Terrorist bank deals seen as “impossible to spot”

By Mark Trevelyan, Security Correspondent

BARCELONA (Reuters) – Four years of intensive U.S.-led
efforts to starve terrorist groups of funds have brought home
the harsh truth that banks are virtually powerless to spot
terrorists solely on the basis of their financial dealings,
bankers, regulators and experts say.

While more stringent checks, introduced after the September
11 attacks in 2001, have made it harder for groups like al
Qaeda to move money around, the chances of uncovering a cell
through suspicious transactions alone are seen as next to
nothing.

“Terrorist operatives are often nearly impossible to detect
from their financial transactions because these financial
transactions look utterly routine,” Douglas Greenburg, a member
of the 9/11 commission that investigated the attacks, told a
European conference organized by specialist publication Money
Laundering Alert in Spain this week.

Two weeks after the suicide hijack attacks that killed
nearly 3,000 people, President George W. Bush announced moves
to freeze the assets of militant groups worldwide in “a strike
on the financial foundation of the global terror network.”

The goal, he said, was “to follow the money as a trail to
the terrorists, to follow their money so we can find out where
they are; and to freeze the money to disrupt their actions.”

United Nations officials say more than $90 million has been
frozen belonging to individuals on its global blacklist of
suspects linked to al Qaeda or the Afghan Taliban.

SMALL BEER

But that amount is small compared to what investigative
author Loretta Napoleoni described at the conference as an
“illegal, criminal and terror economy” worth an estimated 1.5
trillion dollars or five percent of world economic production.

“Look at all the efforts we put in, compared with the
results,” said Rainer Hoerning, compliance officer with Credit
Suisse in Zurich. “It has to be done, but what is the output?
It’s poor.”

Part of the reason is that terrorism, in the words of a
European intelligence official, is “relatively cheap” and even
major attacks can be financed with modest sums.

While the September 11 attacks were thought to have cost
half a million dollars to prepare, EU officials estimated last
year’s Madrid bombers needed less than 10,000 euros for an
operation that killed 191 people.

The European Union agreed a new package of rules in June
against money laundering and terrorist finance, including
enhanced identity checks on customers and more demanding rules
on identifying the real beneficial owners of accounts.

But there was an awkward pause when a questioner at the
Barcelona conference asked if such rules might have helped to
prevent the Madrid attacks and the July London suicide
bombings.

“Anti-moneylaundering regulations are not best designed to
prevent acts of terrorism. What they do produce is an
atmosphere which is less conducive to criminal abuse of the
financial system. They make it harder for terrorists,” said
Edna Young, a financial crime specialist with Britain’s
regulator, the Financial Services Authority.

Audit trails by banks could be valuable to investigators.

“I don’t think the investigating authorities expect banks
to be able to…spot the terrorists beforehand. It’s having the
information available when they’re asked for it that is key.”

Greenburg, of the 9/11 commission, said financial
information could be critical in investigating someone
identified as a suspect through other means, such as
intelligence.

He said two of the suicide hijackers, who were identified
as militants and known to be inside the United States, might
have been tracked if the FBI had been able to find out they had
opened bank accounts in New Jersey.

At that time, Greenburg said, there was no mechanism in
place for the authorities to ask all banks simultaneously if
they held accounts in the two men’s names — a gap that has
since been filled with the introduction of the U.S. Patriot
Act.

All 19 of the hijackers had U.S. bank accounts, and none of
the banks involved had reported any suspicions to authorities.