Financial tracking is the name of the game

Washington, April 7 | Updated: Apr 8 2005, 05:30am hrs
In August 2001, US officials were scrambling to hunt down two suspected terrorists who had arrived in the United States. A month later, the two men were among the hijackers in the September 11 attacks.

Knowing the names of Khalid al-Mihdhar and Nawaf al-Hazmi had not been enough. Had officials also known the men had US bank accounts and were using debit cards to pay for hotels, they could have worked with banks high-tech computer systems to track the pair and maybe avert the attacks. But back in the summer of 2001, nobody had heard of "financial tracking."

Today, this little-publicised technique that marries financial systems with nuggets of specific intelligence from the government is one of the most valuable tools in the fight against terrorism financing, helping officials track down militants, watch their moves and thwart attacks, officials and experts say.

The process takes place behind the scenes, and while successes are real, they never make headlines because officials are afraid of endangering sources and methods, both fans and critics of the Bush administration say.

"We miss an awful lot, but there are some really stunning accomplishments by the people who work quietly in the dead of the night," said David Aufhauser, the treasurys former general counsel who spearheaded the fight against terrorism financing after the 2001 attacks.

Unlike money laundering, which often triggers red flags that banks can detect, financial institutions struggle to spot terrorist financing proactively without government tip-offs.

But if government officials can provide a specific morsel of hardwon intelligence -- such as dates or transactions -- that goes beyond the names and aliases they routinely provide, banks computers become a powerful search engine which can help monitor militants activities including where they are, what they buy and whom they know.

"Probably banks most valuable role is in emergency situations when they can use their systems, together with a piece of intelligence from the government, to provide financial information helpful in tracking terrorists," said Douglas Greenburg, one of the authors of the September 11 Commissions groundbreaking special report on terrorism financing.

Several current and former officials, including several critics of the Bush administration, have confirmed successes of financial tracking, but would not give details for fear of damaging ongoing operations.

One current official familiar with the practice said: "The good story out there is entirely classified." Dennis Lormel, who headed the FBIs anti-terrorist financing efforts after the 2001 attacks, said financial tracking had helped law enforcement thwart "numerous" attacks. In some cases, he said, officials obtained "intelligence information about monies being sent to operatives, and we were able to track the money to the operatives and they were identified and apprehended before they took any actions."

Reliable intelligence details which can be used in financial tracking are hard to come by, and officials must still perfect their financial tracking skills. Reuters

The process is also complicated by factors such as the need to protect sources, limited software capabilities and privacy or civil liberty concerns.

"Theres the whole idea of false positives: What happens to individuals who are wrongly profiled as being suspects What recourse would they have" said Beth Givens, director of the Privacy Rights Clearinghouse advocacy group.

Bankers also say they get conflicting messages about whether officials want them to focus on financial tracking or other post-September 11 requirements, such as sweeping checks of all clients and transactions for suspicious activities. "Until theres a way to bridge the gap...the financial community is going to be going off in two different directions, and not succeeding tremendously well in either one," said Pete Djinis, a former senior treasury official who now advises banks on money laundering and terrorist financing issues.

After initial attempts after the September 11 attacks to starve terrorists of money -- mostly by providing suspects names to banks so they could block related accounts -- the governments anti-terrorism financing approach expanded to include the more targeted tool of financial tracking, officials, former officials and experts said.

Banks prefer the more focused approach, saying the blacklists and onerous post-9/11 laws and regulations requiring them to conduct tough customer background checks and to report all sorts of suspicious activities are too broad and have done little if anything to detect terrorist funds.

Officials say financial tracking is valuable but say the tough and broad regulations are still necessary because they help banks spot irregularities and ensure they have the tools to conduct sophisticated searches as needed.

"We understand the limitation of the current anti-money laundering regime in terms of proactively identifying operational terrorism finance," said William Langford, a senior official in treasurys Financial Crimes Enforcement Network.

"But the very systems and controls that were developing (in financial and other industries) ... are an incredibly necessary first step. Because we know when you combine it with a bit of information, then the dominoes start to fall," he said.