Banking Records

In an effort to trace and deter terrorist financing, a plan is under development to give government access to hundreds of millions of international banking records , even though bankers say they feel besieged by government antiterrorism rules they consider overly burdensome.

The initiative, which was conceived by the Treasury Department, expands the government's database of financial transactions by gaining access to logs of international wire transfers in and out of American banks. Officials said that such transactions were used by the September 11th hijackers to wire more than $130,000, and are still believed to be vulnerable to terrorist financiers.

Government officials have said in recent interviews that the effort, which was developed from a little-noticed provision in the intelligence reform bill recently passed by Congress, gives them the tools to track leads on specific suspects and to analyze patterns in terrorist financing and other financial crimes. They said they were well aware of privacy concerns such a system will provoke and wanted to include safeguards in order to prevent misuse of what would amount to an enormous cache of banking records.

The provision would authorize the Treasury Department to pursue regulations requiring financial institutions to turn over "certain cross-border electronic transmittals of funds" that may be needed to combat money laundering and terrorist financing.

Industry and government officials agree that the plan for tracking overseas wire transfers intensifies pressure on banks and other financial institutions to comply with the expanding base of provisions to fight money laundering. The government's aggressive tactics since the attacks of 09/11/01 have already caused a backlash among banking compliance officers (and even some federal officials), who say the effort has gone too far in penalizing the financial sector for banking record lapses and has criminalized what were once seen as technical violations.

The initiative, which is still in its preliminary stages, reflects the heightened concerns by administration and Congressional officials in regards to the government's ability to track banking records and disrupt financing for terrorist operations by Al Qaeda and other terrorist groups, an effort identified by the President as a top priority in the campaign against terrorism.

Terrorist money has been difficult to identify, much less seize, because terror operations are conducted on relatively small budgets. According to the 9/11 commission, planning and operations for the 09/11 attacks cost Al Qaeda between $400,000 to $500,000, while the 1998 embassy bombings in East Africa cost only $10,000.

While counterterrorism officials have made inroads in tracking terrorist money via banking records, experts say that clear successes have been few and sporadic, and recent reports have brought up concerns regarding the government's ability to deter and disrupt such financing.

"I don't think we really have a full grasp of how to deal with the problem yet," said Dennis M. Lormel, the former head of the FBI's terrorism-financing unit. "The framework is certainly getting better, but in general, we don't have the full capability yet to get at the money from banking records."

The federal government has taken aggressive steps since the 9/11 attacks to disrupt terrorist financing. It has done so by expanding its list of terrorist-related groups banned from financial dealings with the United States, setting up new investigative offices to track terrorist financing, and requiring more financial data and tighter compliance from financial industries as part of the USA Patriot Act and other measures.