Feds secretly sift bank data to track terrorists
WASHINGTON – The U.S. government, without the knowledge of many banks and their customers, has engaged for years in a secret effort to track terrorist financing by reviewing confidential information on transfers of money between banks worldwide.
The program, run by the Treasury Department, is considered a potent weapon in the war on terrorism because of its ability to clandestinely monitor financial transactions and map terrorist webs.
It is part of an arsenal of aggressive measures the government has adopted since the Sept. 11 terrorist attacks that yield new intelligence, but also circumvent traditional safeguards against abuse and raise concerns about intrusions on privacy.
Under this effort, Treasury routinely acquires information about bank transfers from the world’s largest financial communication network, which is run by a consortium of financial institutions called the Society for Worldwide Interbank Financial Telecommunication, or SWIFT.
The SWIFT network carries up to 12.7 million messages a day containing instructions on many of the international transfers of money between banks. The messages typically include the names and account numbers of bank customers – from U.S. citizens to major corporations – who are sending or receiving funds.
Through the program, Treasury has built an enormous – and ever-growing – repository of financial records drawn from what is essentially the central nervous system of international banking.
In a major departure from traditional methods of obtaining financial records, the Treasury Department uses a little-known power – administrative subpoenas – to collect data from the SWIFT network, which has operations in the U.S., including a main computer hub in Manassas, Va. The subpoenas are secret and not reviewed by judges or grand juries, as are most criminal subpoenas.
“It’s hard to overstate the value of this information,” Treasury Secretary John W. Snow said Thursday in a statement he issued after the Los Angeles Times and other media outlets reported the existence of the Terrorist Finance Tracking Program.
SWIFT acknowledged Thursday in response to questions from the Times that it has provided data under subpoena since shortly after Sept. 11, a striking leap in cooperation from international bankers, who long resisted such law enforcement intrusions into the confidentiality of their communications.
But SWIFT said in a statement that it has worked with U.S. officials to restrict the use of the data to terrorism investigations.
Part of growing reach
The program is part of the Bush administration’s dramatic expansion of intelligence-gathering capabilities, which includes warrantless eavesdropping on the international phone calls of some U.S. citizens. Critics complain that these efforts are not subject to independent governmental reviews designed to prevent abuse and charge that they collide with privacy and consumer protection laws in the United States.
Steven Aftergood, director of the Project on Government Secrecy at the Federation of American Scientists, said the SWIFT program raises similar issues. “It boils down to a question of oversight, both internal and external. And in the current circumstances, it is hard to have confidence in the efficacy of their oversight,” he said. “Their policy is, ‘Trust us,’ and that may not be good enough anymore.”
A former senior Treasury official expressed concern that the SWIFT program allows access to vast quantities of sensitive data that could be abused without safeguards. The official, who said he did not have independent knowledge of the program, questioned what becomes of the data, some of it presumably on innocent banking customers.
“How do you separate the wheat from the chaff?” the former official said. “And what do you do with the chaff?”
More than a dozen current and former U.S. officials discussed the program on condition of anonymity, citing its sensitive nature.
Customers likely in dark
The effort runs counter to the expectations of privacy and security that are sacrosanct in the worldwide banking community. SWIFT promotes its services largely by touting the network’s security, and most of its customers are likely unaware that the U.S. government is regularly using subpoenas to review the private financial information.
U.S. officials, some of whom expressed surprise the program had not previously been revealed by critics, acknowledged it would be controversial in the financial community. “It is certainly not going to sit well in the world marketplace,” said a former counterterrorism official. “It could very likely undermine the integrity of SWIFT.”
Bush administration officials asked the Los Angeles Times not to publish information about the program, contending that disclosure could damage its effectiveness and that sufficient safeguards are in place to protect the public.
Dean Baquet, the editor of the Times, said, “We weighed the government’s arguments carefully, but in the end we determined that it was in the public interest to publish information about the extraordinary reach of this program. It is part of the continuing national debate over the aggressive measures employed by the government.”
Who is targeted?
Under the program, Treasury issues a new subpoena once a month and SWIFT turns over huge amounts of electronic financial data, according to Stuart Levey, the undersecretary for terrorism and financial intelligence. The administrative subpoenas are issued under authority granted in the 1977 International Emergency Powers Act.
