Secret U.S. Program Tracks Global Bank Transfers

[Richard Forno]

http://www.latimes.com/news/nationworld/nation/la-na-
swift23jun23,0,6482687.
story?coll=la-home-headlines
>From the Los Angeles Times
Secret U.S. Program Tracks Global Bank Transfers
The Treasury Dept. program, begun after the Sept. 11 attacks,
attempts to
monitor terrorist financing but raises privacy concerns.
By Josh Meyer and Greg Miller
Times Staff Writers

June 23, 2006

WASHINGTON b The U.S. government, without the knowledge of many banks
and
their customers, has engaged for years in a secret effort to track
terrorist
financing by accessing a vast database of confidential information on
transfers of money between banks worldwide.

The program, run by the Treasury Department, is considered a potent
weapon
in the war on terrorism because of its ability to clandestinely monitor
financial transactions and map terrorist webs.

It is part of an arsenal of aggressive measures the government has
adopted
since the Sept. 11 terrorist attacks that yield new intelligence, but
also
circumvent traditional safeguards against abuse and raise concerns about
intrusions on privacy.

Under this effort, Treasury routinely acquires information about bank
transfers from the world's largest financial communication network,
which is
run by a consortium of financial institutions called the Society for
Worldwide Interbank Financial Telecommunication, or SWIFT.

The SWIFT network carries up to 12.7 million messages a day containing
instructions on many of the international transfers of money between
banks.
The messages typically include the names and account numbers of bank
customers b from U.S. citizens to major corporations b who are
sending or
receiving funds.

Through the program, Treasury has built an enormous b and ever-growing b
repository of financial records drawn from what is essentially the
central
nervous system of international banking.

In a major departure from traditional methods of obtaining financial
records, the Treasury Department uses a little-known power b
administrative
subpoenas b to collect data from the SWIFT network, which has
operations in
the U.S., including a main computer hub in Manassas, Va. The
subpoenas are
secret and not reviewed by judges or grand juries, as are most criminal
subpoenas.

"It's hard to overstate the value of this information," Treasury
Secretary
John W. Snow said Thursday in a statement he issued after The Times and
other media outlets reported the existence of the Terrorist Finance
Tracking
Program.

SWIFT acknowledged Thursday in response to questions from The Times
that it
has provided data under subpoena since shortly after Sept. 11, 2001, a
striking leap in cooperation from international bankers, who long
resisted
such law enforcement intrusions into the confidentiality of their
communications.

But SWIFT said in a statement that it has worked with U.S. officials to
restrict the use of the data to terrorism investigations.

The program is part of the Bush administration's dramatic expansion of
intelligence-gathering capabilities, which includes warrantless
eavesdropping on the international phone calls of some U.S. residents.
Critics complain that these efforts are not subject to independent
governmental reviews designed to prevent abuse, and charge that they
collide
with privacy and consumer protection laws in the United States.

Steven Aftergood, director of the Project on Government Secrecy at the
Federation of American Scientists, said the SWIFT program raises similar
issues. "It boils down to a question of oversight, both internal and
external. And in the current circumstances, it is hard to have
confidence in
the efficacy of their oversight," he said. "Their policy is, 'Trust
us,' and
that may not be good enough anymore."

A former senior Treasury official expressed concern that the SWIFT
program
allows access to vast quantities of sensitive data that could be abused
without safeguards. The official, who said he did not have independent
knowledge of the program, questioned what becomes of the data, some
of it
presumably related to innocent banking customers.

"How do you separate the wheat from the chaff?" the former official
said.
"And what do you do with the chaff?"

More than a dozen current and former U.S. officials discussed the
program on
condition of anonymity, citing its sensitive nature.

The effort runs counter to the expectations of privacy and security
that are
sacrosanct in the worldwide banking community. SWIFT promotes its
services
largely by touting the network's security, and most of its customers are
unaware that the U.S. government has such extensive access to their
private
financial information.

U.S. officials, some of whom expressed surprise the program had not
previously been revealed by critics, acknowledged it would be
controversial
in the financial community. "It is certainly not going to sit well in
the
world marketplace," said a former counterterrorism official. "It
could very
likely undermine the integrity of SWIFT."

Bush administration officials asked The Times not to publish information
about the program, contending that disclosure could damage its
effectiveness
and that sufficient safeguards are in place to protect the public.

Dean Baquet, editor of The Times, said: "We weighed the government's
arguments carefully, but in the end we determined that it was in the
public
interest to publish information about the extraordinary reach of this
program. It is part of the continuing national debate over the
aggressive
measures employed by the government."

Under the program, Treasury issues a new subpoena once a month, and
SWIFT
turns over huge amounts of electronic financial data, according to
Stuart
Levey, the department's undersecretary for terrorism and financial
intelligence. The administrative subpoenas are issued under authority
granted in the 1977 International Emergency Economic Powers Act.

The SWIFT information is added to a massive database that officials have
been constructing since shortly after Sept. 11. Levey noted that
SWIFT did
not have the ability to search its own records. "We can, because we
built
the capability to do that," he said.

