The deal, which is still awaiting approval from the European Parliament (EP), will allow financial data to be passed to the Treasury Department in the US to facilitate the tracking and potential prosecution of supposed terrorists.
Subject to EP approval, the agreement will initially last for five years before being renewed on an annual basis.
Michael Dodman, US Embassy's economic officer to the EU, said negotiations behind the agreement had been “very long and intense”.
“It is a very solid agreement and we want it to be applied fully as it is important for the security of the EU and the US,” he explained.
Alfredo Perez Rubalcaba, Spanish minister for home affairs, signed the agreement on behalf of the EU while Mr Dodman represented the US in the agreement. The arrangement has been provisionally drawn up following the rejection of a similar working relationship by the EP in February of this year.
Many of the contentious issues, which concerned privacy and data protection, have been removed from the new deal, the body explained.