Criminals and terrorists do not respect laws; we should not expect them to respect borders. Financial markets are global. Financial intelligence can help governments turn vulnerabilities to our advantage in efforts to protect the public from serious crime and terrorist acts. We must use this powerful tool available to us to extend law enforcement's reach beyond jurisdictional limitations through transnational cooperation.
An international consensus has emerged that a key role in such efforts should be played by a designated central agency to serve as each jurisdiction's financial intelligence unit. FIUs can bridge the gap by receiving certain information from financial institutions subject to controls and protections; and applying their expertise to develop financial intelligence that is accessible and applicable to law enforcement investigations. FIUs have been given unique legal authority and have developed the infrastructure necessary to transcend jurisdictional borders to appropriately share financial intelligence. Benefits from such sharing have been well proven in tactical support of actual law enforcement investigations. Now it is time to unleash the potential for proactive information sharing and joint strategic analytical work. In our increasingly globalized world, we must take FIU information sharing to this higher plane to realize its potential to further transnational efforts to combat the global threats of money laundering, terrorist financing, and other illicit activity.
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1National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission Report at 169, available at http://govinfo.library.unt.edu/911/report/index.htm.
2 See id. at 237 ("The hijackers made extensive use of banks in the United State, choosing both branches of international banks and smaller regional banks. All of the hijackers opened accounts in their own name, and used passports and other identification documents that appeared valid on their face.... While the hijackers were not experts on the use of the U.S. financial system, nothing they did would have led the banks to suspect criminal behavior, let alone a terrorist plot to commit mass murder."116 and at 528, n.116 ("Contrary to persistent media reports, no financial institution filed a suspicious activity report (SAR)... with respect to any transaction of any of 19 hijackers before 9/11.... Nor should they have been filed. The hijackers' transactions themselves were not extraordinary or remarkable.").
3http://www.treasury.gov/press-center/press-releases/Pages/hp898.aspx.
4 See Paul Allen Schott, Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorism, The World Bank and International Monetary Fund, Washington, DC (2d ed. 2006) at I-5, available at http://siteresources.worldbank.org/EXTAML/Resources/396511-1146581427871/Reference_Guide_AMLCFT_2ndSupplement.pdf, ("The techniques used to launder money are essentially the same as those used to conceal the sources of, and uses for, terrorist financing. Funds used to support terrorism may originate from legitimate sources, criminal activities, or both. Nonetheless, disguising the source of terrorist financing, regardless of whether the source is of legitimate or illicit origin, is important. If the source can be concealed, it remains available for future terrorist financing activities. Similarly, it is important for terrorists to conceal the use of the funds so that the financing activity goes undetected.").
5 See FATF, Terrorist Financing (2008) at 15, available at http://www.fatf-gafi.org/dataoecd/28/43/40285899.pdf, ("Terrorist use of criminal activity to raise funds ranges from low-level fraud to involvement in serious and organised crime."). This report provided more details from actual cases provided by multiple countries related to terrorism funding from narcotics trafficking, credit card fraud, check fraud, and extortion of diaspora communities.
6 See General Assembly Resolution A/RES/51/210, "Measures to eliminate international terrorism" (December 17, 1996), art. 3:
- Calls upon all States to adopt further measures in accordance with the relevant provisions of international law, including international standards of human rights, to prevent terrorism and to strengthen international cooperation in combating terrorism and, to that end, to consider the adoption of measures such as those contained in the official document adopted by the group of seven major industrialized countries and the Russian Federation at the Ministerial Conference on Terrorism, held in Paris on 30 July 1996, and the plan of action adopted by the Inter-American Specialized Conference on Terrorism, held at Lima from 23 to 26 April 1996 under the auspices of the Organization of American States, and in particular calls upon all States: (f) To take steps to prevent and counteract, through appropriate domestic measures, the financing of terrorists and terrorist organizations, whether such financing is direct or indirect through organizations which also have or claim to have charitable, social or cultural goals or which are also engaged in unlawful activities such as illicit arms trafficking, drug dealing and racketeering, including the exploitation of persons for purposes of funding terrorist activities, and in particular to consider, where appropriate, adopting regulatory measures to prevent and counteract movements of funds suspected to be intended for terrorist purposes without impeding in any way the freedom of legitimate capital movements and to intensify the exchange of information concerning international movements of such funds[.]
