Homeland Security Department Experiments With New Tool to Track Financial
Crime
By ERIC LICHTBLAU
http://www.nytimes.com
Published: December 12, 2004
WASHINGTON, Dec. 11 - The Department of Homeland Security has begun
experimenting with a wide-ranging computer database that allows
investigators to match financial transactions against a list of some 250,000
people and firms with suspected ties to terrorist financing, drug
trafficking, money laundering and other financial crimes.
The program, developed by a British company and used in recent test runs at
the Department of Homeland Security, gives investigators what amounts to an
enormous global watch list to track possible financial crimes at American
border crossings, banks and other financial institutions.
"This is something that's shown promise," said Dean Boyd, a spokesman for
the department's Immigration and Customs Enforcement agency. While the
program is still in its trial stage, Mr. Boyd said, "it's interesting
technology, and it would give us another tool in the box, but there's been
no decision made on whether to put it into operation or not."
He stressed that the software had not been used as part of any criminal
investigations or other operations.
David Leppan, chief executive of World-Check, the British company that has
provided the database to American officials, said the recent test runs had
produced a number of promising hits on people with suspected criminal ties
overseas who had entered the United States with more than $10,000 in cash or
made other financial transactions in this country that were reported to the
government.
The program provides yet another indication of the wide-ranging efforts by
American officials to look for new technological tools in fighting terrorism
and other international crime. But it also raises privacy and civil
liberties questions because domestic security officials are relying on a
private overseas firm to provide a voluminous list of people and companies
that it considers to represent a "high risk" of committing financial crimes,
based on an assortment of public records and data.
"There's a real risk in a situation like this because there's really no
accountability," said Marc Rotenberg, executive director of the Electronic
Privacy Information Center, an advocacy group based in Washington devoted to
privacy issues. "People can find themselves on a watch list incorrectly, and
the consequences can be very serious."
Mr. Rotenberg likened the trial program at the department to a Pentagon
operation disclosed last year in which JetBlue airlines agreed to turn over
data on millions of its passengers to a private contractor doing
antiterrorism work for the military. In both cases, Mr. Rotenberg said,
government officials effectively "outsourced" the job to private firms "in
order to develop profiles on people and circumvent U.S. privacy laws."
With a proliferation of private companies looking to profit from a surge in
national security contracts, he said, "we'll see more arrangements like
this, and we're likely to see more and more companies in the dot-connecting
business."
Officials at the Department of Homeland Security and at World-Check said
they were mindful of privacy concerns.
"We're not hiding in alleyways taking pictures of people," said Brendan
Cohen, director of United States operations for World-Check, which is
allowing the department to use its database free on a 12-month trial basis.
"It's just that there's so much information already out in the public domain
that by the time the mainstream media or a government agency gets onto
someone, there's already a lot of information out there on them."
Mr. Boyd said that if his agency went ahead with the program, it was likely
to use the private database as a tip sheet of sorts. "Hits" from the
company's list of "high-risk" targets would then allow investigators to
initiate follow-up work, develop intelligence and open criminal
investigations or move to freeze financial assets if warranted.
"We've obviously got an obligation to go to a court of law and prove our
case, and we've got a higher burden of proof" than does World-Check in
establishing whether someone does in fact have criminal ties, Mr. Boyd said.
Homeland Security lawyers have not yet done any legal analysis of the
database's privacy implications, he said, but such a review would be
conducted if the department decided to put the program into operation.
World-Check provides its financial profiles to about 800 private clients and
governmental agencies around the world. In developing its watch lists, the
firm says, it relies on data from some 140,000 public sources - including
lists of "banned" financiers developed by governments worldwide, news
reports and court filings. As a result, the list includes far more names
than many governments have on their own watch lists.
For instance, the company's high-risk list includes both Viktor Bout, a
well-known international arms trafficker, and his older brother, Serge. But
the United States Office of Foreign Assets Control, which administers
financial sanctions against banned foreign individuals and entities, does
not include Serge Bout on its list.
Mr. Leppan acknowledged that his company used lower standards than most
governments in declaring someone a high risk to engage in financial
impropriety, but he said that flexibility gave the firm's clients a head
start in tracking crime.
In early 2002, for instance, World-Check added to its high-risk list a
terror suspect in Southeast Asia who went by the name of Hambali. Months
later, the United States Office of Foreign Assets Control added Hambali to
its own list of "banned" foreigners. Hambali, captured in Thailand last
year, is in American custody and is accused of organizing two deadly
nightclub attacks in Bali in October 2002.
World-Check's financial profiles also list the suspects' corporate
affiliations and their aliases. The profile for Hambali, for instance, lists
eight aliases and variations on the spelling of his name.
"Once somebody knows that they've been blacklisted," Mr. Leppan said, "the
likelihood of them opening up a bank account or applying for a passport in
their own name is very slim, so they're going to use variations of their
name. That's why keeping a running database is so important to what we do."
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