Financial intelligence
Encyclopedia
Financial Intelligence is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. Generally the term applies in the context of law enforcement and related activities.
FININT does not necessarily involve money laundering
, which refers to the practice of the undeclared and covert transfer of money or other negotiable item. However FININT is used to detect money laundering
, which is often done as part of or as a consequence of some other criminal activity.
or datamatching techniques may be employed to identify persons potentially engaged in a particular activity.
Where financial institutions are required to make manual reports of certain financial transactions, obtaining this information is a type of HUMINT
, just as the reports of military police in a combat zone is HUMINT. Not all HUMINT comes from espionage. Many industrialized countries have such reporting requirements.
It may be possible for the FININT organization to obtain access to raw data at a financial organization. From the collection standpoint, if the data are in computer-readable format, this is a type of SIGINT
. From a legal standpoint, this type of collection can be quite complex. For example, the CIA obtained access to the Society for Worldwide Interbank Financial Telecommunication
(SWIFT) data streams, but this violated Belgian privacy law.
Reporting requirements do not affect Informal value transfer system
s (IVTS),
the use of which may simply be customary in a culture, and of amounts that would not require reporting if in a conventional financial institution. IVTS also can be used for criminal purposes of avoiding oversight.
The United States has several laws requiring the reporting to the FinCEN
. These include the Right to Financial Privacy Act
(RFPA) of 1978, the Bank Secrecy Act
of 1970 (and other names of revisions), and the Gramm-Leach-Bliley Act
of 1999 (GLBA). Some reports also need to go to the Securities and Exchange Commission.
For example, the reports
Representative Reports required from US financial institutions >
Report and definition
Authority
Receiving Agency
Currency Transaction Report (CTR). Cash transactions in excess of $10,000 during the same business day. The amount over $10,000 can be either from one transaction or a combination of cash transactions.
Bank Secrecy Act
Internal Revenue Service
Negotiable Instrument Log (NIL). Cash purchases of negotiable instruments (e.g., money orders, cashiers checks, travelers cheques) totaling from $3,000 to $10,000, inclusive.
Bank Secrecy Act
Internal Revenue Service
Suspicious Activity Report (SAR). Any cash transaction where the customer seems to be trying to avoid BSA reporting requirements (e.g., CTR, NIL). A SAR must also be filed if the customer's actions indicate that s/he is laundering money or otherwise violating federal criminal law. The customer must not know that a SAR is being filed.
Bank Secrecy Act
Financial Crimes Enforcement Network
Actions that can trigger an SAR being filed include:
. See CIA access to the Society for Worldwide Interbank Financial Telecommunication
(SWIFT).
Information developed by these units, when related to domestic security and especially when state and local law enforcement, is disseminated by the Office of Intelligence and Analysis (OIA) in the United States Department of Homeland Security
, under the Under Secretary of Homeland Security for Intelligence and Analysis
. This Office is not restricted to FININT, but handles collection, analysis and fusion of intelligence throughout the entire Department. It disseminates intelligence throughout the Department, to the other members of the United States Intelligence Community
, and to affected first responders at the state and local level.
Depending on the specific Federal violation, law enforcement investigation may be under agencies including the Federal Bureau of Investigation
, United States Secret Service
, or the Internal Revenue Service
.
, and national organizations such as:
an allegation was made in The Wall Street Journal
that tanzanite
stones were being used as an untraceable currency and source of income for terrorists. This has not since been firmly established. See possible examples.
However, the Internal Revenue Service
has since instituted new anti-money laundering regulations to control the gem trade.
.
FININT does not necessarily involve money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
, which refers to the practice of the undeclared and covert transfer of money or other negotiable item. However FININT is used to detect money laundering
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
, which is often done as part of or as a consequence of some other criminal activity.
Financial intelligence collection
FININT involves scrutinizing a large volume of transactional data, usually provided by banks as part of regulatory requirements. Transactions made by certain individuals or entities may be studied. Alternatively, data miningData mining
Data mining , a relatively young and interdisciplinary field of computer science is the process of discovering new patterns from large data sets involving methods at the intersection of artificial intelligence, machine learning, statistics and database systems...
or datamatching techniques may be employed to identify persons potentially engaged in a particular activity.