Available at http://www.un.org/documents/ga/res/51/a51r210.htm.
7UNSCR 1333 (2000) art. 9.
8 See UNSCR 1267 (1999) art. 4: "Decides further that, in order to enforce paragraph 2 above, all States shall:
- * * * "(b) Freeze funds and other financial resources, including funds derived or generated from property owned or controlled directly or indirectly by the Taliban, or by any undertaking owned or controlled by the Taliban, as designated by the Committee established by paragraph 6 below, and ensure that neither they nor any other funds or financial resources so designated are made available, by their nationals or by any persons within their territory, to or for the benefit of the Taliban or any undertaking owned or controlled, directly or indirectly, by the Taliban, except as may be authorized by the Committee on a case-by-case basis on the grounds of humanitarian need."
9 See UNSCR 1193 (1998) art. 15 ("Demands the Afghan factions to refrain from harbouring and training terrorists and their organizations and to halt illegal drug activities."); and UNSCR 1214 (1998) art. 13 ("Demands also that the Taliban stop providing sanctuary and training for international terrorists and their organizations, and that all Afghan factions cooperate with efforts to bring indicted terrorists to justice.") and art. 14 ("Demands further that the Taliban, as well as others, halt the cultivation, production and trafficking of illegal drugs.").
10 See United States Treasury Department Press Release, Treasury Targets FARC Financial Network in Colombia (January 15, 2008), available at http://www.treasury.gov/press-center/press-releases/Pages/hp762.aspx.
11 See Dale Fuchs, "Spain Says Bombers Drank Water From Mecca and Sold Drugs," The New York Times (April 14, 2004) ("The Islamic terrorists responsible for the Madrid train bombings financed their plot with sales of hashish and Ecstasy and drank holy water from Mecca in ritual 'purification acts' before the attacks, the acting interior minister, �ngel Acebes, said Wednesday.... the bombers swapped the drugs for the 440 pounds of dynamite used in the blasts.... Mr. Acebes said the man in charge of the group's finances was Jamal Ahmidan, a 33-year-old Moroccan immigrant with an 'extensive criminal record for drug trafficking.'... Money from the drug trafficking paid for an apartment hide-out, a car and the cellphones used to detonate the bombs, an Interior Ministry spokesman said.")
12http://www.treasury.gov/press-center/press-releases/Pages/hp898.aspx.
13http://www.fatf-gafi.org/document/28/0,3343,en_32250379_32236930_33658140_1_1_1_1,00.html
14FATF Recommendation 14 provides:
- Financial institutions, their directors, officers and employees should be:
a) Protected by legal provisions from criminal and civil liability for breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision, if they report their suspicions in good faith to the FIU, even if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred. b) Prohibited by law from disclosing the fact that a suspicious transaction report (STR) or related information is being reported to the FIU.
15For a recent overview of cash transaction reporting requirements in the United States and law enforcement uses of this information, see United States Government Accountability Office, Bank Secrecy Act: Increased Use of Exemption Provisions Could Reduce Currency Transaction Reporting While Maintaining Usefulness to Law Enforcement Efforts (February 2008), available at http://www.gao.gov/new.items/d08355.pdf.
16 See FATF Recommendation 24:
- Countries should further encourage in general the development of modern and secure techniques of money management, including increased use of checks, payment cards, direct deposit of salary checks, and book entry recording of securities, as a means to encourage the replacement of cash transfers.
(emphasis added).
17 See Interpretive Note Concerning the Egmont Definition of a Financial Intelligence Unit, available at http://www.egmontgroup.org/files/library_egmont_docs/egmont_final_interpretive.pdf.
18 See United Nations Convention Against Transnational Organized Crime, available at http://www.unodc.org/documents/treaties/UNTOC/Publications/TOC%20Convention/TOCebook-e.pdf. Article. 7, "Measures to combat money-laundering," reads in relevant part: "1. Each State Party:
- "(b) Shall, without prejudice to articles 18 and 27 of this Convention, ensure that administrative, regulatory, law enforcement and other authorities dedicated to combating money-laundering (including, where appropriate under domestic law, judicial authorities) have the ability to cooperate and exchange information at the national and international levels within the conditions prescribed by its domestic law and, to that end, shall consider the establishment of a financial intelligence unit to serve as a national centre for the collection, analysis and dissemination of information regarding potential money-laundering."
