Leaked trade services pact puts financial data on the table

Countries could be left helpless to prevent sensitive financial data from leaving their borders under provisions of an annex to the Trade in Services Agreement (Tisa) leaked by WikiLeaks.

Tisa is currently being negotiated by 50 countries, including the US, Japan, Pakistan and 28 European states through the EU.

WikiLeaks has published what it claims to be a draft of the financial services annex from a negotiation round in April which shows the US and EU pushing for the free transfer of financial data across borders.

Says the US: "Each Party shall allow a financial service supplier of another Party to transfer information in electronic or other form, into and out of its territory, for data processing where such processing is required in the financial service supplier's ordinary course of business."

In an analysis of the document for WikiLeaks, professor Jane Kelsey from the faculty of law at the University of Auckland, says that the financial services lobby, particularly the US insurance and credit card industries, have been vocally opposing 'localisation' requirements.

Says Kelsey: "When data is held offshore it becomes almost impossible for states to control data usage and impose legal liability. Protecting data from abuse by states has become especially sensitive since the Snowden revelations about US use of domestic laws or practices to access personal data across the world."

Russia - which is not part of the Tisa negotiations - cited data privacy concerns, in light of the NSA revelations, when it recently told Visa and MasterCard that they must process all domestic transactions on its soil.

The draft Tisa document also says that each party country would have to grant financial services firms from any other party access to payment and clearing systems operated by public entities.

Another provision would see member countries forced to let financial services firms temporarily ship in computer and telecommunications specialists from other members.

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Comments: (1)

A Finextra member 23 June, 2014, 02:41

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While I am not at all familiar with the Tisa negotiations or the financial services annex I am all in favor in general terms of transparency in all financial dealings, of course this transparency should not compromise state, personal or corporate rights to privacy, we do after all live and work in an electronic age where physical boarders or territories are somewhat irrelevant terms in regard to the movement of data.

If we are talking about data movement and storage in the ‘Cloud’ it pretty much goes without saying that this will be a multi-national cross boarder system and I can see no harm in it as I do believe that this would be beneficial to financial information processing. Freedom of choice is all important so if a financial services firm chooses not to transmit information beyond their area of operation they should not be required or forced to do so, although they may be disadvantaged if they do not participate.

Perhaps we should view the internet and other electronic networks as a global state in their own right with appropriate controls emplace to avoid misuse of information. In any case a financial institution should be free to transmit, process and receive data how and when best suites their needs.