administrative process, regardless of nationality or country of residence.

Subject to Article 20 (1), the Agreement provides for persons, regardless of nationality or country of residence, to have available under U.S. law a process for seeking judicial redress from an adverse administrative action. Relevant statutes for seeking redress from an adverse Treasury administrative action in connection with personal data received pursuant to the Agreement may include the Administrative Procedure Act and the Freedom of Information Act. The Administrative Procedure Act allows persons who have suffered harm as a result of certain U.S. Government agency actions to seek judicial review of such actions. The Freedom of Information Act allows persons to utilize administrative and judicial remedies to seek government records.

According to the Treasury, an EU citizen or resident may seek judicial redress from an adverse administrative action by filing a complaint with a court in an appropriate venue.

3.11. Consultations under Article 19

In reaction to the 2013 media allegations about the U.S. possibly accessing SWIFT data outside the Agreement, the Commission initiated formal consultations as a framework to assess whether the implementation of the Agreement might have been affected. The U.S. side provided explanations and gave written reassurances that the U.S. government has not, since the entry into force of the Agreement, collected financial payment messages from the Designated Provider in the EU except as authorised by the Agreement. In this context European Commissioner for Home Affairs Cecilia Malmström and U.S. Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen have also agreed to intensify efforts to keep the implementation of the Agreement under close scrutiny over the coming months and in the longer term and agreed on some concrete measures to achieve this, including measures further supporting the role of the EU independent overseers and advancing this review to spring 2014[10].

During the consultations the Commission also conducted a dialogue with the Designated Provider to determine whether its data has been accessed by the U.S. contrary to the Agreement. Separately, the General Counsel of the Designated Provider was invited by the Committee on Civil Liberties, Justice and Home Affairs (LIBE Committee) of the European Parliament to make a statement to its Inquiry on electronic mass surveillance of EU citizens. More detailed information is provided below.

On 27 November 2013, Commissioner Malmström informed the European Parliament about closing the consultation process, which had not revealed any elements indicating a breach of the Agreement. The results of this review provide further assurances that the Agreement has been properly implemented by the U.S. side.

In reply to the specific question of the EU review team (question 12 in Annex II), the Treasury confirmed the validity of the assurances given during the consultations. It stated that since the TFTP Agreement entered into force in August 2010, the U.S. Government – including all departments and agencies – has not collected financial payment messages from the Designated Provider in the European Union, except as authorized by the TFTP Agreement. The Treasury also stated that, during that time, the U.S. Government has not served any subpoenas on the Designated Provider in the EU or on the Designated Provider in the United States requesting the production of data stored in the EU, except as authorized by Article 4 of the TFTP Agreement. The Treasury also confirmed that the United States has remained and intends to remain in full compliance with all of its commitments under the TFTP Agreement.

At the end of 2013 the Dutch and the Belgian data protection authorities opened an investigation into the security of financial messaging data at the Designated Provider, partially following reports in international media that foreign intelligence services allegedly had unlawful access to financial messaging data at the Designated Provider. On 8 May 2014 the two data protection authorities concluded that during their investigation into the security of the computer networks of the Designated Provider, they did not find any violations of legal security requirements. The investigating data protection authorities also had no indications that third parties have had or could have had unlawful access to financial messaging data related to European citizens[11].

Statement by the Designated Provider on its security protection

On 24 September, the General Counsel of the Designated Provider informed the Inquiry on electronic mass surveillance of EU citizens of the LIBE Committee that the Company had no evidence to suggest that there has ever been any unauthorised access to its systems or data and provided explanations about the security protection in place. The relevant elements of the Statement are described below.

The Designated Provider operates its services to the highest data protection and security standards, as security is of the utmost importance to its customers. To achieve this objective, the messages and data flows are encrypted and logical security and physical security requirements are identified, implemented and continuously monitored. Concrete examples of how the Designated Provider builds its defensive security architecture for its critical systems and services were also presented.

The Designated Provider has a structured and tiered internal network infrastructure which ensures that servers and data are shielded away from threats, whether internal or external. Its network is isolated from the pure Internet. All external network accesses are restricted and internal duties strictly segregated. Tight network controls are imposed and strong security baselines operated on.

The Designated Provider has also deployed a set of deterrence and detective controls, including, inter alia, intrusion-detection systems and protected logging, application-specific correlation capabilities and network behaviour analysis tools. The Designated Provider has an intrusion-testing programme including logical and physical security, as well as social engineering aspects and a process in place to help ensure that findings are prioritised so that appropriate and timely actions are taken accordingly. This programme covers all exposed components of the service delivery, from network to application level.