Treasury shares the data with the CIA, the FBI and analysts from other
agencies, who can run queries on specific individuals and accounts
believed
to have terrorist connections, Levey said Thursday in an interview
with The
Times.

Levey said that "tens of thousands" of searches of the database have
been
done over the last five years.

The program was initially a closely guarded secret, but it has recently
become known to a wider circle of government officials, former
officials,
banking executives and outside experts.

Current and former U.S. officials said the effort has been only
marginally
successful against Al Qaeda, which long ago began transferring money
through
other means, including the highly informal banking system common in
Islamic
countries.

The value of the program, Levey and others said, has been in tracking
lower-
and mid-level terrorist operatives and financiers who believe they
have not
been detected, and militant groups, such as Hezbollah, Hamas and
Palestinian
Islamic Jihad, that also operate political and social welfare
organizations.



It's no secret that the Treasury Department tries to track terrorist
financing, or that those efforts ramped up significantly after the
Sept. 11
terrorist attacks. But the SWIFT program goes far beyond what has been
publicly disclosed about that effort in terms of the amount of financial
data that U.S. intelligence agencies can access.

The program also represents a major tactical shift. U.S.
investigators long
have been able to subpoena records on specific accounts or
transactions when
they could show cause b a painstaking process designed mainly for
gathering
evidence. But access to SWIFT enables them to follow suspicious
financial
trails around the globe, identifying new suspects without having to seek
assistance from foreign banks.

SWIFT is a consortium founded in 1973 to replace telex messages. It has
almost 7,900 participating institutions in more than 200 countries b
including Bank of America, JP Morgan Chase Bank, Citibank and Credit
Suisse.
The network handled 2.5 billion financial messages in 2005, including
many
originating in countries such as Saudi Arabia, Pakistan and the
United Arab
Emirates that the United States scrutinizes closely for terrorist
activity.

The system does not execute the actual transfer of funds between
banks; that
is carried out by the Federal Reserve and its international
counterparts.
Rather, banks use the network to transmit instructions about such
transfers.
For that reason, SWIFT's data is extremely valuable to intelligence
services
seeking to uncover terrorist webs.

CIA operatives trying to track Osama bin Laden's money in the late 1990s
figured out clandestine ways to access the SWIFT network. But a
former CIA
official said Treasury officials blocked the effort because they did not
want to anger the banking community.

Historically, "there was always a line of contention" inside the
government,
said Paul Pillar, former deputy director of the CIA's counterterrorism
center. "The Treasury position was placing a high priority on the
integrity
of the banking system. There was considerable concern from that side
about
anything that could be seen as compromising the integrity of
international
banking."

Before Sept. 11, a former senior SWIFT executive said, providing
access to
its sensitive data would have been anathema to the Belgium-based
consortium.
But the attacks on the World Trade Center and the Pentagon led to a new
mind-set in many industries, including telecommunications.

SWIFT said the Treasury Department's Office of Foreign Assets Control
sent
the first subpoena shortly after Sept. 11, seeking "limited sets of
data" to
learn about how Al Qaeda financed the attacks.

Unlike telephone lines and e-mail communications, the SWIFT network
cannot
be easily tapped. It uses secure log-ins and state-of-the-art encryption
technology to prevent intercepted messages from being deciphered. "It is
arguably the most secure network on the planet," said the former SWIFT
executive who spoke on condition of anonymity. "This thing is locked
down
like Fort Knox."

SWIFT said it was responding to compulsory subpoenas and negotiated with
U.S. officials to narrow them and to establish protections for the
privacy
of its customers. SWIFT also said it has never given U.S. authorities
direct
access to its network.

"Our fundamental principle has been to preserve the confidentiality
of our
users' data while complying with the lawful obligations in countries
where
we operate," SWIFT said in its statement.



Current and former U.S. officials familiar with the SWIFT program
described
it as one of the most valuable weapons in the financial war on
terrorism,
but declined to provide even anecdotal evidence of its successes.

A former high-ranking CIA officer said it has been a success, and
another
official said it has allowed U.S. counterterrorism officials to follow a
tremendous number of leads. CIA officials pursue leads overseas, and
the FBI
and other agencies pursue leads in the United States, where the CIA is
prohibited from operating.

Officials said the program is relied upon especially heavily when
intelligence chatter from phone and e-mail intercepts suggested an
imminent
attack, conveying real-time intelligence for counterterrorism
operations.

The former SWIFT executive said much can be learned from network
messages,
which require an actual name and address of both the sender and
recipient,
unlike phone calls and e-mails, in which terrorist operatives can easily
disguise their identities.

"There is a good deal of detail in there," he said.

As the global war on terrorism has succeeded in taking out some senior
terrorists and their financiers, particularly within Al Qaeda, the
organization and its many affiliates have sought to move to hidden
locations
and to transfer their money through proxies such as charities, aid
organizations and corporate fronts.

The officials said the SWIFT information can be used in "link analysis."
That technique allows analysts to identify any person with whom a
suspected
terrorist had financial dealings b even those with no connection to
terrorism. That information is then mapped and analyzed to detect
patterns,
shifts in strategy, specific "hotspot" accounts, and locations that have
become new havens for terrorist activity.