Where financial institutions are required to make manual reports of certain financial transactions, obtaining this information is a type of HUMINT
HUMINT
HUMINT, a syllabic abbreviation of the words HUMan INTelligence, refers to intelligence gathering by means of interpersonal contact, as opposed to the more technical intelligence gathering disciplines such as SIGINT, IMINT and MASINT...
, just as the reports of military police in a combat zone is HUMINT. Not all HUMINT comes from espionage. Many industrialized countries have such reporting requirements.
It may be possible for the FININT organization to obtain access to raw data at a financial organization. From the collection standpoint, if the data are in computer-readable format, this is a type of SIGINT
SIGINT
Signals intelligence is intelligence-gathering by interception of signals, whether between people , whether involving electronic signals not directly used in communication , or combinations of the two...
. From a legal standpoint, this type of collection can be quite complex. For example, the CIA obtained access to the Society for Worldwide Interbank Financial Telecommunication
Society for Worldwide Interbank Financial Telecommunication
The Society for Worldwide Interbank Financial Telecommunication operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions...
(SWIFT) data streams, but this violated Belgian privacy law.
Reporting requirements do not affect Informal value transfer system
Informal value transfer system
An informal value transfer system refers to any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, whether or not in the same form...
s (IVTS),
the use of which may simply be customary in a culture, and of amounts that would not require reporting if in a conventional financial institution. IVTS also can be used for criminal purposes of avoiding oversight.
US examples
The United States has different organizations focused on domestic and international financial activity.The United States has several laws requiring the reporting to the FinCEN
Financial Crimes Enforcement Network
The Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes.As reflected in its name, the Financial...
. These include the Right to Financial Privacy Act
Right to Financial Privacy Act
The Right to Financial Privacy Act is a United States federal law that gives the customers of financial institutions the right to some level of privacy from government searches. Before the Act was passed, the United States government did not have to tell customers that it was accessing their...
(RFPA) of 1978, the Bank Secrecy Act
Bank Secrecy Act
The Bank Secrecy Act of 1970 requires financial institutions in the United States to assist U.S. government agencies to detect and prevent money laundering...
of 1970 (and other names of revisions), and the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...
of 1999 (GLBA). Some reports also need to go to the Securities and Exchange Commission.
For example, the reports
Actions that can trigger an SAR being filed include:
-
- Any kind of insider abuse of a financial institution, involving any amount;
- Federal crimes against, or involving transactions conducted through, a financial institution that the financial institution detects and that involve at least $5,000 if a suspect can be identified, or at least $25,000 regardless of whether a suspect can be identified;
- Transactions of at least $5,000 that the institution knows, suspects, or has reason to suspect involve funds from illegal activities or are structured to attempt to hide those funds;
- Transactions of at least $5,000 that the institution knows, suspects or has reason to suspect are designed to evade any regulations promulgated under the Bankruptcy Secrecy Act; or
- Transactions of at least $5,000 that the institution knows, suspects, or has reason to suspect have no business or apparent lawful purpose or are not the sort in which the particular customer would normally be expected to engage and for which the institution knows of no reasonable explanation after due investigation. The language of the RFPA indicates that a SAR filed under this rule comes from an individual transaction, not a profile of activities that make the transaction stand out.
International
International financial activity comes primarily from the Department of the Treasury and the Central Intelligence AgencyCentral Intelligence Agency
The Central Intelligence Agency is a civilian intelligence agency of the United States government. It is an executive agency and reports directly to the Director of National Intelligence, responsible for providing national security intelligence assessment to senior United States policymakers...
. See CIA access to the Society for Worldwide Interbank Financial Telecommunication
Society for Worldwide Interbank Financial Telecommunication
The Society for Worldwide Interbank Financial Telecommunication operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions...
(SWIFT).
US domestic FININT
At the highest level, US domestic FININT, and also some international work, comes under the Under Secretary of the Treasury for Terrorism and Financial Intelligence, heading the Office of Terrorism and Financial Analysis, including:- Financial Crimes Enforcement NetworkFinancial Crimes Enforcement NetworkThe Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes.As reflected in its name, the Financial...