The Designated Provider has defined strict guidelines for the maintenance, repair and disposal of equipment or media such as computers with hard disks, disk units, and other storage media to ensure that data cannot be recovered. Rigorous staff vetting procedures are in place, which include background screening, reference checking and maintaining security awareness through on-going training and communication programmes.

Physical access to the Designated Provider's premises, computer equipment, data storage and resources is restricted. The operating centres are designed to house mission-critical computer operations. Physical security controls are in place to prevent, deter, detect and delay penetration. The perimeters around the operating centres are enclosed, guarded and monitored. Access tokens and associated Personal Identification Numbers or Biometrics exist for doors and provide audit trails of access to computer floors.

Finally the Designated Provider's security, including the processes and technical controls in place to ensure its customers' data protection, is subject to multiple levels of oversight.

4. RECOMMENDATIONS AND CONCLUSION

On the basis of the information and explanations received from the Treasury, Europol, the Designated Provider and the independent overseers, verification of relevant documents and of a representative sample of the searches run on the TFTP provided data, the Commission is satisfied that the Agreement and its safeguards and controls are properly implemented and that the findings of the second joint review have been followed up by the Treasury.

In its written reply to the questionnaire (Annex II), the Treasury confirmed the validity of the assurances given during the 2013 consultations. In particular, it restated that since the TFTP Agreement entered into force in August 2010, the U.S. Government – including all departments and agencies – has not collected financial payment messages from the Designated Provider in the European Union, except as authorized by the TFTP Agreement.

The Commission welcomes the efforts made by the Treasury to collect, analyse and make available to the review team and to the public numerous examples demonstrating the important value of the TFTP for counter-terrorism investigations worldwide, despite the limitations given by the highly sensitive nature of these investigations. The detailed information about how the TFTP Provided Data can and is being used and various concrete cases thereof provided in the Joint Value Report and in the context of this review constitute a considerable step forward in further explaining the functioning and the added value of the TFTP.

The Commission acknowledges the benefits of the close cooperation between the U.S. authorities, Europol and EU counter-terrorism authorities in assessing and communicating on terrorism-related threats ensuring that the TFTP also addresses the threat from the EU perspective. It is important that such cooperation remains independent from the verification role of Europol under Article 4 of the Agreement.

The Commission suggests that the Member States consider providing regular feedback on the TFTP data received from the Treasury which could further improve the quality and the quantity of information exchanged under Articles 9 and 10. In addition, the Commission encourages Europol to continue its efforts to actively promote awareness of the TFTP and to support Member States seeking its advice and experience in devising Article 10 requests.

The Commission will continue discussion on the interpretation of Article 15 concerning the right of access in light of the actual responses Treasury will provide in the future.

Finally the Commission recommends that the Treasury continues to assess the necessity of the extracted data in the sense of Article 6 (7) of the Agreement.

A regular review of the Agreement is essential to ensure its proper implementation, to build up a relationship of trust between the contracting parties and to provide reassurances to interested stakeholders on the usefulness of the TFTP instrument. It has been agreed between the Commission and the Treasury to carry out the next joint review according to Article 13 of the Agreement in the second half of 2015.

ANNEX I

COMPOSITION OF THE REVIEW TEAMS

The members of the EU team were:

– Reinhard Priebe, Director Internal Security, Directorate-General Home Affairs, European Commission – Head of the EU review team;

– Olivier Luyckx, Head of Unit, Unit A1 - Crisis management and Terrorism, Directorate-General Home Affairs, European Commission;

– Monika Maglione, Unit A1 - Crisis management and Terrorism, Directorate-General Home Affairs, European Commission;

– Frank Schuermans, expert on data protection and judicial expert of the EU review team, member of the Belgian Privacy Commission, Senior Deputy prosecutor general at the Ghent Court of Appeal;

– Karsten Behn, expert on data protection, the Federal German Data Protection Authority;

It is noted that Frank Schuermans and Karsten Behn participated in the EU review team as experts for the Commission and not in their other professional capacities.

The members of the US team were:

– John E. Smith, Associate Director, Office of Foreign Assets Control, U.S. Department of the Treasury – Head of the US review team;

– Holly Phelps, Sanctions Policy Advisor, Office of Foreign Assets Control, U.S. Department of the Treasury;

– M. William Schisa, Senior Counsel, Office of the Chief Counsel (Foreign Assets Control), U.S. Department of the Treasury;

– Alexander W. Joel, Civil Liberties Protection Officer, Civil Liberties and Privacy Office, Office of the Director of National Intelligence;

– Jocelyn A. Aqua, Senior Component Official for Privacy, National Security Division, U.S. Department of Justice;

– Leslie Freriksen, Economic Officer, Office of European Union Affairs, U.S. Department of State;

– Michael Olmsted, Senior Counsel for the European Union and International Criminal Law Matters, U.S. Mission to the European Union.

