Watching Finances Of Terror Suspects Discussed in 2002

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By Walter Pincus
Washington Post Staff Writer
Friday, July 14, 2006

At a House subcommittee hearing five months after the Sept. 11 attacks, plans were openly discussed to give the government a highly secure, real-time electronic capability to request and receive data from financial institutions about suspected terrorists or terrorist organizations. The approach was closely similar to the effort described in news reports last month, which the Bush administration has said endangered national security.

In February 2002, Jeffrey P. Neubert, president and chief executive of the New York Clearing House Association LLC, described the intelligence-gathering system at a hearing of the House Financial Services subcommittee on oversight and investigations. Neubert said under the proposed system, government agencies would electronically send the names of suspected terrorists or terrorist organization to financial institutions "seeking account and/or transaction 'hits' which would be returned to the respective [government] organizations."

Neubert's New York Clearing House runs the CHIPS payment system, which describes itself as "the leading private-sector payment system infrastructure for clearing and settling U.S. dollar payments." Providing payment services to more than 1,600 financial institutions worldwide, CHIPS handles $1.5 trillion through about 8 million domestic and international transactions each day. Neubert told the subcommittee how a task force of government and financial industry personnel was also focused "on the issue beyond our borders" and proposed to "work globally to remove obstacles to the flow of information" to government entities.

The testimony was one of several examples where government and industry officials have publicly described how counterterrorism agencies access financial records to track terrorists and shut down their funding, leading some lawmakers and counterterrorism specialists to doubt assertions that the most recent revelations have significantly helped al-Qaeda or other terrorists by disclosing valuable new information.

Last month, the New York Times, followed quickly by other newspapers, including The Washington Post, published articles about how the Bush administration has been secretly tapping into a global database of financial transactions to track the identities and activities of suspected terrorists. The reports named the Society for Worldwide Interbank Financial Telecommunications (SWIFT) as one cooperating organization. SWIFT is a Belgium-based company that operates a financial messaging system used by 7,800 financial institutions in 200 countries.

Bush administration officials attacked the newspapers for publishing the articles, which they said hurt the war on terrorism. Vice President Cheney said at a campaign fundraiser on June 30, "Publishing this highly classified information about our sources and methods for collecting intelligence will enable the terrorists to look for ways to defeat our efforts."

But over several years, public testimony and documents have described those kinds of methods for tracking terror suspects.

The U.N. Security Council Monitoring Group, set up after Sept. 11, 2001, to encourage countries and international organizations to follow and block al-Qaeda financing worldwide, filed a public report in 2002 that drew attention to U.S. monitoring of international transactions, and identified SWIFT -- as well as the U.S.-based CHIPS system -- as likely sources of data.

"The U.S. has begun to apply new monitoring techniques to spot and verify suspicious transactions," the group's December 2002 report said, pointing specifically to international transactions "handled through correspondent banking relationships or large-value message and payments systems, such as SWIFT, Fedwire or CHIPS systems in the United States of America. Such international clearance centers are critical to processing international banking transactions and are rich with payment information."

"I don't think anyone who deals with this topic could have been surprised" about using those organizations, said Victor D. Comras, a retired U.S. Foreign Service officer who participated in the U.N. group. "What it was at best was an open secret" that SWIFT was involved, he added. Comras, who helped draft the report, said those details came from unclassified sources and were "vetted with the U.S. government" before being published.

The report noted that even at that date, al-Qaeda was aware of "increased vigilance over traditional bank transfers and the increased ability of law enforcement agencies in a number of countries to trace such transactions."

As a result, the terrorist group "often routed [funds] through a combination of bank transfers and informal transfer mechanisms such as hawala [which involves passing money person to person] and through multiple intermediaries in order to further obscure their origins and final destinations," the report said.

Subsequent government reports have also highlighted counterterrorism officials' reliance on financial records. The FBI's Terrorist Financing Operations Section, according to an August 2004 report by the 9/11 commission, has a list of contacts "within the financial community, banks, brokerage house, credit card vendors, and money services businesses -- to whom it can turn to get financial information on an expedited basis at any time, including nights, weekends and holidays" after serving them "with a subpoena or other legal process."

The 9/11 commission, in its July 2004 report, publicly praised the cooperation that financial institutions worldwide were providing to the U.S. government: "The U.S. financial community and some international financial institutions have generally provided law enforcement and intelligence agencies with extraordinary cooperation, particularly in supplying information to support quickly developing investigations."

At a House Financial Services Committee hearing on Tuesday, lawmakers challenged Treasury Undersecretary Stuart Levey on whether the recent articles about SWIFT had jeopardized national security.

We announced that "it's a critical part of the overall campaign against al-Qaeda, following the money," said Rep. Barney Frank (D-Mass.). "Did they not infer from that we would be looking at their bank accounts? . . . I mean, was this really not known to them that we were carefully tracking financial records?"

Levey responded: "What was done very commonly was that we would discuss that we're following the money. But that leaves people in some doubt as to what exactly we're able to look at. Once the SWIFT program is disclosed, it's my fear that they'll now know exactly what it is."

Levey added that there has been no evidence yet that the program has been harmed "because the data that we're accessing right now was data that was created before the news stories." He added that logically "public discussion of this will be harmful to the program. But . . . I'm hopeful that we have some value from the program, and we intend to continue with it."


© 2006 The Washington Post Company

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