Vast Data Collection Plan Faces Big Delay

By Ellen Nakashima
Washington Post Staff Writer
Wednesday, January 17, 2007

The Treasury Department reported to Congress yesterday that a data-collection program to give counterterrorism analysts routine access to as many as 500 million cross-border financial transactions a year could not be implemented until 2010. The department had hoped to implement it by the end of this year.

The Cross-Border Electronic Funds Transfer Program was part of the 2004 Intelligence Reform Act, and Congress directed the Treasury secretary to determine if the program would be effective in tracking terrorist financing. In a report to Congress to be released today, the Treasury Department concluded that the program was technologically feasible and has value, but said it needs to determine whether the counterterrorism benefit outweighs banks' costs of compliance and to address privacy concerns.

The program is opposed by bankers, who view it as burdensome and invasive.

Unlike another Treasury program, which uses administrative powers that bypass traditional banking privacy protections to tap into the vast global database of transactions maintained by the Brussels-based Society for Worldwide Interbank Financial Telecommunication, the cross-border plan is the result of legislation sought by Treasury and would require congressional oversight.

Both programs were inspired by the Sept. 11, 2001, terrorist attacks.

Banks and money services are required by law to keep records on all wire transfers of $3,000 or more. The proposed program would mandate that each of those transactions -- if they cross the U.S. border -- be reported to the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

The type of data captured would include the names and addresses of senders, the amount and dates of the transfers, the names and addresses of the beneficiaries and their financial institutions.

Treasury officials said in interviews and in the report to Congress that the data would give analysts more information to ferret out illicit activity as they try to detect links between suspects.

FinCEN said that Australia and Canada had used similar data effectively. Australia has used it to catch tax evaders and predict the movement of drugs into and out of the country. But those countries deal with much smaller numbers of transactions.

Treasury receives more than 16 million currency transaction records and suspicious activity reports a year from banks and other financial institutions, which help officials track money launderers and terrorist activity.

Bankers say the additional reporting requirement would be a tremendous burden.

"We're talking about a volume of transactions that dwarfs anything that has been done in the name of [financial regulatory reporting] up to now," said Richard R. Riese, director of the American Bankers Association Center for Regulatory Compliance.

CONTINUED     1        >

© 2007 The Washington Post Company