ANNEX II

U.S. TREASURY DEPARTMENT RESPONSE TO

EU QUESTIONNAIRE

FOR THE THIRD JOINT REVIEW OF THE EU-U.S. TFTP AGREEMENT

(APRIL 2014)

The U.S. Department of the Treasury (“Treasury Department”) received the following questionnaire from the European Commission (“Commission”) on behalf of the European Union (“EU”) joint review delegation, pursuant to Article 13 of the Agreement Between the United States of America and the European Union on the Processing and Transfer of Financial Messaging Data from the European Union to the United States for the Purposes of the Terrorist Finance Tracking Program (“Agreement”). The Treasury Department response follows each question.

I. Review scope and period

The first joint review carried out in February 2011 covered the period of the first six months after the entry into force of the Agreement (1 August 2010 until 31 January 2011) and the second joint review carried out in October 2012 covered the ensuing period from 1 February 2011 until 30 September 2012. The third joint review carried out in April 2014 covers the period from 1 October 2012 until 28 February 2014.

Pursuant to Article 13(1), the joint review should cover “the safeguards, controls, and reciprocity provisions set out” in the Agreement. In this context, Article 13(2) specifies that the joint review should have particular regard to:

a) the number of financial payment messages accessed;

b) the number of occasions on which leads have been shared with Member States, third countries, and Europol and Eurojust;

c) the implementation and effectiveness of the Agreement, including the suitability of the mechanism for the transfer of information;

d) cases in which information has been used for the prevention, investigation, detection, or prosecution of terrorism or its financing; and

e) compliance with the data protection obligations specified in the Agreement.

Article 13(2) further states that “the review shall include a representative and random sample of searches in order to verify compliance with the safeguards and controls set out in this Agreement, as well as a proportionality assessment of the Provided Data, based on the value of such data for the investigation, prevention, detection, or prosecution of terrorism or its financing.”

II. Statistical information

1. In comparison to the period covered by the first and second joint reviews, what is the trend of the total number of financial payment messages provided (substantially/slightly higher/lower, about the same)?

The trend of the number of financial messages received from the Designated Provider has been slightly higher over the course of the 17 months between 1 October 2012 and 28 February 2014 (“the review period”). The increase is primarily the result of an increase in the volume of the message types responsive to the Requests transiting the Designated Provider’s system.

2. How many financial payment messages were accessed (i.e., extracted) during the period covered by the review?

During the 17 months of the review period, TFTP analysts conducted 22,838 searches of the TFTP, for an average of 1,343 searches per month. This number includes searches involving data stored in and obtained from the United States, as well as data stored in and obtained from the EU pursuant to the Agreement. This number includes searches of financial payment messages from financial institutions around the world, most of which involve neither the EU nor its residents.

A single investigation may require numerous TFTP searches. Each TFTP search may return multiple results or no results at all. Searches that yield multiple results may allow analysts to determine from the search results whether individual messages should be viewed, and thereby accessed, or whether they need not be accessed. In addition, the overwhelming majority of messages that are accessed will never be disseminated; most will be viewed for a few seconds to determine value and thereafter closed, with no further action or dissemination.

3. In comparison to information provided to EU competent authorities and third- countries, what is the trend of information derived from accessing these payment messages provided to competent U.S. authorities (substantially/slightly higher/lower, about the same)?

The trend of TFTP-derived information provided to EU and third-country authorities has increased substantially during the review period. Please see responses to Questions 4, 5, 10, and 11, below. The Treasury Department has seen a corresponding increase in the TFTP-derived information provided to competent U.S. authorities.

4. In how many cases was information derived from accessing these payment messages provided to competent EU authorities, including Europol and Eurojust?

During the 17 months of the current review period, U.S. investigators supplied 55 TFTP-derived “reports” consisting of 1,492 leads pursuant to Article 9 and an additional 3,929 “leads” pursuant to Article 10 to competent authorities of EU Member States and Europol. A single TFTP report may contain multiple TFTP leads. For example, a single Article 9 spontaneous report provided to Europol during the review period contained 39 TFTP leads.

“Reports” have been used to share TFTP-derived information with EU Member States and third-country authorities – beginning long before the TFTP Agreement in 2010. This mechanism generally involves situations in which U.S. counter-terrorism authorities are working with a counterpart foreign agency on a counter-terrorism case of mutual concern or where U.S. counter-terrorism authorities discover counter-terrorism information that they believe affects or would assist the work of a foreign counterpart. In such situations, TFTP-derived information regarding a particular terrorism suspect or case would be supplied to the foreign counterpart – generally with no indication that any of the information comes from the TFTP. Since the Agreement entered into force in August 2010, the U.S. Government has continued to use reports as the vehicle for the spontaneous provision of information to the competent authorities of EU Member States and Europol pursuant to Article 9. Article 9 reports provided to Europol are explicitly identified as containing TFTP-derived information.

