FinCEN ramps up

FinCEN director William Fox says BSA Direct will let outside users find the data they need, freeing up analysts to search for terrorist transactions.

J. Adam Fenster

Armed FBI agents are often the law enforcement officials who capture suspected terrorists. But many times, it was Treasury Department agencies that uncovered the terrorists' financial footprints to build enough evidence for an arrest.

Analysts at Treasury's Financial Crimes Enforcement Network follow the money and link their findings into patterns. FinCEN passes on suspicious data from banks and other financial institutions and also acts as a conduit when law enforcement agencies want more information about customers and transactions.

FinCEN now is preparing to ramp up IT systems for better data collection, data mining and analysis to help disrupt the flow of funds to terrorists.

In fall 2005, the agency will augment its national database with what it calls the BSA Direct data retrieval system, FinCEN director William Fox said at a recent hearing of the Senate Banking, Housing and Urban Affairs Committee.

BSA Direct will make it easier for the FBI and other law enforcement agencies to retrieve FinCEN's data about suspicious transactions and other financial information.

The agency is evaluating vendor proposals to build BSA Direct and expects to award a contract this summer 'We're working with commercial companies that are adjusting proprietary software for our work,' Fox said.

Later this year, FinCEN will start a detailed user requirement study for BSA Direct, which will cost about $6 million to build. The president's fiscal 2005 budget proposal earmarks $2 million for the initial phase.

Under the anti-money-laundering Bank Secrecy Act, banks and other financial businesses must report to FinCEN any suspicious transactions, such as deposits or withdrawals of more than $10,000, as well as other data.

Banks and businesses can file these reports securely online via FinCEN's Patriot Act Communications System, which uses Secure Sockets Layer encryption and a public-key infrastructure. But of 20,000 financial institutions, only 1,100 now file their Bank Secrecy Act reports electronically. Fox is seeking industry recommendations to boost the online reporting.

FinCEN wants to convert the 1,500 top-volume filers to e-filing over the next 10 years, which would mean that 90 percent of all the forms would be electronic, said Robert Werner, FinCEN's chief of staff.

FinCEN distributes the data to the FBI and the Terrorist Threat Integration Center, which compile it for use by several agencies in uncovering terrorist financing.

Currently, FinCEN analysts spend a lot of time helping agencies find information in an outmoded retrieval system linked to the agency's national database at the IRS Detroit Computing Center. That hinders the analysts' main work.

'We can't really fulfill any of our functions very well,' Fox said.

BSA Direct should make the financial information more accessible to law enforcement users while securing it from unauthorized access.

'BSA Direct will free up analysts and give [law enforcement] customers the capabilities to search or mine the BSA data so we don't have to do it for them,' Fox said.

The analysts focus on hot spots for terrorist financing, such as charities that might support humanitarian work but also secretly support terrorism, Fox said.

BSA Direct will have the capability to alert FinCEN officials to irregularities in Bank Secrecy Act reports and will audit use of accessed data to ensure that it is not abused. A networking function will link different law enforcement agencies using the same data to avoid overlap or conflict in investigations.

FinCEN uses NetMap link analysis software from ISO Claims Services Inc. of Jersey City, N.J., to scan large quantities of financial data and find obscure connections.

For example, a bank customer's name might appear on more than one bank's suspicious-activity reports or might have multiple addresses and bank account numbers. NetMap searches all data surrounding each such link to find patterns of suspect financing. It also checks public records and credit reports.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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