FinCEN seeks terrorists' money links

The Financial Crimes Enforcement Network is testing a Web system that will help the Treasury Department agency track and defeat money laundering efforts by suspected terrorists.

The Patriot Act Communications System (PACS) will let banks, brokerages and credit unions file forms online to report suspicious transactions, said David Gilles, special assistant to FinCEN's director.

The agency will use the system to alert the institutions via e-mail about the names and accounts of suspected terrorists or money launderers it receives from law enforcement agencies, he said.

The system, which began testing late last month, was created under the USA Patriot Act passed by Congress last year after the Sept. 11 terrorist attacks.

The act requires the 'Treasury Department to protect our financial system from money laundering and terrorism by reducing the barriers to the sharing of financial information among government activities as well as financial institutions.'

Under a $2.2 million contract awarded early this year, Deloitte Touche LLP of Washington and TRW Inc. are developing the PACS pilot.

Show me the money

FinCEN will test the system with financial institutions and 28 agencies, including the Customs Service, Drug Enforcement Administration, FBI and IRS. Depending on how the system performs during the six-month pilot, FinCEN will decide whether to award a contract to the two venders for full development, Gilles said.

PACS will act as a conduit for information between law enforcement agencies and financial institutions, he said. Financial institutions will file online forms, such as currency transaction reports and suspicious activity reports.

Federal law requires a CTR to be filed when a customer conducts a transaction greater than $10,000. Institutions use SARs to report behavior such as insider abuses and transactions of at least $5,000 that might involve funds from illegal activities.

Currently, institutions file the reports on paper or media such as floppy disks or magnetic tapes and send them to FinCEN via postal mail.

But PACS will give them the option of filing online, Gilles said, which will improve data integrity.

'Users will be able to eliminate several cost-intensive manual processes and track their submissions in near-real time,' Gilles said.

FinCEN will issue public-key infrastructure certificates to PACS users through the General Services Administration's Access Certificates for Electronic Services program.

Financial reports filed with FinCEN are stored on the Suspicious Activity Reporting System, which was built in 1996 and runs on an IBM Corp. mainframe at the IRS Detroit Computing Center. The IRS maintains the system, which contains about 14 million reports.

Law enforcement agencies can query PACS data by calling FinCEN and requesting a search or by placing an electronic search request with the center. Several agencies download SARS data in bulk to their own systems. Others access files made available for users by the Detroit center.

State and local law enforcement have access to SARS through FinCEN's Gateway program, which gives trained users online access to files and other records filed under the Bank Secrecy Act.

Gilles said the second use of PACS will be to broadcast alerts such as names and accounts of suspected terrorists.

Registered PACS users will receive e-mail indicating there is an alert. The e-mail will contain a link to a secure Web page on which alerts will be posted.

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