Despite a drop in the number of reports of terrorist financing, Treasury seems to have made up its mind on what it prioritizes.
According to emptywheel, in May 2012 Treasury likely fired Jim Freis, the head of the Financial Crimes Enforcement Network (FinCen), the bureau responsible for detecting and deterring financial crime, because the bureau demonstrated “that banksters were a growing problem and terrorists a shrinking one.” The FinCen analysis showed reports of possible terrorist financing declined 14 percent, from 711 instances in 2010 to 609 for the same period in 2011. Fries had held that position since 2007.
This claim is supported by a report in American Banker, that suggest, “Treasury may intend to have FinCen dictate what financial institutions prioritize. Which will mean terrorism–and not the crimes of banksters–will once again be the focus.” Adding, “Treasury appears to want FinCen to take a larger role in terrorist financing activities…In past few years, banks have not had to focus on what FinCen’s agenda was.”
No one is suggesting that Treasury not investigate serious allegations of terrorist financing. After all, recent achievements of these efforts have forced many terrorist and criminal enterprises around the world to find new financial avenues. But it is not uncommon to hear about these entities growing increasingly more sophisticated in both their ability to commit revenue-generating crime and to subsequently launder those proceeds through the international financial system, illicit drug sales and online scams.
This is underscored by a recent analysis by the Homeland Security Policy Institute at George Washington University. In a report called, The Next Decade of Countering Threat Finance, it said the use of hawallas by terrorists to raise money is not considered as high-risk as once presumed, and that, “organizations and individuals involved in illicit activity are quite comfortable using the modern financial system.”
It is not hard to understand why. Integrated financial systems, which allow for easy global movement of money, are commonly used by criminals to launder their illicit proceeds. “Money launderers have what seems like an infinite number of ways to disguise and move money, and there appears to be no limit to their ingenuity,” a Justice Department official testified before Congress in February. A January Congressional Research Services report on organized crime estimates that “money laundering annually accounts for between 2% and 5% of world GDP.”
On July 9, the Chicago Tribune reported that HSBC, one of the world’s largest banks, is facing multiple investigations for not reviewing billions of dollars in transactions linked to drug trafficking and other criminal activity by the Securities Exchange Commission, Department of Justice and the U.S. Senate. Notice any agency missing?
So, what is Treasury doing these days? Rather than target these financial threats, which terrorists turn to with increasing frequency, they seem to be ignoring them. But maybe that should not be so surprising. Marcy Wheeler is reporting that it appears that Treasury’s replacement for Freis at FinCen is someone who recently helped JP Morgan oversee the laundering of millions to Iran.
If true, sounds like things may get worse before they get better.