Show us your money: the USA PATRIOT Act lets the feds spy on your finances. But does it help catch terrorists?

Reason, Nov, 2003 by John Berlau

Yet for 30 years agencies have said technology eventually would be able to pinpoint the needle in this enormous haystack, and the elusive technology has yet to appear. The Pentagon's Total Information Awareness (TIA) project was aimed at developing methods to sift through huge volumes of data from public and private sources, looking for patterns that could indicate terrorist activity. After aloud public outcry about the privacy implications, Congress voted earlier this year to deny the project funding. Now the Pentagon is trying to revive it under a new name, Terrorism Information Awareness.

Missing Human Intelligence

Professional criminals often know the banking laws and how to get around them. And terrorist money, without prior intelligence, appears to be even harder to track than drug money. While large cash transfers can occasionally tip off authorities to drug activity, terrorists leave few telltale financial signs. As Jost pointed out in Senate testimony in late 2001, money used for terrorism often comes from legal businesses and charities. "With a certain amount of simplification, money laundering and terrorist financing are opposites," he said. "In money laundering, dirty money becomes clean; in terrorist financing, clean money become dirty."

Take the September a hijackers. The only way we know of that any of them broke the law prior to the attacks was by overstaying their visas. They gave no signs to the financial institutions they dealt with that they were plotting something sinister. "The terrorists didn't spend a whole lot," observes Richard Rahn, a senior fellow at the Seattle-based Discovery Institute and the author of The End of Money and the Struggle for Financial Privacy. "They stayed in cheap hotels, ate in cheap restaurants and rode in cheap rental cars.... And so these measures that are promulgated to try to just collect financial information willy-nilly are not really very useful." Bert Ely, the banking consultant, noted in his Free Congress Foundation paper that "the FBI has estimated that the Sept. 11th hijackers spent just $500,000 over more than a year carrying out their diabolical acts. Payments moving through the U.S. financial system average $1.7 trillion per business day."

A SunTrust bank in Florida did file an internal report, as required for wire transfers of $3,000 or more, on money received by 9/11 ringleader Mohammad Atta, which came from the United Arab Emirates in 2000 and totaled more than $100,000. But "there was nothing unusual in the way those accounts and transactions were opened or maintained," says SunTrust spokesman Barry Koling. The only possible tipoff was that the money came from the UAE, which Jost had identified in his 1998 Interpol report as a hotbed of hawala and terrorism financing. But FinCEN apparently had not issued any warnings about the UAE, as it bad about Colombia and other hot drug spots.

That oversight illustrates the importance of what's called "human intelligence." Both privacy and national security advocates say that since the advent of massive databases and laws like the BSA, the government too often has relied on technology as a savior and disregarded the importance of human sources, both experts in the field and snitches among the bad guys. FBI veteran Revell says that in his major cases, it was the informant who led to the financial data, not the other way around. "When we were investigating the skimming of the casinos by the mob in Las Vegas [in the late 1970s and early '80s], we had to have intelligence on how it was being done before we could really determine evidence of how it was being done," he recalls. "The development of informants within the mob's control structure of Las Vegas led us to be able to discover the money laundering and to bring charges and wipe the mafia out in Las Vegas."