A TFTP “lead”, on the other hand, refers to the summary of a particular financial transaction identified in response to a TFTP search that is relevant to a counter-terrorism investigation. Since the start of the current review period, responses to EU Member States and Europol pursuant to their requests under Article 10 have been provided in lead form and are explicitly identified as TFTP-derived information.

More than 2,000 TFTP reports have been provided to the EU in the 13 years since the program began. During the 17 months of the current review period, 5,421 TFTP leads were provided to EU Member States and Europol.

5. In how many cases was information derived from accessing these payment messages provided to third countries?

U.S. investigators supplied 87 reports consisting of 2,514 leads resulting from TFTP data to competent authorities of third countries during the 17 months of the current review period. As described in response to Questions 2 and 4, above, these reports generally summarize the results of an investigation of a subject, which will typically encompass multiple TFTP searches, each potentially including numerous messages, and may contain multiple leads. More than 3,000 such reports have been provided to competent authorities throughout the world since the program began, the majority of which (more than 2,000 such reports, plus an additional 3,929 leads) have been provided to the EU.

6. In how many cases was prior consent of competent authorities in one of the EU Member States requested for the transmission of extracted information to third countries, in accordance with Article 7(d) of the Agreement?

Article 7(d) authorizes the sharing of certain information involving EU persons “subject to the prior consent of competent authorities of the concerned Member State or pursuant to existing protocols on such information sharing between the U.S. Treasury Department and that Member State . . .” Since the last joint review, all TFTP-derived information provided to third countries was provided pursuant to existing protocols on information sharing between the United States and the relevant Member State.

In the event information could not be shared pursuant to existing protocols, the Treasury Department would not disseminate the information without prior consent of the concerned Member States except where the sharing of the data is essential for the prevention of an immediate and serious threat to public security. Because the Treasury Department relied on existing protocols with relevant EU Member States for all information sharing with third countries during the review period, it did not need to rely on this exception for the prevention of an immediate and serious threat to public security to share information.

7. For the sharing of information with third countries or other appropriate international bodies, what was the remit of their respective mandates as mentioned in Article 7(b) of the Agreement?

In accordance with Article 7(b), TFTP-derived information was shared only with law enforcement, public security, or counter-terrorism authorities, for lead purposes only, and solely for the investigation, detection, prevention, or prosecution of terrorism or its financing. Certain classified information also was shared with the U.S.-EU Joint Review of the TFTP Agreement in February 2011 and Second Joint Review in October 2012. Other sensitive and non-public TFTP-derived information was shown to officials from certain EU institutions, such as Commission officials, members of the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (“LIBE”), and a delegation from the European Parliament’s Inquiry on Electronic Mass Surveillance of EU Citizens.

8. Please elaborate on cases in which the information provided has been used for the prevention, investigation, detection, or prosecution of terrorism or its financing as mentioned in Article 13(2)(d) of the Agreement.

Please see attached paper (Commission' note: included in Annex II A).

Additionally, in November 2013, in accordance with Article 6(6) of the TFTP Agreement, the Treasury Department and the Commission published a joint report on the value of TFTP Provided Data, with particular emphasis on the value of data retained for multiple years. The report includes multiple concrete examples where TFTP data, including data retained for three years or more, have been valuable in counter-terrorism investigations in the United States and the EU, before and since the Agreement entered into force on 1 August 2010. The report contained 18 concrete value examples and involved the analysis of over 1,000 TFTP reports issued between 2005 and 2012.[12]

9. Did any of these cases end in any judicial findings? If so, did the judicial authority accept the TFTP-derived information as supporting or indirect evidence?

Article 7(c) provides that TFTP-derived information may be used for lead purposes only and for the exclusive purpose of the investigation, detection, prevention, or prosecution of terrorism or its financing, and such information is shared based on those conditions, meaning that U.S., EU, and third-country authorities may not directly use TFTP-derived information in a trial. Instead, the authorities must use the TFTP-derived information as a means to gather the evidence that may properly be presented to a judicial authority in a proceeding. The Treasury Department does not and could not track where authorities may have used counter-terrorism lead information derived from the TFTP as a means to gather evidence that might be used in a judicial proceeding. We do, however, request examples where TFTP-derived information was used in a counter-terrorism investigation, some of which are cited in the attached paper.

10. In how many cases was information provided spontaneously, in accordance with Article 9 of the Agreement? What has been the U.S. Treasury’s experience with receiving follow-on information conveyed back by Member States, Europol or Eurojust?