19 See United Nations Convention Against Corruption, art. 14(1)(b), available at http://www.unodc.org/unodc/en/treaties/CTOC/signatures.html. 20 See http://www.unodc.org/pdf/corruption/publications_unodc_convention-e.pdf. 21 See 1996 FATF Recommendation 23:
- Countries should consider the feasibility and utility of a system where banks and other financial institutions and intermediaries would report all domestic and international currency transactions above a fixed amount, to a national central agency with a computerized data base, available to competent authorities for use in money laundering cases, subject to strict safeguards to ensure proper use of the information.
Available at http://www.fatf-gafi.org/dataoecd/15/51/40262612.pdf.
22 See http://www.unodc.org/unodc/en/money-laundering/Model-Legislation.html.
23Treasury Order 105-08, "Establishment of the Financial Crimes Enforcement Network," (April 25, 1990).
24 See Treasury Order 180-01, "Financial Crimes Enforcement Network," (September 26, 2002), art. 1 ("By virtue of the USA PATRIOT Act of 2001 (Pub. L. No. 107-56, Title III, Subtitle B, Section 361(a)(2), 115 Stat. 272, 329-332), and by the authority vested in me as Secretary of the Treasury, it is hereby ordered that the Financial Crimes Enforcement Network ("FinCEN" or the "Bureau") is re-established as a bureau within the Department.").
Pub. L. 107-56 (2001), art.
25 See 31 U.S.C. � 310(b) Director.-
(1) Appointment.- The head of FinCEN shall be the Director, who shall be appointed by the Secretary of the Treasury.
(2) Duties and powers.- The duties and powers of the Director are as follows:
- * * *
(B) Maintain a government-wide data access service, with access, in accordance with applicable legal requirements, to the following:
· (i) Information collected by the Department of the Treasury, including report information filed under subchapter II of chapter 53 of this title (such as reports on cash transactions, foreign financial agency transactions and relationships, foreign currency transactions, exporting and importing monetary instruments, and suspicious activities)....
- * * *
(C) Analyze and disseminate the available data... to-
· (i) identify possible criminal activity to appropriate Federal, State, local, and foreign law enforcement agencies;
- * * *
· (v) determine emerging trends and methods in money laundering and other financial crimes;
· (vi) support the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism; and
· (vii) support government initiatives against money laundering.
- * * *
(H) Coordinate with financial intelligence units in other countries on anti-terrorism and anti-money laundering initiatives, and similar efforts.
26 See Council Decision of 17 October 2000 concerning arrangements for cooperation between financial intelligence units of the Member States in respect of exchanging information. O.J. L 271, 24 October 2000, p. 4-6, available at http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=32000D0642&model=guichett, perambulatory para. 2 ("All Member States have set up financial intelligence units (FIUs) to collect and analyse information received under the provisions of Directive 91/308/EEC with the aim of establishing links between suspicious financial transactions and underlying criminal activity in order to prevent and to combat money laundering.").
27Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, O.J. L 309 /15 (25 November 2005) art. 21(1).
28 See Egmont Information Paper on Financial Intelligence Units and the Egmont Group (September 2004) at 2, available at http://www.egmontgroup.org/files/library_egmont_docs/info_paper_final_oct_2004.pdf.
29 See id.
30Egmont Group, Principles for Information Exchange Between Financial Intelligence Units and Terrorism Financing Cases, The Hague, 13 June 2001, art. 9, available at http://www.egmontgroup.org/princ_info_exchange.pdf. 31Available at http://www.egmontgroup.org/bestpractices.pdf. 32 See International Monetary Fund, Financial Intelligence Units: An Overview (2004), available at http://www.imf.org/external/pubs/ft/FIU/index.htm, at 2 ("The purpose of this handbook is to respond to the need for information on FIUs."
33 See id. at 91. 34 See also Interpretative Note to Recommendation 40, para. 4:
- FIUs should be able to make inquiries on behalf of foreign counterparts where this could be relevant to an analysis of financial transactions. At a minimum, inquiries should include: Searching its own databases, which would include information related to suspicious transaction reports.
- Searching other databases to which it may have direct or indirect access, including law enforcement databases, public databases, administrative databases and commercially available databases.
- Where permitted to do so, FIUs should also contact other competent authorities and financial institutions in order to obtain relevant information.
