US seeks access to bank records

The Bush administration is developing a plan to give the government access to possibly hundreds of millions of international banking records in an effort to trace and deter terror financing, The New York Times has reported.

    International wire transfers would be under greater scrutiny

    The initiative, as conceived by a working group within the

    Treasury Department, would vastly expand the government's

    database of financial transactions by gaining access to

    logs of international wire transfers into and out of

    American banks, The Times said in its online edition on


    Such overseas transactions were used by the 11 September

    hijackers to wire more than $130,000, officials

    said, and are still thought to be vulnerable


    Government officials told The Times in interviews that the

    effort, which grew out of a brief, little-noticed provision

    in the intelligence reform bill passed by Congress in

    December, would give them the tools to track leads on

    specific suspects and, more broadly, to analyse patterns in

    terror financing and other financial crimes.

    The provision authorised the Treasury Department to pursue

    regulations requiring financial institutions to turn over "

    certain cross-border electronic transmittals of funds"

    that may be needed in combating money laundering and

    terror financing.

    Intensifying pressure

    The plan for tracking overseas wire transfers is likely to

    intensify pressure on banks and other financial

    institutions to comply with the expanding base of

    provisions, to fight money laundering.

    The US government adopted
    aggressive tactics since 9/11

    The US government's aggressive tactics since the attacks

    of 11 September 2001, have caused something of a

    backlash among banking compliance officers - and even some

    federal officials, whom The Times quoted as saying that the

    effort had gone too far in penalising the financial sector

    for lapses and had effectively criminalised what were once

    seen as technical violations.

    The initiative, still in its preliminary stages, reflects

    heightened concerns by administration and Congressional

    officials about the government's ability to track and

    disrupt financing for terrorist operations by al-Qaida and

    other groups.

    Planning and operations for the attacks

    on 11 September were thought to have cost al-Qaida

    $400,000 to $500,000 with no

    unusual transactions found, according to the 9/11

    commission, and the 1998 embassy bombings in East Africa

    cost only $10,000.

    While counterterrorism officials have made some inroads in

    tracking terror money, clear successes have been few.

    Senior officials throughout the Bush administration have

    emphasised repeatedly that they want the financial sector

    to be a full partner in the stepped-up efforts to deter

    terror financing.

    'Lack of clarity'

    But The Times said in a letter in January to Treasury

    Department officials that 52 banking associations around the

    country said a "lack of clarity" by the government

    in explaining what was expected of them in complying with

    regulations to deter terrorist financing and money

    laundering had "complicated, and in some cases

    undermined" those efforts.

    "It seems like the rules keep changing on us, and there's

    a lot of confusion and anxiety in the industry about what

    constitutes a proper compliance programme"

    John Byrne,

    The result, banking officials say, is that many banks, now

    in a defensive mode, are sending the government more

    reports than ever on "suspicious activities" by

    their customers - and potentially clogging the system with

    irrelevant data - for fear of being penalised if they fail

    to file the reports as required, The Times said.

    "It seems like the rules keep changing on us, and there's

    a lot of confusion and anxiety in the industry about what

    constitutes a proper compliance programme," John Byrne, who

    oversees compliance issues for the American Bankers

    Association, told The Times.

    By sharply increasing prosecutions against banks over

    compliance failures, "law enforcement is shooting the

    messenger," said Herbert Bierne, a senior enforcement

    official with the Federal Reserve System's board of

    governors, told The Times. "You shoot the messenger, you

    stop getting the messages."

    SOURCE: Agencies


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