CATF Reports Aug. 26, 2015, 12:06pm


The 9/11 attacks ushered in new international banking requirements promulgated on national security grounds, to identify transactions that facilitated al-Qaeda operations and might well be financing future terrorist acts. Among the billions of annual bank-to-bank transfers worldwide, U.S. investigators sought mechanisms to identify funds destined for the sustenance of terrorist cells and others that represented contributions to charities that were skimmed to support terrorist operations. The Bush Administration’s first bank initiative was the Terrorist Finance Tracking Program which soon became known colloquially as the “SWIFT Program” after the worldwide private message system that set foreign funds transfers into motion. The formal name of the private banking network headquartered in Belgium is the "Society for Worldwide Interbank Financial Telecommunication" or SWIFT, and it is regulated primarily by the U.S. Treasury Department’s Financial Crimes Enforcement Network/FinCEN and the European Union.

Created in 1973, SWIFT is a state-of-the-art system designed to replace antiquated Telex messages, that imposed standardization on customer instructions for wiring funds from a bank in one country to a financial institution in another. Many consumers to not realize that SWIFT does not send the funds by wire—rather, it instructs banks to do that, identifying the accounts to be credited and debited. The attraction of SWIFT to terrorists and their supporting financiers lies in the millions of SWIFT transfer instructions sent on any given day - 5 billion annually - forming in volume a virtual “haystack” of transactions that by default enables accounts tied to terrorists to “hide in plain sight”. At least that has been the assumption that has led terrorists and their financiers to rely on SWIFT both before and after 9/11. In addition, both bank accounts and SWIFT-generated deposits to them accounts, held by terrorists and other criminals, have been protected by the necessary privacy protections that are one engine driving international banking.

Banks retain records of SWIFT instructions for years, enabling auditors as well as investigators and analysts to reconstruct transactions that bank employees may regard as suspicious according to criteria of senders, receivers, amounts, country of origin or destination, or other factors. In a campaign based on the U.S. government’s initiative to encourage bank employees to report suspicious transactions that may be tied to criminality, Suspicious Activity Reports (SARs) are now sent, catalogued, and analyzed in banks’ host countries. Data contained in SWIFT message fields usually constitutes the information that meets the requirement of suspiciousness necessary to generate a SAR - which is carefully eyeballed by bank wire room, risk control, and money laundering compliance personnel.

U.S. officials such as former Treasury Undersecretary Stuart Levey have expressed strong support for initiatives to mine SWIFT data for terrorism leads, even labeling SWIFT benefits that flow from the Terrorist Finance Tracking Program as “incalculable.” Unfortunately, as various nations’ intelligence agencies are principle consumers of SWIFT data, quantitative results on “hits” are very hard to come by. Complicating the equation further are pessimistic reactions to the release of frozen Iranian bank accounts resulting from the country’s nuclear agreement. By rejoining SWIFT, Iran is expected to have unprecedented access to the world financial system to move money in support of terrorist causes.

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