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June 23rd, 2006 - Bank Data Is
Sifted by U.S. in Secret to Block Terror News
article by the New York Times News
article by the Associated Press |
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Bank Data Is Sifted by U.S.
in Secret to Block Terror By Eric Lichtblau and James Risen New York Times June 23, 2006 Washington, June 22 - Under
a secret Bush administration program initiated weeks after the Sept. 11
attacks, counterterrorism officials have gained access to financial records
from a vast international database and examined banking transactions
involving thousands of Americans and others in the United States, according
to government and industry officials. The program is limited,
government officials say, to tracing transactions of people suspected of
having ties to Al Qaeda by reviewing records from the nerve center of the
global banking industry, a Belgian cooperative that routes about $6 trillion
daily between banks, brokerages, stock exchanges and other institutions. The
records mostly involve wire transfers and other methods of moving money
overseas and into and out of the United States. Most routine financial
transactions confined to this country are not in the database. Viewed by the Bush
administration as a vital tool, the program has played a hidden role in
domestic and foreign terrorism investigations since 2001 and helped in the
capture of the most wanted Qaeda figure in Southeast Asia, the officials
said. The program, run out of the
Central Intelligence Agency and overseen by the Treasury Department,
"has provided us with a unique and powerful window into the operations
of terrorist networks and is, without doubt, a legal and proper use of our
authorities," Stuart Levey, an under secretary at the Treasury
Department, said in an interview on Thursday. The program is grounded in
part on the president's emergency economic powers, Mr. Levey said, and
multiple safeguards have been imposed to protect against any unwarranted
searches of Americans' records. The program, however, is a
significant departure from typical practice in how the government acquires
Americans' financial records. Treasury officials did not seek individual
court-approved warrants or subpoenas to examine specific transactions,
instead relying on broad administrative subpoenas for millions of records
from the cooperative, known as Swift. That access to large amounts
of confidential data was highly unusual, several officials said, and stirred
concerns inside the administration about legal and privacy issues. "The capability here is
awesome or, depending on where you're sitting, troubling," said one
former senior counterterrorism official who considers the program valuable.
While tight controls are in place, the official added, "the potential
for abuse is enormous." The program is separate from
the National Security Agency's efforts to eavesdrop without warrants and
collect domestic phone records, operations that have provoked fierce public
debate and spurred lawsuits against the government and telecommunications
companies. But all the programs grew
out of the Bush administration's desire to exploit technological tools to
prevent another terrorist strike, and all reflect attempts to break down
longstanding legal or institutional barriers to the government's access to
private information about Americans and others inside the United States. Officials described the
Swift program as the biggest and most far-reaching of several secret efforts
to trace terrorist financing. Much more limited agreements with other
companies have provided access to A.T.M. transactions, credit card purchases
and Western Union wire payments, the officials said. Nearly 20 current and former
government officials and industry executives discussed aspects of the Swift
operation with The New York Times on condition of anonymity because the
program remains classified. Some of those officials expressed reservations
about the program, saying that what they viewed as an urgent, temporary
measure had become permanent nearly five years later without specific
Congressional approval or formal authorization. Data from the Brussels-based
banking consortium, formally known as the Society for Worldwide Interbank
Financial Telecommunication, has allowed officials from the C.I.A., the
Federal Bureau of Investigation and other agencies to examine "tens of
thousands" of financial transactions, Mr. Levey said. While many of those
transactions have occurred entirely on foreign soil, officials have also been
keenly interested in international transfers of money by individuals,
businesses, charities and other groups under suspicion inside the United
States, officials said. A small fraction of Swift's records involve
transactions entirely within this country, but Treasury officials said they
were uncertain whether any had been examined. Swift executives have been
uneasy at times about their secret role, the government and industry
officials said. By 2003, the executives told American officials they were
considering pulling out of the arrangement, which began as an emergency
response to the Sept. 11 attacks, the officials said. Worried about potential
legal liability, the Swift executives agreed to continue providing the data
only after top officials, including Alan Greenspan, then chairman of the
Federal Reserve, intervened. At that time, new controls were introduced. Among the safeguards,
government officials said, is an outside auditing firm that verifies that the
data searches are based on intelligence leads about suspected terrorists.
