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Terrorist bank deals seen as "impossible to spot"

Posted on: Thursday, 29 September 2005, 11:25 CDT

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.

Source: REUTERS

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