US plans record access to trace terror funds

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By ERIC LICHTBLAU in Washington
  • Published 10.04.05

Washington, April 10: The Bush administration is developing a plan to give the government access to possibly hundreds of millions of international banking records to trace and deter terrorist financing, even as many bankers say they already feel besieged by government anti-terrorism rules that they consider overly burdensome.

The initiative, as conceived by a working group within the treasury department, would vastly expand the government?s database of financial transactions by gaining access to logs of international wire transfers into and out of American banks. Such overseas transactions were used by the September 11 hijackers to wire more than $130,000, officials said, and are still believed to be vulnerable to terrorist financiers.

Government officials said in interviews that the effort, which grew out of a brief, little-noticed provision in the intelligence reform bill passed by Congress in December, would give them the tools to track leads on specific suspects and, more broadly, to analyse patterns in terrorist financing and other financial crimes. They said they were mindful of privacy concerns that such a system is likely to provoke and wanted to include safeguards to prevent misuse of what would amount to an enormous cache of financial records.

The provision authorised the treasury department to pursue regulations requiring financial institutions to turn over ?certain cross-border electronic transmittals of funds? that may be needed in combating money laundering and terrorist financing.

The plan for tracking overseas wire transfers is likely to intensify pressure on banks and other financial institutions to comply with the expanding base of provisions to fight money laundering, industry and government officials agreed. The government?s aggressive tactics since the attacks of September 11, 2001, have already caused something of a backlash among banking compliance officers ? and even some federal officials, who say the effort has gone too far in penalising the financial sector for lapses and has effectively criminalised what were once seen as technical violations.

The initiative, still in its preliminary stages, reflects heightened concerns by administration and Congressional officials about the government?s ability to track and disrupt financing for terrorist operations by al Qaida and other groups ? an effort identified by President Bush as a top priority in the campaign against terrorism.

Terrorist money has been difficult to identify, much less seize, in part because terror operations are conducted on relative shoestring budgets. Planning and operations for the attacks on September 11, 2001, were believed to have cost al Qaida $400,000 to $500,000, with no unusual transactions found, according to the 9/11 commission, and the 1998 embassy bombings in east Africa cost only $10,000.

While counter-terrorism officials have made some inroads in tracking terrorist money, clear successes have been few and sporadic, experts say, and a number of recent reports have pointed up concerns about the government?s ability to deter and disrupt such financing.

?I don?t think we really have a full grasp of how to deal with the problem yet,? said Dennis M. Lormel, former head of the Federal Bureau of Investigation?s terrorism-financing unit. ?The framework is certainly getting better, but in general, we don?t have the full capability yet to get at the money.?

In a letter in January to treasury department officials, 52 banking associations said that a ?lack of clarity? by the government in explaining what is expected of them in complying with regulations to deter terrorist financing and money laundering has ?complicated, and in some cases undermined? those efforts.

By sharply increasing prosecutions against banks over compliance failures, ?law enforcement is shooting the messenger,? said Herbert A. Bierne, a senior enforcement official with the Federal Reserve System?s board of governors. ?You shoot the messenger, you stop getting the messages.?