The SWIFT information is added to a massive database that officials have been constructing since shortly after Sept. 11. Levey noted that SWIFT did not have the ability to search its own records. “We can because we built the capability to do that,” he said.
Treasury shares the data with the CIA, the FBI and analysts from other agencies, who can run queries on specific individuals and accounts believed to have terrorist connections, Levey said Thursday in an interview with the Times.
Levey said “tens of thousands” of searches of the database have been done over the last five years.
The program was initially a closely guarded secret, but it has recently become known to a wider circle of government officials, former officials, banking executives and outside experts.
Current and former U.S. officials say the effort has only been marginally successful against al-Qaida, which long ago began transferring money through other means, including the highly informal banking system common in Islamic countries.
The value of the program, they said, has been in tracking lower-level and mid-level terrorist operatives and financiers who believe they have not been detected, and militant groups, such as Hezbollah and Hamas, that also operate political and social welfare organizations.
A shift in strategy
It’s no secret that the Treasury Department tries to track terrorist financing, or that those efforts ramped up significantly after the Sept. 11 terrorist attacks. But the SWIFT program goes far beyond what has been publicly disclosed about that effort in terms of the amount of financial data that U.S. intelligence agencies can access.
The program also represents a major tactical shift. U.S. investigators have long been able to subpoena records on specific accounts or transactions when they could show cause – a painstaking process designed mainly for gathering evidence. But access to SWIFT enables them to follow suspicious financial trails around the globe, identifying new suspects without having to seek assistance from foreign banks.
SWIFT is a consortium founded in 1973 to replace telex messages. It has almost 7,900 participating institutions in 205 countries, including Bank of America, JP Morgan Chase Bank, Citibank and Credit Suisse. The network handled 2.5 billion financial messages in 2005, including many originating in countries such as Saudi Arabia, Pakistan and the United Arab Emirates that the United States scrutinizes closely for terrorist activity.
The system does not execute the actual transfer of funds between banks – that is carried out by the Federal Reserve and its international counterparts. Rather, banks use the network to transmit instructions about such transfers. For that reason, SWIFT’s data is extremely valuable to intelligence services seeking to uncover terrorist webs.
SWIFT said that it was responding to compulsory subpoenas and negotiated with U.S. officials to narrow them and to establish protections for the privacy of its customers.
SWIFT also said it has never given U.S. authorities direct access to its network.
Current and former U.S. officials familiar with the SWIFT program describe it as one of the most valuable weapons in the financial war on terrorism, but declined to provide even anecdotal evidence of its successes.
A former high-ranking CIA officer said it has been a success and another official said it has allowed U.S. counterterrorism officials to follow a tremendous number of leads. CIA officials pursue leads overseas and the FBI and other agencies pursue leads in the United States, where the CIA is prohibited from operating.
Officials said the program was relied upon especially heavily when intelligence chatter from phone and e-mail intercepts suggested an imminent attack, conveying real-time intelligence for ongoing counterterrorism operations.
A former SWIFT executive said much can be learned from network messages, which require an actual name and address of both sender and recipient, unlike phone calls and e-mails, in which terrorist operatives can easily disguise their identities.
No outside governmental oversight body, such as the Foreign Intelligence Surveillance Court or a grand jury, monitors the subpoenas served on SWIFT.
Levey said the program is subject to “robust” checks and balances designed to prevent misuse of the data. He noted that requests to access the data are reviewed by the Treasury’s assistant secretary for intelligence; that analysts can only access the data for terrorism-related searches; and that records are kept of each search and are reviewed by an outside auditor for compliance.
During the past five years, SWIFT officials have raised concerns about the scope of the program, particularly at the outset when it was handing over virtually its entire database. The amount of data handed over each month has been winnowed down.
“The safeguards were not all there in September 2001,” Levey acknowledged. “We started narrowing it from the beginning.”
New safeguards have been added, he said, noting that SWIFT officials are now allowed to be present when analysts search the data and to raise objections with top officials.
Officials said the administration has briefed congressional intelligence committees on the SWIFT program, in contrast to the way the information on the National Security Agency wiretapping was withheld. One congressional aide said the committees have “a good handle on what the executive branch is doing to track terrorist financing” and are generally supportive of those efforts.