During the 17 months of the review period, 55 reports consisting of 1,492 TFTP leads were provided to EU Member States and Europol as the spontaneous provision of information pursuant to Article 9.

During the development of the U.S.-EU Joint Value Report, which was published in November 2013, the Treasury Department received feedback from Europol and certain EU Member States about the value derived from the Treasury Department’s spontaneous provision of information pursuant to Article 9 and the provision of information in response to an EU request pursuant to Article 10.

However, the Treasury Department rarely receives analytic “follow-on information” in response to the provision of information pursuant to Articles 9 and 10 on the targets of searches to further investigations. The Treasury Department believes that the provision of such follow-on information would greatly enhance its ability to provide meaningful information to EU authorities pursuant to Articles 9 and 10 and encourages the EU, Europol, Eurojust, and EU Member States to establish a procedure to request such information from their authorities and provide it, where possible, to the Treasury Department.

11. How many EU requests for TFTP searches in agreement with Article 10 of the Agreement have been received? In how many cases did these requests lead to the transmission of information? In how many cases was there a feed-back to the U.S. Treasury Department on that information coming from EU-MS or Agencies?

The Treasury Department received 70 requests from EU Member States and Europol pursuant to Article 10 during the review period and responded to all 70 requests. TFTP searches resulted in the transmission of leads to the EU in response to 41 of the 70 requests. There were 3,929 leads contained in the 41 Article 10 responses provided to EU Member States and Europol during the review period. In nine cases, the Treasury Department received feedback from EU Member States through Europol after submitting an Article 10 response.

During the development of the U.S.-EU Joint Value Report, which was published in November 2013, the Treasury Department received valuable feedback regarding its provision of information in response to an EU request pursuant to Article 10 from Europol and certain EU Member States. For example, the U.S.-EU Joint Value Report notes that, “in the case of Spain, a total number of 11 requests, pursuant to Article 10, generated 93 investigative leads on natural and legal persons suspected of having a nexus to terrorism or its financing.”[13]

III. Implementation and effectiveness of the Agreement

12. Can you confirm that the assurances given by the U.S. Treasury Department during the consultations carried out under Article 19 of the Agreement in 2013 are still valid and that the U.S. has remained and will remain in full compliance with the Agreement?

Yes. The Treasury Department appreciated the opportunity to engage in detailed and intensive consultations with the European Commission about the TFTP Agreement between September and November 2013. As Under Secretary David Cohen emphasized to Commissioner Cecilia Malmström in Brussels on 7 October 2013, and in formal correspondence dated 8 November 2013, since the TFTP Agreement entered into force in August 2010, the U.S. Government – including all departments and agencies – has not collected financial payment messages from SWIFT in the European Union, except as authorized by the TFTP Agreement. Moreover, during that time, the U.S. Government has not served any subpoenas on SWIFT in the EU or on SWIFT in the United States requesting the production of data stored in the EU, except as authorized by Article 4 of the TFTP Agreement. The Treasury Department confirms that the United States has remained and intends to remain in full compliance with all of its commitments under the TFTP Agreement.

The Treasury Department welcomed the formal letter from Commissioner Malmström, dated 27 November 2013, in which she concluded there was no evidence that the United States has acted in a manner contrary to the provisions of the Agreement.

13. During the period covered by the review, have any particular issues related to the implementation and effectiveness of the Agreement been identified, including the suitability of the mechanism for the transfer of information? If so, which?

No.

14. What has been the frequency of requests to Europol and the Designated Provider under Article 4 of the Agreement, and did these requests contain personal data?

During the review period, the Treasury Department submitted its Article 4 Requests on a monthly basis. During one month in 2013, the Treasury Department submitted a second, supplemental Request in response to a terrorist attack in the United States. During another month in 2013, the Treasury Department submitted two Requests, to accommodate the disruption caused by the temporary shutdown of the U.S. Government, during which period no Request was sent.

The initial Treasury Department Requests submitted to Europol following the entry into force of the Agreement contained minimal personal data, such as the names and business addresses of the sender and recipient of the Requests and the names of two top Al-Qaida leaders. In response to comments provided by Europol, the Treasury Department expanded the amount of personal data included in its Article 4 Requests – such as the names of other terrorists, their supporters, and terrorism-related suspects – in order to provide additional information relating to the provisions of Article 4 regarding the necessity of the data and terrorism-related threats and vulnerabilities.

15. What measures have been put in place to ensure that the requests are tailored as narrowly as possible, as required under Article 4(2)(c)?