The SWIFT program is just one of the Bush administration's post-Sept. 11
initiatives to collect intelligence that could include information on
U.S.
residents.

The National Security Agency, which can intercept communications
around the
world, is eavesdropping on the telephone calls and e-mails of some U.S.
residents without obtaining warrants. And it has been accused of asking
telecommunications companies to help create a database of the phone-call
records of almost all Americans.

The Justice Department also has asked Internet companies to keep
records of
the websites customers visit and the people they e-mail for two years,
rather than days or weeks, which would greatly expand the government's
ability to track online activity.

Numerous lawsuits have been filed against the government and phone
companies, challenging the NSA efforts. The government has asked
courts to
throw them out, invoking the "state secrets" privilege and arguing that
trials would compromise national security. The NSA's interception of
telephone calls also has been criticized for lacking an independent
review
process to ensure that the information is not abused.

The SWIFT program raises similar concerns, some critics say.

Privacy advocates have questioned "link analysis" because it can drag in
innocent people who have routine financial dealings with terrorist
suspects.

And no outside governmental oversight body, such as the Foreign
Intelligence
Surveillance Court or a grand jury, monitors the subpoenas served on
SWIFT.

Levey said the program is subject to "robust" checks and balances
designed
to prevent misuse of the data. He noted that requests to access the
data are
reviewed by Treasury's assistant secretary for intelligence; that
analysts
can only access the data for terrorism-related searches; and that
records
are kept of each search and are reviewed by an outside auditor for
compliance.

Levey said there had been one instance of abuse in which an analyst had
conducted a search that did not meet the terrorist-related criteria. The
analyst was subsequently denied access to the database, he said.

During the last five years, SWIFT officials have raised concerns
about the
scope of the program, particularly at the outset, when it was handing
over
virtually its entire database. The amount of data handed over each
month has
been winnowed down.

"The safeguards were not all there in September 2001," Levey
acknowledged.
"We started narrowing it from the beginning."

New safeguards have been added, he said, noting that SWIFT officials
are now
allowed to be present when analysts search the data and to raise
objections
with top officials.

Officials from other government agencies have raised the issue of
accessing
the records for other investigative purposes, but Levey said such
proposals
have been rejected b largely out of concern that doing so might erode
support for the program.

Asked what would prevent the data from being used for other purposes
in the
future, Levey said doing so would likely trigger objections from
SWIFT and
the outside auditor.

A SWIFT representative said that Booz Allen Hamilton, an international
consulting firm, is the auditor but provided no further details on
how the
oversight process works.

Although the searches focus on suspected terrorist activity overseas,
U.S.
officials acknowledged that they do delve into the financial
activities of
Americans, noting that privacy laws don't protect individuals
believed to be
acting as a "foreign terrorist agent."

Officials said the administration has briefed congressional intelligence
committees on the SWIFT program. In contrast, information on the NSA
wiretapping was shared only with key lawmakers. One senior congressional
aide said the committees have "a good handle on what the executive
branch is
doing to track terrorist financing" and are generally supportive of
those
efforts.

But the operation seems to have been kept secret from key segments of
the
banking industry, including senior executives in the United States and
overseas.

John McKessy, chairman of the SWIFT user group in the United States,
said he
was unaware of any such program. McKessy represents companies and
institutions that are not members of the SWIFT cooperative but use its
messaging system.

SWIFT noted that its published policies clearly indicate that it
cooperates
with law enforcement authorities and that the subpoenas were "discussed
carefully within the board," made up of members from 25 major banks.
SWIFT
said it has also kept informed an oversight committee drawn from the
central
banks of the major industrial countries.



The SWIFT program plugs a gap in global efforts to track terrorism
financing.

In the United States, law enforcement authorities can access bank
records if
they get permission through the legal process. The FBI also has various
legal ways to get almost instantaneous access to financial records.
And U.S.
banking laws require financial institutions to file Suspicious Activity
Reports, but authorities believe Al Qaeda and other terrorist groups
know
how to evade the activities that trigger such red flags.

U.S. officials, however, long have complained that they cannot get
access to
financial records overseas and that some requests for cooperation from
foreign governments and financial institutions took months, while others
were rebuffed.

"The sort of 18th century notions on this stuff drive me nuts," said one
senior U.S. counterterrorism official. "Somebody can move money with the
click of a mouse, but it takes me six months to find it. If that is the
world in which we live, you have to understand the costs involved with
that."

The Sept. 11 commission urged the government in its July 2004 report
on the
U.S. intelligence failures leading up to the terrorist attacks to put
more
emphasis on tracking the flow of funds, rather than seeking to
disrupt them,
to learn how terrorist networks are organized.

Lee Hamilton, a former congressman and co-chairman of the commission who
said he has been briefed on the SWIFT program, said U.S. intelligence
agencies have made significant progress in recent years, but are still
falling short. "I still cannot point to specific successes of our
efforts
here on terrorist financing," he said.




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