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New York Post


A Bounced Fact-Check

June 30, 2006

By Nicole Gelinas

Terror & banking: what media missed

NEW York Times Executive Editor Bill Keller has justified the paper's decision to expose the Bush administration's scrutiny of international banking transactions in part with a claim that the American people never gave the feds permission to snoop into banking records, even those of suspected Islamist terrorists.

Problem is, when the Bush administration did ask the American people for permission to scrutinize banking records for terrorist activity, Congress practically shouted yes without public outcry.

Just six weeks after 9/11, Congress overwhelmingly passed the Patriot Act—which, among much else, vastly increased the Treasury Department's, ability to examine both domestic banking transactions and international ones whose activity touches the United States. Federal law now requires all banks and brokerage firms doing business in this country to keep detailed records of new customers and to report any suspicious clients or transactions to the authorities.

Thus, if you withdraw, say, $15,000 in cash, with no history of similar requests, the bank must send the government a form reporting the transaction. And if you want to wire $100,000 to what you claim is a charity or business in, say, Jordan, that the bank cannot verify is legitimate, the bank must report that, too, or it risks severe sanctions, including closure.

Congress and the public clearly understood that such close scrutiny of American banks raised privacy issues. But the imperative to stop new terrorist attacks outweighed privacy worries.

In fact, any concern over privacy when it comes to banking is almost absurdly out of place anyway. Anyone who has ever worked in the U.S.-based private banking field knows, international banking in America is about as private as yelling your name from a rooftop.

But the Patriot Act's banking provisions were incomplete. Under it, banks' scrutiny is generally transaction by transaction, based on size and destination of withdrawals and transfers. That is, they're not typically watching for suspicious activity by client name. (Of course, they do respond to government subpoenas, and use watchlists and the like to ensure that they don't open accounts for prominent terrorists or sympathizers.)

Thus a terrorist facilitator in east London could send $3,000 to a Would-be attacker in Miami, helping him buy a used car and some bomb-making materials—yet an American bank likely wouldn't 'flag the transaction as suspicious, since it wasn't very large and didn't originate in a suspicious country (and because the bank isn't tracking either customer's name).

A second Patriot Act flaw is that the law often generates too much information Banks flag all kinds of transactions as suspicious, because they don't want the government to cite them as lax. But the feds don't need to know if former Sen. Bob Dole is withdrawing thousands in cash (and his bank has reported him)—they need to know if a group of suspected Islamist radicals in Detroit, whose names they haven't released publicly, is getting a few hundred dollars every month from some obscure Saudi "charity."

The program exposed by the Times and other media outlets last week partly remedied these deficiencies. By using access to Swift, the Belgium-based international banking-information system, Treasury officials don't have to rely on banks to flag transactions that seem suspicious. The T-men can search international banking records for the names of suspected or known terrorists without having to release the suspects' names publicly.

Plus, access to Swift also let officials' track suspected terrorists transferring money from, say, Riyadh to Cologne, even if the funds didn't enter the United States.

In pursuing the Swift initiative without seeking the authorization of Congress (though it briefed lawmakers and the 9/11 Commission about it on a classified basis), the Bush administration may simply have concluded that it had already won permission to carry out bank surveillance. After all, Swift really just fills in gaps in the massive surveillance program authorized under the Patriot Act (and did so quietly, until the media unconscionably exposed it). Why tell the terrorists what we're doing to catch them when there's no legal reason to do so?

The administration may also have reasoned that, since Swift is an international system, it's hard to see how U.S. laws would apply in the first place.

New legislation, or even a public announcement, might even have scared Swift off. No overseas financial organization wants to appear to fall under the jurisdiction of U.S. officials or lawmakers. In this light, Treasury's approach, led by Secretary John Snow, seems correct: Seek quiet, multilateral cooperation with Swift's international stewards.

Apparently, the Times and its fellows have decided they don't like it when the Bush administration pursues cooperative international solutions to pressing problems.



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