The closing of thousands of suspicious terror-linked bank accounts has now resulted in a surge of underground accounts and illegal activity, making the tracking and monitoring of these actions a challenge for federal agencies.
The federal government has had access to valuable banking information, established in 2001 by the Patriot Act in the aftermath of the September 11 attacks. This information has helped authorities close accounts linked to drug trafficking, terror financing and fraud, but also faces the consequence of losing track of these individuals and accounts when they move their financial activities underground.
“It’s what you don’t know that’s the frightening thing,” the head of the Federal Bureau’s financial crimes investigation unit Patrick Fallon said.
“What do we do, in the law enforcement arena, when the money goes underground?”
Harmless individuals, companies and organizations, similar to foreign banks and non-profit groups have also found themselves in the crosshairs of these crackdowns, according to The Wall Street Journal.
The unforeseen consequences has led U.S. officials to suggest that instead of terminating ’suspicious’ accounts, financial institutions should monitor and manage these accounts in hopes of preventing the transfer of more money overseas or ‘underground.’
Dilip Ratha, the World Bank’s lead economist points out the “paradoxical” situation and says that when “the whole flow of money goes underground, it becomes counterproductive to the original purpose of being able to track it.”
The discussion is parallel to a longstanding debate among think tanks and government groups about the tracking and reporting of jihadi groups online and on social media platforms. One argument is to pull these groups off, preventing them from spreading their virulent propaganda and recruitment strategies on American platforms, while the other side argues to keep these groups on to extract intel, allowing law enforcement agencies to learn more about their motives and to monitor their actions.
As concerns for millions of dollars exiting the global banking system without a trace increases, a group of bipartisan lawmakers in January asked the U.S. Government’s Accountability Office to review the problem.
The World Bank has estimated that approximately $54 billion was sent overseas in 2014, with the help of money transfer companies and firms like Western Union Co.; However, these companies have also lost half of their accounts in 2014, according to a new study by the World Bank of 82 money-transfer companies.
The sharing of information between financial institutions and the U.S. government is “one of the most important sources of data” used to fight terror organizations like ISIS, according to Jennifer Shasky Calvery, chief of the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
Calvery’s department is responsible for collecting SAR’s, or suspicious activity reports, from banks who just last year filed 2,200 reports of suspected terror financiers.
Data from the U.S. Treasury is shared with the NSA, IRS, intelligence agencies and about 380 regulators and has also resulted in an average of 800 of the IRS’ approximate 3,500 yearly indictments since 2012.
When it comes to reviewing millions of customers to glean information, the chief of the IRS’ criminal investigation division Richard Weber, says, “whatever the cost is, it’s worth it.”