FinCEN a good source of money-laundry data

Based on our survey of Postscript readers, 9 out of every 10 of respondents believe that many of the senators who grilled AFP intelligence chief Col. Victor Corpus and ex-police agent Ador Mawanay last Friday were themselves hiding something, possibly including substantial bank deposits abroad, that they fear might catch the eye of Corpus.

We append some survey figures at the end of this column.

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Ask FinCEN: If it has not done so yet, the justice department may want to link up with the Financial Crimes Enforcement Network (FinCEN), an agency whose global electronic network intercepts, collates and analyzes movement of large sums, some of which turn out to be illegally acquired and in the process of being laundered.

The FinCEN was established in April 1990 as part of the Bush administration’s campaign against drugs. Its original mission was to provide a "government-wide, multi-source intelligence and analytical network to support the detection, investigation, and prosecution of domestic and international money laundering and other financial crimes."

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Fine Sieve: If it is true that millions of dollars had been deposited in the US by Sen. Panfilo Lacson alone or in connivance with his wife or former President Erap Estrada, it is unlikely that the movement of such money had not been caught in the FinCEN monitoring web.

The availability to us of information on such funds will depend largely on the willingness of the US government to cooperate in pinning down the suspects.

The early passage of an anti-laundering law might help convince the US government to share information on Filipinos who have huge bank deposits in US banks that federal agencies themselves are watching for possible link to illegal activities such as narcotics trafficking.

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Deadline for RP: The Philippine government has been given by the Financial Action Task Force on Money Laundering, a quasi-official global network, until September to pass an anti-laundering law by September. This could mean amendments to local bank secrecy laws.

The Senate inquiry into charges that Sen. Panfilo Lacson is engaged in money-laundering is ostensibly related to this.

Failure to pass a law could mean sanctions being imposed on the Philippines, including possible restrictions on financial transactions to and from the country. The impact on foreign trade and the economy in general could be considerable.

The FATF is a multi-disciplinary body that brings together the policy-making power of legal, financial and law enforcement experts from its members.

It monitors members’ progress in implementing anti-money laundering measures; reviews and reports on laundering trends, techniques and counter-measures; and promotes the adoption and implementation of FATF anti-money laundering standards globally.

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Beware of FinCEN: In Dr. W. G. Hill’s "Banking in Silence" third edition for 1997, he reported that "increasingly, computers are used to not only collect data about you, but more importantly to analyze it with the hope that you will be caught doing something that has recently been reclassified as illegal behavior. The only reason that any information about your private affairs has been collected in the first place is for this express purpose of creating a new class of criminals."

He takes the negative attitude that "new government police forces have been created to track down and bankrupt these individuals who have done nothing more than invest their own money according to their own best interests."

"In the US," he adds, "in the eyes of FinCEN, if you have money you automatically guilty until proven innocent."

"Since its launch in April of 1990 with a low key champagne reception at the US Treasury Department, FinCEN has become the most effective financial investigation unit in the world. It is a state-of-the-art computer snooping agency and is so effective that when Russian president Boris Yeltsin needed to locate stolen communist party funds, he asked FinCEN for help."

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How it’s done: Part of the text in Hill’s book appears to be a reproduction of part of an earlier article we read by Anthony L. Kimery in WIRED magazine, issue of December 1993. We don’t know if Hill and Kimery are the same person.

One interesting part that appears in both Hill and Kimery reads:

"There wasn’t much to go on. The police salvaged the slip of paper that a small-time East Coast criminal tried to eat before arrested but on it they found scribbled only a telephone number and what appeared to be the name ëJohn.’ This frustrated the police. They had anticipated more incriminating information on the man they believed was the supplier not only to the dealer they had just busted but also to dozens of other street corner crack peddlers.

"With two slim leads, the police weren’t technically equipped to do much more than antiquated detective work that probably wouldn’t yield evidence they could use to indict John. So they turned to FinCEN for the digital sleuthing they needed.

"Less than 45 minutes after receiving the official police request for help, FinCEN had retrieved enough evidence of criminal wrongdoing from government databases that the district attorney prosecuting the case was able to seek indictments against John on charges of money laundering and conspiracy to traffic narcotics. The local police were impressed. The whiz kids at FinCEN to pull them out of the electronic-sleuthing quicksand.

"The case of John is a good example of one of their less complex assignments, and it illustrates the adeptness with which the government can collate existing financial data.

"Seated at a computer terminal inside FinCEN’s command post, an analyst began the hunt. He started by querying a database of business phone numbers. He scored a hit with the number of a local restaurant. Next he entered the Currency and Banking Database (CBDB), an IRS database accessed through the Currency and Banking Retrieval System. CBDB contains roughly 50 million Currency Transaction Reports (CTRs), which document all [cash] financial transactions of more than $10,000.

"By law these transactions must be filed by banks, S & Ls, credit unions, securities brokers, casinos and other individuals and businesses engaged in the exchange of large sums of money.

"The analyst narrowed his quest by searching for CTRs filed for transactions deemed suspicious. Financial institutions must still file a CTR, or IRS Form 4789, if a transaction under $10,000 is considered suspicious under the terms of an extensive federal government list. There was a hit.

"A series of ësuspicious’ CTRs existed in the restaurant’s zip code. Punching up images of the identified CTRs on his terminal, the FinCEN analyst noted that the transactions were made by a person whose first name was John. The CTRs were suspicious all right. They were submitted for a series of transactions each in the amount of $9500, just below the CTR threshold of $10,000. This was hard evidence that John structured the deposits to avoid filing a Form 4789, and that is a federal crime.

"Selecting one of the CRTs for an expanded review, the analyst got John’s full name, social security number, date of birth, home address, drivers’ license number and other statistics, including bank account numbers. Plunging back into the IRS database, the analyst broadened his search for all CTRs filed on behalf of the suspect, including non-suspicious CTRs.

"Only 20 reports deemed suspicious popped up on the screen, but more than 150 CTRs were filed in all. A review of the non-suspicious ones revealed that on several, John listed his occupation as the owner or manager of the restaurant identified by the telephone number on the slip of paper taken from the arrested criminal. The connection between the name and the phone number originally given to FinCEN was secured.

"The FinCEN analyst then tapped commercial and government databases and turned up business information on the restaurant showing that John had reported an expected revenue for his eatery of substantially less than the money he had been depositing, as indicated by the CTRs.

"Fishing in a database of local tax assessment records, the analyst discovered that John owned other properties and businesses. With the names of these other companies, the analyst went back into the CTR database and found that suspicious transaction reports were filed on several of them as well."

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Poll Figures: The responses to our opinion survey were almost evenly coming from local and foreign-based readers of Postscript. A full 45 percent of the responses came from abroad.

The males (83 percent) dominated the survey. In the age-bracketing, the bulk of respondents came from the 31-35-year-old group (15%), 36-40 (18%), 41-45 (15%), and 66-70 (15%).

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