CATF Reports Mar. 22, 2016, 5:03pm


In response to the latest Paris terrorist attacks, a former French security official lamented the nation’s critical shortcoming - failing to share counterterrorism intelligence. Alain Chouet, former chief of French intelligence noted: “We don’t share information. We even didn’t agree on the translations of people’s names that are in Arabic….”.   Sadly, today’s cluster of terrorist attacks in Brussels is beginning to point in the same self-defeating direction. According to one observer writing in the aftermath of this morning’s carnage, “compared to other EU countries, Belgium spends little on civilian and military intelligence and lacks serious overseas intelligence-gathering capabilities. At the federal level, its law enforcement structures are weak.”

In a fascinating juxtaposition between Europe and the U.S., one shining example of optimum law enforcement cooperation comes to mind. Ironically, the program’s wisdom resides not in one large federal agency but rather in a small and little known law enforcement consortium headquartered in Phoenix: the Arizona Anti-Money Laundering Alliance. The Alliance was formed with $94 million in settlement funds from a suit brought by the state’s attorney general against Western Union because the firm’s institutional “blind eye” systematically ignored rampant laundering along the Mexican border. The windfall settlement enabled a highly innovative network of state and local agencies in Arizona, California, Texas, and New Mexico to share money laundering intelligence gleaned from Bank Secrecy Act reports obtained via state subpoena and contributions of data on money transfers - known colloquially as “remittances” - flowing through a large network of Western Union, MoneyGram, and other retail outlets.  

As a result of the embarrassing litigation, Western Union is now on board to assist law enforcement proactively, in any way it legitimately can, and MoneyGram has also embarked on an aggressive compliance effort. All this grand cooperation along both sides of the Mexican-U.S. border is identifying literally thousands of low dollar money transfers as possible laundering transactions where, to no one’s surprise, narco-dollars are sent from the U.S. to major traffickers, back home. And a small but deadly subset of those “almost off the radar” transactions increasingly appear to analysts to meet the definition of terror finance.

At least, that is what Alliance researchers were able to validate in two extremely high profile cases. Soon after the January 2015 Paris “Charlie Hebdo” massacre, Alliance analysts discovered money transfers linking the terrorists - brothers Saïd and Chérif Kouachi - to money transfer outlets in the U.S. Southwest Border Region. Later in 2015, “home grown” terrorists Elton Simpson and Nadir Soofi plotted to kill patrons at a Charlie Hebdo “cartoon knockoff” event in Garland, Texas. The two were killed after opening fire on security guards. Investigation revealed that Simpson and Soofi were also in the Alliance database involving foreign remittances.

Three suspects of this morning's attacks at Brussels Airport, in Zaventem
Three suspects of this morning's attacks at Brussels Airport, in Zaventem | AFP/Belgian Federal Police

A prominent law enforcement dictum is that optimum information sharing succeeds across multiple law enforcement challenges. Thus, exchanging data on how Mexican cartels launder their drug proceeds also sheds light on the use by terrorists in the Southwestern U.S. of the very same financial vehicles for moving money - in this case, relatively small dollar remittances.    

Features unique to the Alliance foundation in money laundering data seem worthy of attention on a day when ISIS terrorists appear to have claimed another victory. Transactional Records Analysis Center (TRAC) gathers its foundation of money laundering data from banks in the Alliance 4-state region. Specifically, state agencies subpoena records of currency transaction reports and state-mandated money transmitters - formally known as Money Service Businesses (MSBs) - such as Western Union and MoneyGram. Accessible to MOU signatory agencies in the four Alliance states, as well as many federal agencies such as FBI and DEA nationwide, TRAC data often points to subjects engaged in below-the-radar criminal activity long before they burst onto the scene in headline grabbing schemes.

Lone wolf and small cell terrorists - like the Charlie Hebdo and Hebdo knockoff extremists - often remain so far below even the record generating radar screen that their importance is difficult to gauge when based on a handful of low dollar transfers. However, analysts have learned that data recorded on required forms like foreign passports and problematic countries of origin, and frequent patterns of  remittances, can provide early signs of questionable intent on the part of subjects. That is why another feature of the Alliance - aggressive involvement of private sector firms like Western and MoneyGram - is so promising, especially in combating lone wolf and small cell terrorism.

Following major bouts of public criticism and outright condemnation, both firms hired experienced federal law enforcement personnel and scoped high profile self-detection initiatives to identify probable laundering and terrorist finance early on. Both firms speak regularly at law enforcement conferences and invite queries in agencies have a legitimate suspicion about an individual or transaction that could lead to criminal charges. Back to reflecting on needed improvements in Belgian security processes, this appears to be the right time for the private funds transfer sector to show the way to greater public-private cooperation. Then, hopefully, public agencies in need for information sharing reforms will follow.  

More News