The Treasury Department performs an ongoing review of the extracted data received and the utility and necessity of the data for counter-terrorism purposes. A large-scale audit and analysis of the extracted data – spanning several months and requiring hundreds of employee hours – is conducted every year, analyzing on a quantitative and qualitative basis the types of data most relevant to counter-terrorism investigations, and the geographic regions where the terrorist threat is particularly high or most relevant or susceptible to relevant terrorist activity.

The audit and analysis occurs in several stages. First, a comprehensive electronic assessment is conducted of the extracted data to determine the message types and geographic regions that are the most and least responsive to TFTP searches. Second, those message types and geographic regions that have been the least responsive are scrutinized to determine their qualitative component – namely, whether the relatively few responses returned nevertheless contained high-quality information or were of particular value for the purposes of the prevention, investigation, detection, or prosecution of terrorism or its financing. Third, those message types and/or geographic regions that, from a quantitative or qualitative standpoint at the time of the evaluation, do not appear necessary to combat terrorism or its financing are removed from the Article 4 Request.

The Treasury Department conducted two such large-scale evaluations during the review period, concluding in October 2012 and December 2013. In October 2012, the Treasury Department refined and narrowed the message types included in its Requests based on a determination during the Treasury Department’s comprehensive annual audit and analysis that particular message type(s) did not provide sufficient value to counter-terrorism investigations at that time. The Treasury Department completed a subsequent comprehensive annual audit and analysis in December 2013, in which the Treasury Department determined all of the message types included in its Requests at the time to be necessary for the purpose of the prevention, investigation, detection, or prosecution of terrorism or terrorist financing.

The Treasury Department modified the geographic regions responsive to its Requests three times during the review period as a result of evolving threat data (each time slightly expanding the geographic regions responsive to the Request). The Treasury Department will continue to conduct additional necessity-based reviews to ensure that the Requests remain tailored as narrowly as possible.

16. Has Europol been able to perform its verification function within an appropriate timeframe, as required under Article 4(4)? What has been the average timeframe Europol has required for this verification function?

Europol performed its verification function within an appropriate timeframe as required under Article 4(4), which provides that Europol shall verify the Requests “as a matter of urgency.” During the review period, Europol performed its verification function, on average, within two days of its receipt of a Treasury Department Request and supplemental documents.

17. In how many cases has Europol requested supplemental information for the requests under Article 4(1)? Have there been any cases in which Europol came to a conclusion that the request under Article 4(1) did not meet the requirements set out in Article 4(2)?

Europol has never determined that a Treasury Department Request failed to satisfy the requirements set out in Article 4(2). During the 17-month review period, Europol also did not request supplemental information from the Treasury Department with respect to Requests submitted pursuant to Article 4(1) in order to verify the sufficiency of the Request.

During the summer of 2011, the Treasury Department and Europol agreed that Europol would notify the Treasury Department in advance, if possible, whenever Europol decided that additional types or categories of information could be useful in the Requests, to allow the Treasury Department adequate time to enhance future Requests and to ensure that verification of specific Requests would not be delayed.

In an ongoing effort to enhance the Requests beyond the requirements set out in Article 4(2), Europol officials regularly provided comments and suggested that the Treasury Department include additional information to improve the clarity and focus of the Requests. The Treasury Department carefully considered these suggestions and generally incorporated them in subsequent Requests.

18. What is your overall assessment of the effectiveness of the Agreement? Have any specific impediments to achieving the stated purpose of the Agreement been identified? If so, which?

The Treasury Department assesses that the Agreement has been effective in supporting global counter-terrorism efforts and has identified no specific impediments to achieving the stated purpose of the Agreement. In November 2013, the Commission and the Treasury Department issued the U.S.-EU Joint Value Report, which concluded that the TFTP Provided Data had “significant value . . . in preventing and combatting terrorism and its financing. . . The TFTP information and its accuracy enable the identification and tracking of terrorists and their support networks across the world. It sheds light on the existing financial structures of terrorist organisations and allows for the identification of new streams of financial support, previously unknown associates, and new suspected terrorists. The TFTP information can also help to evaluate and corroborate existing intelligence, confirm a person’s membership in the terrorist organisation, and fill information gaps.”[14]

19. Is the TFTP subject to oversight by U.S. authorities? If so please elaborate. What is the role of U.S. Congress within this mechanism?

In addition to the multiple, mutually reinforcing data safeguards provided by the EU-appointed overseers and the independent, external overseers, the TFTP is subject to multiple layers of oversight by U.S. authorities. The Treasury Office of the Inspector General (“OIG”) provides independent oversight of the programs and operations of the Department of the Treasury pursuant to its statutory authorities and consistent with Article 12(2) of the TFTP Agreement. The OIG has fulfilled and continues to fulfil its responsibilities regarding independent oversight with respect to the TFTP, including monitoring the deletion of certain data pursuant to Treasury’s commitments in Article 6. The OIG concluded that this data deletion was conducted in accordance with the U.S.-EU TFTP Agreement.