"We are not on a fishing expedition," Mr. Levey said. "We're
not just turning on a vacuum cleaner and sucking in all the information that
we can." Swift and Treasury officials
said they were aware of no abuses. But Mr. Levey, the Treasury official, said
one person had been removed from the operation for conducting a search
considered inappropriate. Treasury officials said
Swift was exempt from American laws restricting government access to private
financial records because the cooperative was considered a messaging service,
not a bank or financial institution. But at the outset of the
operation, Treasury and Justice Department lawyers debated whether the
program had to comply with such laws before concluding that it did not,
people with knowledge of the debate said. Several outside banking experts,
however, say that financial privacy laws are murky and sometimes
contradictory and that the program raises difficult legal and public policy
questions. The Bush administration has
made no secret of its campaign to disrupt terrorist financing, and President
Bush, Treasury officials and others have spoken publicly about those efforts.
Administration officials, however, asked The New York Times not to publish
this article, saying that disclosure of the Swift program could jeopardize
its effectiveness. They also enlisted several current and former officials,
both Democrat and Republican, to vouch for its value. Bill Keller, the newspaper's
executive editor, said: "We have listened closely to the
administration's arguments for withholding this information, and given them
the most serious and respectful consideration. We remain convinced that the
administration's extraordinary access to this vast repository of
international financial data, however carefully targeted use of it may be, is
a matter of public interest." Mr. Levey agreed to discuss
the classified operation after the Times editors told him of the newspaper's
decision. On Thursday evening, Dana
Perino, deputy White House press secretary, said: "Since immediately
following 9/11, the American government has taken every legal measure to prevent
another attack on our country. One of the most important tools in the fight
against terror is our ability to choke off funds for the terrorists." She added: "We know the
terrorists pay attention to our strategy to fight them, and now have another
piece of the puzzle of how we are fighting them. We also know they adapt
their methods, which increases the challenge to our intelligence and law
enforcement officials." Referring to the disclosure
by The New York Times last December of the National Security Agency's
eavesdropping program, she said, "The president is concerned that once
again The New York Times has chosen to expose a classified program that is
working to protect our citizens." Swift declined to discuss
details of the program but defended its role in written responses to
questions. "Swift has fully complied with all applicable laws," the
consortium said. The organization said it insisted that the data be used only
for terrorism investigations and had narrowed the scope of the information
provided to American officials over time. A Crucial Gatekeeper Swift's database provides a
rich hunting ground for government investigators. Swift is a crucial
gatekeeper, providing electronic instructions on how to transfer money among
7,800 financial institutions worldwide. The cooperative is owned by more than
2,200 organizations, and virtually every major commercial bank, as well as
brokerage houses, fund managers and stock exchanges, uses its services. Swift
routes more than 11 million transactions each day, most of them across
borders. The cooperative's message
traffic allows investigators, for example, to track money from the Saudi bank
account of a suspected terrorist to a mosque in New York. Starting with tips
from intelligence reports about specific targets, agents search the database
in what one official described as a "24-7" operation. Customers'
names, bank account numbers and other identifying information can be
retrieved, the officials said. The data does not allow the
government to track routine financial activity, like A.T.M. withdrawals,
confined to this country, or to see bank balances, Treasury officials said.
And the information is not provided in real time — Swift generally turns it over
several weeks later. Because of privacy concerns and the potential for abuse,
the government sought the data only for terrorism investigations and
prohibited its use for tax fraud, drug trafficking or other inquiries, the
officials said. The Treasury Department was
charged by President Bush, in a September 2001 executive order, with taking
the lead role in efforts to disrupt terrorist financing. Mr. Bush has been
briefed on the program and Vice President Dick Cheney has attended C.I.A.
demonstrations, the officials said. The National Security Agency has provided
some technical assistance. While the banking program is
a closely held secret, administration officials have held classified
briefings for some members of Congress and the Sept. 11 commission, the
officials said. More lawmakers were briefed in recent weeks, after the
administration learned The Times was making inquiries for this article. Swift's 25-member board of
directors, made up of representatives from financial institutions around the
world, was previously told of the program. The Group of 10's central banks,
in major industrialized countries, which oversee Swift, were also informed.
It is not clear if other network participants know that American intelligence
officials can examine their message traffic. Because Swift is based
overseas and has offices in the United States, it is governed by European and
American laws. Several international regulations and policies impose privacy
restrictions on companies that are generally regarded as more stringent than
those in this country. United States law establishes some protections for the
privacy of Americans' financial data, but they are not ironclad. A 1978
measure, the Right to Financial Privacy Act, has a limited scope and a number
of exceptions, and its role in national security cases remains largely
untested. Several people familiar with
the Swift program said they believed that they were exploiting a "gray
area" in the law and that a case could be made for restricting the
government's access to the records on Fourth Amendment and statutory grounds.