35 See, e.g., FATF Revised Interpretative Note to Special Recommendation VII: Wire Transfers (February 2008), available at http://www.fatf-gafi.org/dataoecd/16/34/40268416.pdf.
36For a description of how FinCEN processes requests from foreign FIUs, see FATF, Third Mutual Evaluation Report on Anti-Money Laundering and Combating the Financing of Terrorism: United States of America (June 23, 2006), paras. 1196, 1997, available at http://www.fatf-gafi.org/dataoecd/44/9/37101772.pdf:
- 1196. After the initial screening process is complete, an analyst is assigned to the case. The assigned FinCEN analyst is responsible for making all relevant queries on the subjects named in the request, expanding their research as necessary (and as agreed upon) to include any 'new' entities that are identified through the research. Queries are made on all commercial databases, financial databases and law enforcement databases to which FinCEN has access. If other agencies have requested data on the same entities (and all parties agree), FinCEN can facilitate networking amongst the agencies involved (i.e. by sharing the contact names and telephone numbers of the other requesting agencies).
- 1197. In general, based on the needs of the requesting agency, FinCEN can provide a foreign FIU with three types of data: commercial data (public record information); financial data (BSA information); and law enforcement data (foreign travel, criminal history, and driver history records). FinCEN prepares a report that summarizes its findings and forwards it to the requester.
37 See FinCEN, Annual Report for 2007, at 33, available at http://www.fincen.gov/AnnualReportFY2007.pdf.
38FinCEN, Mortgage Loan Fraud: An Update of Trends Based Upon an Analysis of Suspicious Activity Reports (April 2008), available at http://www.fincen.gov/MortgageLoanFraudSARAssessment.pdf.
39FinCEN, Insurance Industry Suspicious Activity Reporting: An Assessment of Suspicious Activity Report Filings (April 2008), available at http://www.fincen.gov/Insurance_Industry_SAR.pdf.
40FinCEN, The Role of Domestic Shell Companies in Financial Crime and Money Laundering: Limited Liability Companies (November 2006), available at http://www.fincen.gov/LLCAssessment_FINAL.pdf.
41 See Council Decision of 17 October 2000 concerning arrangements for cooperation between financial intelligence units of the Member States in respect of exchanging information. O.J. L 271, 24 October 2000, p. 4-6, available at http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=32000D0642&model=guichett, art. 8 ("This Decision shall be implemented without prejudice to the Member States' obligations towards Europol, as they have been laid down in the Europol Convention.").
42FATF, Third Mutual Evaluation Report on Anti-Money Laundering and Combating the Financing of Terrorism: United States of America (June 23, 2006), para. 1190, available at http://www.fatf-gafi.org/dataoecd/44/9/37101772.pdf.
43 See id.
44Id.
45 See White House News Release - President Announces Crackdown on Terrorist Financial Network; Remarks by the President in Announcement on Financial Aspects of Terrorism, delivered at the Financial Crimes Enforcement Network (FinCEN) (November 7, 2001), available at http://www.whitehouse.gov/news/releases/2001/11/20011107-4.html (President George W. Bush: "You're doing some imaginative work here at the Financial Crimes Enforcement Network, and I want to thank all the fine Americans who are on the front line of our war [against terror], the people who work here.").
46 See Directive 95/46EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data, O.J. L 281 (23 November 1995) art. 13 ("Member States may adopt legislative measures to restrict the scope of the obligations and right provided... when such restriction constitutes a necessary measure to safeguard: (a) national security; (b) defence; (c) public security; (d) the prevention, investigation, detection and prosecution of criminal offences...."). See also, supra, Council Decision of 17 October 2000 concerning arrangements for cooperation between financial intelligence units of the Member States in respect of exchanging information. O.J. L 271, 24 October 2000, p. 4-6.
47 See FinCEN, Annual Report for 2007, at 33, available at http://www.fincen.gov/AnnualReportFY2007.pdf.
48 See id. at 34.
49 See FinCEN Guidance to Financial Institutions on the Money Laundering Threat Involving the Republic of Uzbekistan at http://www.fincen.gov/fin-2008-a004.html
50 See FinCEN Guidance to Financial Institutions on the Increasing Money Laundering Threat Involving Illicit Iranian at http://www.fincen.gov/guidance_fi_increasing_mlt_iranian.html
