USPS hunts for bogus transactions

'Data can be looked at by geographic location, by date, by account and in other ways. It also helps in making sure employees are collecting the right information' about money transactions.

'Henry Gibson, USPS Bank Secrecy Act Compliance Officer

Olivier Douliery

When it came to spotting possible cases of money laundering, Postal Service officials used to rely on a system that could see only the top layer of financial activity at post offices.

After deploying a new Web system, postal officials can search deeper for money order fraud.

Working with Information Builders Inc. of New York, USPS IT employees developed a system that collects and sorts transaction data against Federal Reserve Bank models. Postal analysts can drill down to identify patterns of suspicious activity.

'We are looking at the money activity, not the individual,' said Henry Gibson, USPS Bank Secrecy Act compliance officer. 'Data can be looked at by geographic location, by date, by account and in other ways. It also helps in making sure employees are collecting the right information' about money transactions.

Congress in 1994 required companies that sell money orders, traveler's checks and cashier's checks to report possible criminal activities to the Treasury Department. USPS put together a mainframe system using IBM DB2 Universal Database and analysis software written in Cobol, Gibson said.

Officials quickly recognized that the mainframe system limited their ability to share data.
'We have a 30-day window of detection, and then we have to send those records to the Treasury,' said Al Gillum, a retired postal inspector who now consults with USPS on the Bank Secrecy Act. 'We were using much of that time entering the data we had collected.'

Security concerns

Information security was called into question because USPS relied on CD-ROMs to transfer records.

Recognizing the benefits the Web offered, officials sought a better way to move data among 30,000 post offices, the Treasury and the Federal Reserve Bank in St. Louis, as well as to cut the time to analyze the money order transactions, Gillum said.

The new system, which USPS finished in March, has taken on a bigger role as the administration seeks to stem the flow of money to terrorists, Gillum added.

Post offices handle more than $30 billion in money order transactions each year, about a third of all money orders processed in the United States. Of those 200 million transactions, less than 0.5 percent are considered suspicious.

The new system relies on a thin-client application that works through Microsoft Internet Explorer. The back end of the system stores information in an Oracle8i database, and data travels through a virtual private network from post offices around the country to the National Information Support Center for USPS, a data center in Raleigh, N.C. The system uses IBM's WebSphere application server software on two Compaq ProLiant DL 380 servers running Microsoft Windows 2000'one for applications and the other for the database.

The front end uses Information Builders' WebFocus suite of applications to collect, analyze and transfer money order data.

'The software does a good job of identifying suspicious activity,' said Gene Seiffert, an Information Builders project implementation manager who worked on the USPS system. 'But because you are looking at such a small universe, you must be able to take it down to another level of granularity. USPS can look at individual transactions or view everything in a specific data set to spot individual patterns.'

The process starts when a postal clerk issues a money order for more than $3,000. The clerk must write down the customer's name, address, date of birth, Social Security number and the amount of the transaction. If a money order transaction is more than $10,000, the clerk must report it to the data center.

Once that data is entered into the system, it is compared against financial images the Federal Reserve in St. Louis sends by File Transfer Protocol, Seiffert said.

The database system then groups the information and assigns it to an employee for analysis.
'Through WebFocus, all the money orders with a specific name or account are analyzed, and the application builds queries that can be used by USPS or Treasury officials,' Gillum said.

From floppy to FTP

USPS sends weekly reports of suspicious activity to the Treasury on floppy disk. Postal officials are looking into sending it by FTP, but Treasury is not ready to accept that kind of transfer, Gillum said.

The system also shows Gibson whether postal employees are filling out the reports correctly and picking up enough information about the money order customers. He said it helps him demonstrate to postal managers where employees need training.

'Until we get to the last point of analysis, there is no human intervention, which makes our new system quicker and more efficient,' Gibson said.

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