Having rejected the original SWIFT agreement negotiated by the European Commission and the US Treasury in February, MEPs approved the amended deal by 484 votes to 109.
The agreement will enter into force on 1 August 2010.
The revised EU-US agreement follows months of negotiations between Washington and Brussels in what had become a transatlantic bone of contention in the US-led war on terror.
Under the new SWIFT agreement, so-called 'scrutineers' appointed by the European Union will become part of the US Treasury's operations that examine the financial transactions of terror suspects on European territory (EurActiv 07/07/10).
European Parliament President Jerzy Buzek welcomed the agreement but sounded a warning shot to EU member states that they had better treat the Parliament as an "equal player" in future or risk recurring stand-offs of a similar nature.
"Today's vote hopefully brings the SWIFT affair to an end," Buzek said, adding that since the Parliament's rejection of the original proposal in February, "the EU institutions have worked intensively with the US administration to strike a better balance between the competing needs of security and data protection".
According to the Parliament, the key to gaining MEPs' approval was the eventual elimination of 'bulk' data transfers to US authorities.
In exchange for backing the agreement, MEPs obtained a guarantee that work on setting up an EU equivalent to the US Terrorist Finance Tracking Programme (TFTP), which would preclude the need for bulk data transfers, will start within 12 months.
Once Europe has a system enabling it to analyse data on its own territory, it need only transfer data relating to a specific terrorist track.
Take us seriously, warns Buzek
The outcome of the SWIFT negotiations has a broader resonance for EU politics, as it proved to be the first opportunity for the European Parliament to exercise its new Lisbon Treaty powers of scrutiny over international agreements.
Some argue that the Parliament used its mandate to negotiate a better deal for EU citizens, while some believe the chamber exercised power for power's sake and "misused its new Lisbon powers" (EurActiv 07/07/10).
Like it or lump it, you'd better pay attention to us in future, warned Buzek.
"Important institutional lessons have also been learned from this experience. Under the Lisbon Treaty, nearly all international agreements between the EU and third countries now require the European Parliament's consent," the president cautioned.
"To avoid mishaps in future, [EU member states] and the Commission must treat the European Parliament as an equal player at all stages of negotiations, keeping it fully informed and taking its views seriously into account," he added.
EU Home Affairs Commissioner Cecilia Malmström hailed the compromise, noting that getting there had "not been an easy task and has represented a test case for EU-US cooperation in the Lisbon era".
Failure to conclude a deal could have had negative repercussions for EU-US relations in security policy and more broadly, she claimed.
However, "thanks to the frank and open attitude of both negotiating parties we avoided a potential setback and transformed this challenge into a success story that I am convinced sets a very important positive precedent in the transatlantic relationship," she said.
Obama: All's well that ends well
US President Barack Obama welcomed "the decision by the Parliament to join the Council and Commission" in finding a deal.
According to the White House, the TFTP has provided critical investigative leads - and more than 1,550 for EU member states – since its creation after the September 11 terrorist attacks in 2001.
The president said that "protecting privacy and civil liberties is a top priority" of his administration.