In addition to the OIG, the Treasury Department’s Office for Privacy, Transparency, and Records provides verifications regarding the Treasury Department’s implementation of the TFTP Agreement. The Office of General Counsel is also closely involved in ensuring the Treasury Department implements the TFTP in accordance with the terms of the Agreement. For more information, please see the response to Question 20, below.

Furthermore, the U.S. Congress exercises oversight of the TFTP primarily through the Senate Select Committee on Intelligence and the House Permanent Select Committee on Intelligence. The Committees can and do request information on the Treasury Department’s counter-terrorism functions, such as the TFTP, and Treasury Department officials periodically brief the Committees on these issues.

IV. Compliance with the data protection obligations specified in the Agreement

20. What is the role and what are the findings of the Privacy Officer of the U.S. Treasury Department (Articles 15(3) and 16(2)) in relation to the Agreement? Does this role include findings relevant for the compliance with data protection obligations specified in the agreement (Article 13(2)(e) of the Agreement)?

The Treasury Department’s Director for Privacy and Civil Liberties (“Privacy Officer”) is the lead Treasury Department official charged with the implementation of Articles 15 and 16 of the Agreement. Under the supervision of the Deputy Assistant Secretary for Privacy, Transparency, and Records and in close coordination with Treasury’s Office of General Counsel and Office of Foreign Assets Control (“OFAC”), the Privacy Officer established redress procedures to facilitate the proper implementation of Articles 15 and 16. These redress procedures – allowing persons to seek access, rectification, erasure, or blocking pursuant to Articles 15 and 16 of the Agreement – are posted on the Treasury Department’s website at www.treasury.gov/tftp.

The initial step in the redress procedures requires that a person, through the relevant EU National Data Protection Authority (“NDPA”), submit a request in writing pursuant to Articles 15 and/or 16 and provide proof of identity in order to ensure that there are no unauthorized disclosures of personal data. Once a completed request is obtained and identity verified, the Privacy Officer will process the requests as follows: (1) confirm receipt of the completed request (or ask for additional information, where necessary); (2) work with the TFTP manager and/or analysts to verify whether any data relevant to the request have ever been extracted as a result of a TFTP search; (3) assess whether the relevant safeguards with respect to any extraction of data have been satisfied; and (4) provide written notice explaining whether the data subject’s rights have been duly respected and, where appropriate, whether personal data may be disclosed (and, if not, the underlying reasons); whether personal data have been rectified, erased, or blocked (and, if not, the underlying reasons); and the means available for seeking administrative and judicial redress in the United States.

The Privacy Officer’s role relates to the data protection obligations specified in Articles 15 and 16 of the Agreement. Other officials – including Europol and the independent overseers – have oversight with respect to other data protection obligations specified in the Agreement. Treasury’s senior management and counsel,[15] along with the Inspector General of the Treasury Department, have oversight with respect to the entirety of the program.

21. Have any particular issues related to the role or findings of the Privacy Officer of the U.S. Treasury Department been identified (Articles 15(3) and 16(2))?

During the prior review period, European authorities, including Commission officials and EU NDPAs, raised with the Treasury Department whether the verification of identity of European persons – required by Articles 15 and 16 and the TFTP redress procedures posted on the Treasury Department’s website – could be delegated to EU NDPAs. Such a delegation would avoid additional personal data being sent to the United States and authorize those officials closest to requesters – e.g., an NDPA within a requester’s own country and presumably familiar with its national identity documents – to make the identity verification decisions that are necessary to ensure the identity of requesters and avoid unauthorized disclosures of personal data.

During the current review period, Treasury Department officials worked constructively with the Commission to establish uniform NDPA verification procedures, and the Commission consulted on this topic with the EU’s Article 29 Working Party. The Treasury Department and the Commission finalized documents for use by NDPAs for verification decisions, and the Commission notified the Article 29 Working Party on 1 August 2013 that the uniform application procedures could enter into force. The Commission then informed the Treasury Department that the Article 29 Working Party applied the procedures in all member countries as of 1 September 2013, at which point the Treasury Department began to accept Articles 15 and/or 16 verification decisions by EU NDPAs. The Treasury Department will work with the Commission to make any adjustments required as these new procedures are implemented.

22. Have any measures put in place to ensure that provided data shall be used exclusively for the prevention, investigation, detection, or prosecution of terrorism and its financing changed since the last Joint Review (Article 5(2))? If so, what changes have occurred?

