The database is expected to contain the details of 70 million individuals and is designed to stop people applying for a visa to a Schengen country if they have already been refused by another Schengen state.
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The Visa Information System (VIS) database will also be used to strengthen national borders, fight terrorism, fraud and other serious crime.
The database will carry photographs, fingerprints and other personal details, and will be managed by a permanent EU funded authority. National police forces and Europol will have access, among other agencies involved in border control.
There are currently 15 Schengen member states in Europe. Although the UK is not one of them, it intends opting into the VIS system.
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