They also worried about the impact on Swift if the program were disclosed. "There was always
concern about this program," a former official said. One person involved in the
Swift program estimated that analysts had reviewed international transfers
involving "many thousands" of people or groups in the United
States. Two other officials placed the figure in the thousands. Mr. Levey
said he could not estimate the number. The Swift data has provided
clues to money trails and ties between possible terrorists and groups
financing them, the officials said. In some instances, they said, the program
has pointed them to new suspects, while in others it has buttressed cases
already under investigation. Among the successes was the
capture of a Qaeda operative, Riduan Isamuddin, better known as Hambali,
believed to be the mastermind of the 2002 bombing of a Bali resort, several
officials said. The Swift data identified a previously unknown figure in
Southeast Asia who had financial dealings with a person suspected of being a
member of Al Qaeda; that link helped locate Hambali in Thailand in 2003, they
said. In the United States, the
program has provided financial data in investigations into possible domestic
terrorist cells as well as inquiries of Islamic charities with suspected of
having links to extremists, the officials said. The data also helped
identify a Brooklyn man who was convicted on terrorism-related charges last
year, the officials said. The man, Uzair Paracha, who worked at a New York
import business, aided a Qaeda operative in Pakistan by agreeing to launder
$200,000 through a Karachi bank, prosecutors said. In terrorism prosecutions,
intelligence officials have been careful to "sanitize," or hide the
origins of evidence collected through the program to keep it secret,
officials said. The Bush administration has
pursued steps that may provide some enhanced legal standing for the Swift
program. In late 2004, Congress authorized the Treasury Department to develop
regulations requiring American banks to turn over records of international
wire transfers. Officials say a preliminary version of those rules may be
ready soon. One official described the regulations as an attempt to
"formalize" access to the kind of information secretly provided by
Swift, though other officials said the initiative was unrelated to the
program. The Scramble for New Tools Like other counterterrorism
measures carried out by the Bush administration, the Swift program began in
the hectic days after the Sept. 11 attacks, as officials scrambled to
identify new tools to head off further strikes. One priority was to cut off
the flow of money to Al Qaeda. The 9/11 hijackers had helped finance their
plot by moving money through banks. Nine of the hijackers, for instance,
funneled money from Europe and the Middle East to SunTrust bank accounts in
Florida. Some of the $130,000 they received was wired by people overseas with
known links to Al Qaeda. Financial company
executives, many of whom had lost friends at the World Trade Center, were
eager to help federal officials trace terrorist money. "They saw 9/11
not just as an attack on the United States, but on the financial industry as
a whole," said one former government official. Quietly, counterterrorism
officials sought to expand the information they were getting from financial
institutions. Treasury officials, for instance, spoke with credit card
companies about devising an alert if someone tried to buy fertilizer and
timing devices that could be used for a bomb, but they were told the idea was
not logistically possible, a lawyer in the discussions said. The F.B.I. began acquiring financial
records from Western Union and its parent company, the First Data
Corporation. The programs were alluded to in Congressional testimony by the
F.B.I. in 2003 and described in more detail in a book released this week,
"The One Percent Doctrine," by Ron Suskind. Using what officials
described as individual, narrowly framed subpoenas and warrants, the F.B.I.
has obtained records from First Data, which processes credit and debit card
transactions, to track financial activity and try to locate suspects. Similar subpoenas for the
Western Union data allowed the F.B.I. to trace wire transfers, mainly outside
the United States, and to help Israel disrupt about a half-dozen possible
terrorist plots there by unraveling the financing, an official said. The idea for the Swift
program, several officials recalled, grew out of a suggestion by a Wall
Street executive, who told a senior Bush administration official about
Swift's database. Few government officials knew much about the consortium,
which is led by a Brooklyn native, Leonard H. Schrank, but they quickly
discovered it offered unparalleled access to international transactions.
