A formal complaint has been lodged with the federal privacy commissioner to determine whether Australia's banking industry is breaching local privacy laws by using the Society for Worldwide Interbank Financial Telecommunications (Swift) network.
The Swift network, which processes international funds transfers is used by the Commonwealth Bank, Westpac Banking Corporation and ANZ, has been accused of breaking European data protection laws by sharing personal information with US authorities.
Anna Johnston, chair of the Australian Privacy foundation said the privacy of Australian's banking records has been put at risk by a third party, namely Swift, passing on records to the US Government.
The US government ordered Swift to share a host of information about people and companies around the world following the September 11, 2001 terrorist attacks as the data was deemed essential in tracing how terrorism was financed.
However, European data protection laws outlaw the transfer of personal data outside the European Union if the country receiving the information has weaker privacy protection laws.
Both Swift and the European Central Bank (ECB) have been accused of breaking Belgian and European data protection laws by sharing data deemed private and personal with US authorities.
Johnston said the foundation is concerned Australian banks and other financial institutions using the Swift service may be in breach of the Australian Privacy Act.
"As if the practice of banks offshoring customer records wasn't bad enough, now we discover that Swift, the organization that processes international fund transfers for Australian banks, has been giving banking records to the US administration for several years," Johnston said.
"Our banking records have already been compromised by the actions of Swift in allowing the US government to gain access to Australian banking records without independent judicial oversight.
"If Australian privacy laws cannot be enforced in this case, then all this talk by the Treasurer and Attorney-General about how Australia's tough privacy laws prevent our banking records leaving this country is completely meaningless."
The foundation has submitted a complaint to the privacy commissioner to investigate whether customer records are leaving the country.
Under local privacy laws, records cannot leave Australia unless safeguards are attached.
While the Australian Banking Association (ABA) was unwilling to comment, the Swift 2005 Annual Report shows 11 banks and 88 financial institutions in Australia sent more than three million messages over the SWIFTNet FIN service last year.