IRS systems can track terrorists via tax data

'We have used this tool successfully on computers seized in abusive tax schemes and those found in caves in Afghanistan,' the IRS' Nancy Jardini says.

J. Adam Fenster

As executive director of Benevolence International Foundation Inc. of Chicago, Enaam Arnaout accepted donations for humanitarian efforts overseas but diverted some of the funds to fighters in Chechnya and Bosnia.

Using systems that track tax data and suspicious financial transactions, analysts in the IRS Criminal Investigation unit spotted Arnaout's illegal use of funds and started an investigation that led to his guilty plea last year and an 11-year prison sentence.

The IRS-CI unit had increased its counterterrorism activities after the terrorist attacks of Sept. 11, 2001, and they now include combining tax data with Bank Secrecy Act reports. The IRS processes the data for Treasury's Financial Crimes Enforcement Network at its Detroit facility, unit chief Nancy Jardini said.

'The work we perform in our counterterrorism program is often related to our tax administration mission,' she said.

Of 150 current terrorism investigations, 56 percent involve income tax violations and 18 percent involve organizations that claim to be tax-exempt charities.

Advanced analytics

IRS-CI is piloting a new counterterror project at its Garden City, N.Y., lead development center. When the project is operational, it will apply advanced analytics to the integrated Bank Secrecy Act and income tax data to better identify suspicious patterns.

Workers in the Garden City office analyze information not available to other law enforcement agencies, such as data from tax-exempt organizations and tax information protected by strict disclosure laws, Jardini said. They apply data modeling to uncover funding of terrorist activities by charitable groups that use informal money-transmission networks called hawalas and wire funds.

IRS-CI also employs forensic software called ILook in domestic and international investigations. The application can analyze multiterabytes of data in multiple languages.

'We have used this tool successfully on computers seized in abusive tax schemes and those found in caves in Afghanistan,' Jardini said.

ILook's Imager component, which runs under Linux, lets a specialist image mass-storage subsystems and non-Microsoft Windows operating systems.

ILook Investigator, the analysis component, recovers all data from the drive image, including deleted files. An investigator can insert foreign-language character sets if necessary.

ILook's developer was Elliot Spencer, managing partner of Perlustro LP and head of forensic computing in the United Kingdom's Serious Fraud Office. The software is free to state and local law enforcement agencies.

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