Swift, a former government official said, was "the mother lode, the
Rosetta stone" for financial data. Intelligence officials were
so eager to use the Swift data that they discussed having the C.I.A. covertly
gain access to the system, several officials involved in the talks said. But
Treasury officials resisted, the officials said, and favored going to Swift
directly. At the same time, lawyers in
the Treasury Department and the Justice Department were considering possible
legal obstacles to the arrangement, the officials said. In 1976, the Supreme Court
ruled that Americans had no constitutional right to privacy for their records
held by banks or other financial institutions. In response, Congress passed
the Right to Financial Privacy Act two years later, restricting government
access to Americans' banking records. In considering the Swift program, some
government lawyers were particularly concerned about whether the law
prohibited officials from gaining access to records without a warrant or
subpoena based on some level of suspicion about each target. For many years, law
enforcement officials have relied on grand-jury subpoenas or court-approved
warrants for such financial data. Since 9/11, the F.B.I. has turned more
frequently to an administrative subpoena, known as a national security
letter, to demand such records. After an initial debate,
Treasury Department lawyers, consulting with the Justice Department,
concluded that the privacy laws applied to banks, not to a banking
cooperative like Swift. They also said the law protected individual customers
and small companies, not the major institutions that route money through
Swift on behalf of their customers. Other state, federal and
international regulations place different and sometimes conflicting
restrictions on the government's access to financial records. Some put
greater burdens on the company disclosing the information than on the
government officials demanding it. Among their considerations,
American officials saw Swift as a willing partner in the operation. But Swift
said its participation was never voluntary. "Swift has made clear that
it could provide data only in response to a valid subpoena," according
to its written statement. Indeed, the cooperative's
executives voiced early concerns about legal and corporate liability,
officials said, and the Treasury Department's Office of Foreign Asset Control
began issuing broad subpoenas for the cooperative's records related to
terrorism. One official said the subpoenas were intended to give Swift some
legal protection. Underlying the government's
legal analysis was the International Emergency Economic Powers Act, which Mr.
Bush invoked after the 9/11 attacks. The law gives the president what legal
experts say is broad authority to "investigate, regulate or
prohibit" foreign transactions in responding to "an unusual and
extraordinary threat." But L. Richard Fischer, a
Washington lawyer who wrote a book on banking privacy and is regarded as a
leading expert in the field, said he was troubled that the Treasury
Department would use broad subpoenas to demand large volumes of financial
records for analysis. Such a program, he said, appears to do an end run
around bank-privacy laws that generally require the government to show that
the records of a particular person or group are relevant to an investigation. "There has to be some
due process," Mr. Fischer said. "At an absolute minimum, it strikes
me as inappropriate." Several former officials said
they had lingering concerns about the legal underpinnings of the Swift
operation. The program "arguably complies with the letter of the law, if
not the spirit," one official said. Another official said:
"This was creative stuff. Nothing was clear cut, because we had never
gone after information this way before." Treasury officials said they
considered the government's authority to subpoena the Swift records to be
clear. "People do not have a privacy interest in their international
wire transactions," Mr. Levey, the Treasury under secretary, said. Tighter Controls Sought Within weeks of 9/11, Swift
began turning over records that allowed American analysts to look for
evidence of terrorist financing. Initially, there appear to have been few
formal limits on the searches. "At first, they got
everything — the entire Swift database," one person close to the
operation said. Intelligence officials paid
particular attention to transfers to or from Saudi Arabia and the United Arab
Emirates because most of the 9/11 hijackers were from those countries. The volume of data,
particularly at the outset, was often overwhelming, officials said. "We
were turning on every spigot we could find and seeing what water would come
out," one former administration official said. "Sometimes there
were hits, but a lot of times there weren't." Officials realized the
potential for abuse, and narrowed the program's targets and put in more
safeguards. Among them were the auditing firm, an electronic record of every
search and a requirement that analysts involved in the operation document the
intelligence that justified each data search. Mr. Levey said the program was
used only to examine records of individuals or entities, not for broader data
searches. Despite the controls, Swift
executives became increasingly worried about their secret involvement with
the American government, the officials said. By 2003, the cooperative's
officials were discussing pulling out because of their concerns about legal
and financial risks if the program were revealed, one government official
said. "How long can this go
on?" a Swift executive asked, according to the official. Even some American officials
began to question the open-ended arrangement. "I thought there was a
limited shelf life and that this was going to go away," the former
senior official said. In 2003, administration
officials asked Swift executives and some board members to come to
Washington. They met with Mr. Greenspan, Robert S. Mueller III, the F.B.I.
director, and Treasury officials, among others, in what one official
described as "a full-court press." Aides to Mr. Greenspan and Mr.
