The European Parliament Thursday voted to approve a financial-data-sharing deal with the U.S. for tracking terrorist finances.

The vote now renders the bill legally binding, after months of tough negotiations with the European Council, which represents the 27 member countries, and the European Commission, the bloc's executive power. The bodies were struggling to find an acceptable level of data privacy the bill should provide for European Union citizens.

"This new, legally binding agreement reflects significant additional data privacy safeguards but still retains the effectiveness and integrity of this indispensable counterterrorism program," President Obama said in a statement released by the White House press office.

The new compromise sets a definitive timetable for replacing the current U.S.-operated system for data transfers with a European-led system, which will ensure the eventual elimination of "bulk" data transfers, in favor of targeted information requests. If after five years a European equivalent data tracking system still doesn't exist, the EU can annul the whole agreement, the Parliament said.

The compromise agreement, approved by the Parliament, also ensures that a European official will be able to control and correct the operations of American agencies on U.S. territory over all the data transfers.

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