Treasury moving to disrupt terrorist financing

Treasury's Office of Terrorism and Financial Intelligence plans to integrate the department's information and intelligence streams.

The streams include Bank Secrecy Act data from the Financial Crimes Enforcement Network, targeting analysis and sanctions enforcement data from the Office of Foreign Assets Control, and all intelligence flowing into Treasury from the intelligence community.

Prior to creating the new intelligence office earlier this year, the data streams were generally kept in separate channels, said Stuart Levey, Treasury under secretary for terrorism and financial intelligence, yesterday at a hearing of the House Financial Services Committee on the 9/11 Commission report.

Pulling the data together will help Treasury analysts better uncover terrorist financing by matching suspicious transactions in U.S. accounts, activities of sanctioned foreign organizations and persons, and law enforcement data.

'The simple fact remains that the money trail generally does not lie,' he said. Studying money trails can also illustrate how terrorists exploit vulnerabilities in the U.S. financial systems and take advantage of regulatory weaknesses.

Treasury is studying how it can develop tools or systems aimed more precisely at sniffing out terrorist financing. 'With terrorist financing, investigators need a microscope in order to identify and track the movement of relatively small amounts of often 'clean' money supporting an evil purpose,' he said.

Lee Hamilton, vice chair of the National Commission on Terrorist Attacks, cited continued enforcement of the Bank Secrecy Act rules for financial institutions, particularly Suspicious Activity Reporting of problematic transactions or accounts, and expansion of the USA Patriot Act to include reporting from other financial lines of business for assisting investigations.

'In reality, stopping the flow of funds to al Qaeda and affiliated terrorist groups has proved to be essentially impossible. At the same time, tracking al Qaeda financing is an effective way to locate terrorist operatives and supporters and to disrupt terrorist plots,' Hamilton said.

The majority of terrorist financiers and facilitators operate and store their money overseas, Levey said.

Treasury and the State Department have developed global standards to identify vulnerabilities in the international finance system and to encourage compliance. Countries have, for example, frozen terrorist-related assets, regulated alternative remittance systems and gathered information on the origin of cross-border wire transfers, he said.

Hamilton urged the United States to increase its technical assistance to other countries, which it does now through the Financial Action Task Force. For some countries, such as Pakistan, a major U.S. ally in the war on terror, their financial systems are not as sophisticated and have few money-laundering or terrorist-financing tracking laws, he said. Another, the government of Saudi Arabia, did little to stem the flow of terrorist funds from its country until last year when it came under terrorist attack twice and started cooperating.

But 'we don't have enough people to do technical assistance for other countries and what we do here at home,' Hamilton said.

'Terrorists are very entrepreneurial and good at finding the gaps in our financial system,' Hamilton said. The 9/11 commission report said the terrorists depended on wire transfers, cash, traveler's checks, and credit and debit cards from overseas bank accounts.
Al Qaeda relied on well-placed financial facilitators who gathered money from both witting and unwitting donors, primarily in the Gulf region.

And although al Qaeda's budget has been slashed, 'the U.S. government still has not determined with any precision how much al Qaeda raises or from whom, or how it spends its money.' Al Qaeda relies more now on the physical movement of money and other informal methods of value transfer such as hawalas, 'which are almost impossible to track, ' Hamilton said, meaning the U.S. will need more help from other countries in detecting those trust systems. At the same time, 'new jihadist groups are forming independent of al Qaeda to create loose networks of terrorist groups, and Al Qaeda is becoming more decentralized,' Hamilton said.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.


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