Mueller declined to comment on the meetings. The executives agreed to
continue supplying records after the Americans pledged to impose tighter
controls. Swift representatives would be stationed alongside intelligence
officials and could block any searches considered inappropriate, several
officials said. The procedural change
provoked some opposition at the C.I.A. because "the agency was chomping
at the bit to have unfettered access to the information," a senior
counterterrorism official said. But the Treasury Department saw it as a
necessary compromise, the official said, to "save the program." Barclay Walsh contributed
reporting for this article. Copyright 2006 The New York
Times Company External link:
http://www.nytimes.com/2006/06/23/washington/23intel.html Snow:
Program vital to war on terrorism By Jeannine Aversa Associated Press Fri Jun 23, 7:43 PM ET The
Bush administration said Friday an anti-terrorism program that taps into an
immense international database of confidential financial records has adequate
safeguards to protect Americans' privacy. Democrats
and civil liberties groups said the effort had disturbing similarities to
another controversial anti-terrorism program of warrantless spying on
telephone calls and e-mails. Treasury
Secretary John Snow called the financial-records effort "government at
its best" and said it was "entirely consistent with our democratic
values, with our best legal traditions." The
program, kept secret until it was revealed Thursday by news organizations,
has been going on since shortly after the Sept. 11, 2001, terror attacks. Using
broad government subpoenas, the program allows U.S. counterterrorism analysts
to obtain financial information from a vast database maintained by a company
based in Belgium. It routes about 11 million financial transactions daily
among 7,800 banks and other financial institutions in 200 countries. "By
following the money, we've been able to locate operatives, we've been able to
locate their financiers, we've been able to chart the terrorist networks and
we've been able to bring the terrorists to justice," Snow said. "If
people are sending money to help al-Qaida, we want to know about it." The
existence of the program was first reported Thursday night on the Web sites
of The New York Times, the Los Angeles Times and The Wall Street Journal. The
administration had argued for the media to withhold details. Vice
President Dick Cheney, speaking at a political luncheon in Chicago, denounced
the decision to reveal the existence of the financial monitoring program and
the earlier-disclosed National Security Agency surveillance program. "What
I find most disturbing about these stories is that some of the news media
take it upon themselves to disclose vital national security programs, thereby
making it more difficult for us to prevent future attacks against the
American people," Cheney said. "That offends me." The
news organizations defended their decision. Dean Baquet, editor of the Los
Angeles Times, said the government's arguments were considered carefully but
in the end the newspaper felt it was "in the public interest to publish
information about the extraordinary reach of this program." Snow
said that "very significant protocols and safeguards" had been put
in place to protect Americans' privacy. Officials said that for the most
part, Americans would not come under the scrutiny of the program unless they
were transferring or receiving money from abroad. At
a separate news conference, Attorney General Alberto Gonzales said the
Justice Department had reviewed the program "and we believe it is
lawful." Snow
declined to give specific examples of where the program had been successful
in shutting off terrorist financing but said that he had assured himself that
it was working. In
a statement from its Belgian headquarters, Swift said it had negotiated with
the U.S. Treasury Department "over the scope and oversight of the
subpoenas." Democrats
in Congress and civil liberties groups were critical of the administration's
actions while Republicans voiced support. Rep.
Ed Markey, D-Mass., co-chairman of the Congressional Privacy Caucus, said
there were disturbing similarities between the financial data tracking and
the telephone and e-mail surveillance. He
said the administration appeared to be relying "on justifications
concocted without regard to current law." Rep.
Barney Frank (news, bio, voting record), the top Democrat on the House
Financial Services Committee, said he was concerned that the government was
acting "without real safeguards to protect people's privacy." Barry
Steinhardt of the American Civil Liberties Union called the program a
"frightening invasion of civil liberties." He said the most
troubling aspect was the potential that the CIA and other agencies with
access to information from both programs could use leads turned up by taping
into telephone conversations to mine bank records. Edward
Yingling of the American Bankers Association said banks were working to
strike the right balance between "protecting customer privacy and
stopping terrorist financing." Some officials of foreign banks were less
supportive. "We
had no idea this was going on at all," said James Nason with the Swiss
Bankers Association. Republicans
defended the financial program, saying that it made sense in trying to track
down terrorists. "I
think that the tracking of the financing of terrorism trumps most
things," said Senate Banking Committee Chairman Richard Shelby, R-Ala. Select
members of Congress received briefings after the program began in 2001. The
full House and Senate Intelligence Committees were briefed about the program
last month. Stuart
Levey, Treasury's undersecretary for terrorism and financial intelligence,
said that there were "at least tens of thousands, maybe hundreds of
thousands" of financial transactions that had been scrutinized. For
the Swift transaction data to be reviewed, investigators have to produce the
name of someone they suspect of terrorist links, a requirement that officials
said keeps the government from launching fishing expeditions into the vast
data pool. The
consulting firm of Booz Allen Hamilton was retained to audit and review the
U.S. activities in the program, Levey said. "They
have found consistently the government is not abusing this data," he
said. External link: http://news.yahoo.com/s/ap/20060623/ap_on_go_ca_st_pe/treasury_terrorist_financing |