[Clips] U.S. Is Moving on Several Fronts To Police Financial Transactions

[R.A. Hettinga]

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  Delivered-To: rah at shipwright.com
  Delivered-To: clips at philodox.com
  Date: Sat, 24 Jun 2006 23:34:16 -0400
  To: Philodox Clips List <clips at philodox.com>
  From: "R.A. Hettinga" <rah at shipwright.com>
  Subject: [Clips] U.S. Is Moving on Several Fronts To Police Financial
  	Transactions
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  <http://online.wsj.com/article_print/SB115107967824388905.html>

  The Wall Street Journal


  U.S. Is Moving on Several Fronts
  To Police Financial Transactions

  By GLENN R. SIMPSON

  June 24, 2006

  The Treasury Department's newly disclosed program to track suspected
  terrorists by examining records of international financial transactions is
  just one component of an expanding effort by American security officials to
  more closely monitor suspect financial dealings.

  U.S. officials also are privately asking the banking industry to change the
  ways that banks record international transactions so the data are more
  complete and more accurate, several executives and industry officials said.
  Regulators are concerned that banks in some cases aren't producing records
  that disclose all information about senders and recipients of wire
  transfers, prompting regulators from the Federal Reserve and other agencies
  to raise questions about record-keeping practices in recent examinations.

  Officials are also weighing new regulations to make U.S. banks disclose
  details of all cross-border transfers to law-enforcement agencies. At the
  moment, American banks aren't required to report when they make financial
  transfers less than $3,000 between the U.S. and other countries.

  These new steps come on the heels of a variety of new reporting
  requirements put into place by U.S. regulators shortly after the Sept. 11,
  2001, terrorist attacks. While many are aimed at thwarting terrorists and
  their supporters, U.S. officials also have other goals. They aim to use
  cross-border transaction data to enforce U.S. economic sanctions and to
  apply U.S. tax laws to American citizens who move money offshore.

  The initiatives rely on a patchwork of existing laws that allow the
  government to take these steps, and their legality generally isn't
  disputed. Still, the government's financial-surveillance activities may
  face new scrutiny following the disclosure this past week of the Treasury
  Department's secret Terrorist Finance Tracking Program. Using it on behalf
  of American intelligence and law-enforcement officials, the Treasury seeks
  information from a database of international wire transactions maintained
  by a Belgian firm known as Swift, an industry cooperative that serves as a
  clearinghouse for the majority of overseas transactions on behalf of banks
  and financial institutions. The Treasury program's existence was
  acknowledged on the record by U.S. officials for the first time on Thursday.

  "I am particularly proud of our Terrorist Finance Tracking Program which,
  based on intelligence leads, carefully targets financial transactions of
  suspected foreign terrorists," Treasury Secretary John Snow said at a news
  conference Friday.

  Some congressional Democrats and some civil-liberties activists criticized
  the program as a privacy threat, but most law-enforcement and
  banking-industry officials, and many political leaders, joined the Bush
  administration in defending it as appropriate. "Financial institutions are
  seeking to cooperate with law enforcement in this very critical fight
  against terrorist financing," said Lawrence Uhlick of the Institute for
  International Bankers. "I think this is a pretty clear case of the right
  kind of cooperation within the legal process." David Caruso, a former
  Secret Service agent and banking consultant, called the program "an
  aggressive but pretty wise use of power."

  Swift, which stands for the Society for Worldwide Interbank Financial
  Telecommunication, processes the millions of electronic messages sent daily
  by banks and brokerages to coordinate international transactions. While
  law-enforcement officials have traditionally subpoenaed individual banks
  when seeking information, the newly disclosed program involves broad
  government subpoenas to Swift for data on specific terrorists.

  While the reaction to disclosure of the program was generally muted, some
  banking executives say they still are concerned that the government's
  broader campaign to scoop up wire-transfer data from Swift and others could
  trigger a backlash. That might even weaken the dollar if institutions
  decide transactions made in dollars are more likely to attract the
  attention of American investigators.

  For now, U.S. officials remain interested in extracting more detail on
  international transactions that could involve criminal activity or suspect
  individuals. Most cross-border wire transfers contain sets of instructions
  in one of two standard Swift formats, and officials are concerned that in
  some cases people and groups are using a format that allows them to
  improperly hide their identities, several people with direct knowledge of
  the matter said.

  The issue arose after Treasury discovered that ABN Amro of the Netherlands
  improperly used a Swift form designed for large bank-to-bank transfers to
  deliberately hide transactions with Iran, a longtime target of U.S.
  economic sanctions.

  --
  -----------------
  R. A. Hettinga <mailto: rah at ibuc.com>
  The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
  44 Farquhar Street, Boston, MA 02131 USA
  "... however it may deserve respect for its usefulness and antiquity,
  [predicting the end of the world] has not been found agreeable to
  experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
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-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'