During the prior review period, the Treasury Department agreed to accept the appointment by the Commission of a deputy overseer who, with the agreement of and subject to appropriate security clearances by the United States, would carry out the functions related to the Article 5 safeguards in conjunction with the Commission-appointed overseer appointed pursuant to Article 12. The deputy overseer shares the workload of the overseer and ensures that the overseer work can proceed smoothly while one overseer may be travelling or otherwise unavailable. The deputy overseer started work at the Treasury Department on 1 October 2012, at the beginning of the current review period. The team of Commission-appointed overseers has all of the necessary access to fully review all TFTP searches in real-time and is an integral part of the implementation of the data safeguards embedded in the TFTP.

The comprehensive and overlapping set of systems and controls previously reviewed remains in place to ensure that provided data are processed exclusively for the prevention, investigation, detection, or prosecution of terrorism or its financing and that all searches of provided data are based on pre-existing information or evidence which demonstrates a reason to believe that the subject of the search has a nexus to terrorism or its financing. These systems and controls include the following:

• All analysts who have access to the TFTP system are extensively trained and re-trained regularly to ensure the fulfilment of all requirements for searches, including that a pre-existing nexus to terrorism or its financing is documented for every search; if an analyst even attempted a search that does not satisfy the requirements, the Treasury Department would respond appropriately, with responses varying from mandating additional training for the analyst to removing access rights to the TFTP and instituting disciplinary proceedings;

• Detailed logs are maintained of all searches made, including the identity of the analyst, date and time of search, the search terms used, and the justification for the search; these logs are regularly analyzed by outside auditors as part of the regular independent audit of the program;

• Electronic controls (in addition to human review and oversight) have been implemented that prevent analysts from conducting a search without inputting the pre-existing nexus to terrorism or its financing;

• Other electronic controls aim to prevent certain technical mistakes, such as inputting an “or” instead of an “and” as a search term, that inadvertently could result in an overly broad search;

• Independent overseers retained by the Designated Provider and the European Commission review searches either as they occur or shortly thereafter, prior to dissemination of any results, to ensure that the counter-terrorism purpose limitation and other safeguards have been satisfied; and

• Independent auditors retained by the Designated Provider evaluate the technical and systemic controls to ensure the integrity of the system and the satisfaction of all the safeguards.

23. Have any measures put in place to ensure that the TFTP does not and shall not involve data mining or any other type of algorithmic or automated profiling or computer filtering changed since the last Joint Review (Article 5(3))? If so, what changes have occurred?

The enhanced systems and controls outlined in response to Question 22, above, prevent any type of data mining or profiling because they require individualized searches, based on a pre-existing nexus to terrorism or its financing.

24. Have any measures been put in place to implement the provisions of Article 5(4) on data security and integrity or have any measures been changed since the last Joint Review? If so, what changes have occurred?

Multiple physical and technical security layers exist to ensure data security and integrity. The data are stored in a secure location accessible only by U.S. Government-cleared personnel and in a secure analysis area accessible only by a limited number of TFTP managers and analysts and security personnel. The data are stored separately from other data, are not interconnected with any other database, and are protected by multiple security layers that prevent unauthorized access to the data. Significant physical and technical security controls exist to ensure that no unauthorized copies of TFTP data may be made, except for disaster recovery purposes. The independent auditors retained by the Designated Provider review and verify these physical and technical security safeguards. These measures have been in place for years, and no changes have been made since the last joint review.

25. Have any measures (other than the measures mentioned in Article 12) been put in place to ensure that all searches of provided data are based on pre-existing information or evidence which demonstrates a reason to believe that the subject of the search has a nexus to terrorism or its financing (Article 5(5)), or have any such measures been changed since the last Joint Review? If so, what changes have occurred?

Please see response to Question 22, above.

26. Have there been any cases where the extracted data included personal data revealing racial or ethnic origin, political opinions, or religious or other beliefs, trade union membership, or health and sexual life (sensitive data)? If so, have any special safeguards or measures been taken to take into account the sensitivity of these data (Article 5(7))?

The Treasury Department is not aware of any cases in which such data have been extracted.

27. Have any measures put in place to organise the ongoing and at least annual evaluation to identify non-extracted data that are no longer necessary to combat terrorism or its financing changed since the last Joint Review (Article 6(1))? If so, what changes have occurred? Have such data been promptly and permanently deleted since the last Joint Review?

Please see response to Question 15, above. Once a message type or geographic region is deleted from the Request, all previous non-extracted data that had been received involving that message type or geographic region are permanently deleted during the course of a semiannual deletion process. This deletion has occurred with respect to all data received in response to message types or geographic regions removed from the Request.

28. Have there been any cases where financial payment messaging data were transmitted which were not requested? If so, has the U.S. Treasury Department promptly and permanently deleted such data and informed the relevant Designated Provider (Article 6(2))?

No.

29. Have all non-ex