A new deal being negotiated between EU and US authorities to share data from the SWIFT banking network for counter-terrorism purposes was heavily criticised on Wednesday for failing to respect European citizens' privacy.

The criticism occurred during a debate in the European Parliament.

Sweden, holder of the six-month rotating presidency of the EU, is negotiating an interim agreement to allow the sharing of information about trans-Atlantic financial transactions once SWIFT transfers the data from the US to the Netherlands in the coming weeks.

US authorities have mined the database while it has been on their own soil, claiming that the information helped them on more than one occasion to track down a terrorist.

The move to the Netherlands requires some negotiation, due to European data protection laws that restrict the exporting of data to countries with weaker privacy regimes than those applied in the EU.

The agreement being negotiated will last for a maximum one year, to be replaced by a permanent arrangement once a legal basis for it has been established.

Currently justice and home affairs fall outside the remit of the European Parliament, but once the long-awaited Lisbon Treaty has been passed, the Parliament will be able to participate in this area of EU lawmaking, according to Michele Cercone, an official at the European Commission. The Commission is assisting the Swedish government in the negotiations.

Nevertheless, several MEPs slammed the discussions about an interim agreement. "It is unacceptable that once again the European and national parliaments, representing citizens' interests, are bypassed and being denied a transparent and democratic process," said Sophie In't Veld, a Dutch liberal MEP.

"The interim agreement has more safeguards for Europeans' data than the agreement in place until now," Cercone said, adding that the aim is not to exclude the Parliament, but to take necessary measures to ensure the continued free flow of financial information in the absence of a final accord.

Other MEPs questioned the legal validity of any interim agreement. "Payment platforms are fundamental to our economy," said Sharon Bowles, a British liberal MEP. "It is absolutely essential that there is legal certainty in any agreement reached, so that the platforms concerned do not face the prospect of destabilizing lawsuits."

The SWIFT issue first arose in 2006 following an article in The New York Times that revealed that US authorities were accessing data held by the Belgium-based financial network on European citizens without the knowledge of the European authorities.

Following pressure by the European Parliament and some EU countries, certain guarantees regarding privacy were given and the US undertook to ensure that the data collected was used purely for antiterrorism purposes.

The issue erupted again this summer when Swift announced it was switching the location of its database to the Netherlands. At the time, MEPs asked the Commission for information about the changed circumstances and their implications. Many MEPs feel that request was ignored, and they used the plenary session of Parliament on Wednesday to voice their frustration.

The head of Swift, Lázaro Campos, said Wednesday's debate was "not about Swift but about cooperation between Europe and the United States," and argued that the new architecture of the financial network "is a key factor in the security of our clients."

Swift serves as a gatekeeper of financial transactions, providing electronic instructions on how to transfer money among 7,800 financial institutions worldwide. Based in Belgium, it is owned by more than 2,000 financial organisations, including almost all major commercial banks. Brokerage houses, fund managers and stock exchanges also use its services.