: tracks domestic transactions - Office of Foreign Assets ControlOffice of Foreign Assets ControlThe Office of Foreign Assets Control is an agency of the United States Department of the Treasury under the auspices of the Under Secretary of the Treasury for Terrorism and Financial Intelligence. OFAC administers and enforces economic and trade sanctions based on U.S...
: focused on foreign assets in the US - Office of Intelligence and Analysis
Information developed by these units, when related to domestic security and especially when state and local law enforcement, is disseminated by the Office of Intelligence and Analysis (OIA) in the United States Department of Homeland Security
United States Department of Homeland Security
The United States Department of Homeland Security is a cabinet department of the United States federal government, created in response to the September 11 attacks, and with the primary responsibilities of protecting the territory of the United States and protectorates from and responding to...
, under the Under Secretary of Homeland Security for Intelligence and Analysis
Under Secretary of Homeland Security for Intelligence and Analysis
The Under Secretary of Homeland Security for Intelligence and Analysis is a position within the United States Department of Homeland Security. The Under Secretary for Intelligence and Analysis is responsible for fusing law enforcement and intelligence information relating to terrorist threats...
. This Office is not restricted to FININT, but handles collection, analysis and fusion of intelligence throughout the entire Department. It disseminates intelligence throughout the Department, to the other members of the United States Intelligence Community
United States Intelligence Community
The United States Intelligence Community is a cooperative federation of 16 separate United States government agencies that work separately and together to conduct intelligence activities considered necessary for the conduct of foreign relations and the protection of the national security of the...
, and to affected first responders at the state and local level.
Depending on the specific Federal violation, law enforcement investigation may be under agencies including the Federal Bureau of Investigation
Federal Bureau of Investigation
The Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
, United States Secret Service
United States Secret Service
The United States Secret Service is a United States federal law enforcement agency that is part of the United States Department of Homeland Security. The sworn members are divided among the Special Agents and the Uniformed Division. Until March 1, 2003, the Service was part of the United States...
, or the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
.
Financial intelligence analysis
Examples of financial intelligence analysis could include:- Identifying high-riskRiskRisk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
housing tenants on the basis of past rental histories. - Deterring tax payers trying to avoid their ficudiary obligations by moving wealth surreptitiously out of a tax-levying jurisdiction.
- Discovering safe havensTax havenA tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
where criminals park the proceeds of crimeCrimeCrime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
. - Accounting for how a large sum of money handed to a targeted individual disappears
- Checking to see if a corrupt individual has had any sudden and unexplained windfalls.
- Detecting relationships between terrorist cells through remittances.
Financial intelligence organizations
Government organizations may simply receive and process raw financial reports, and forward them, as appropriate, to law enforcement and/or intelligence agencies, include the multinational Egmont GroupEgmont Group
The Egmont Group is a media corporation founded and rooted in Copenhagen, Denmark. The business area of Egmont has traditionally been magazine publishing but has over the years evolved to comprise media generally....
, and national organizations such as:
- AUSTRAC (Australia)
- COAF Conselho de Controle de Atividade Financeira (Brazil)
- FinCENFinancial Crimes Enforcement NetworkThe Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes.As reflected in its name, the Financial...
(United States) - FIU Financial Intelligence Unit (India)
- FINTRACFinancial Transactions and Reports Analysis Centre of CanadaFinancial Transactions and Reports Analysis Centre of Canada gathers, analyzes, assesses, and discloses financial intelligence. Originally created in July 2000 to counter suspected money laundering, FINTRAC's mandate was expanded in December 2001 to provide the Canadian Security Intelligence...
(Canada) - Serious Organised Crime Agency (United Kingdom)
- TracfinTracfinTracfin is a service of the French Ministry of Finances. It fights money laundering....
(France) - Unidad de Inteligencia FinancieraUnidad de Inteligencia FinancieraUnidad de Inteligencia Financiera is the intelligence agency of the Argentine Ministry of Economy.-See also:*National Intelligence System*National Intelligence School*Secretariat of Intelligence...
(Argentina)
Gems as an untraceable currency and source of income for terrorists
Following the September 11, 2001 attacksSeptember 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
an allegation was made in The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
that tanzanite
Tanzanite
Tanzanite is the blue/purple variety of the mineral zoisite which was discovered in the Mererani Hills of Northern Tanzania in 1967, near the city of Arusha and Mount Kilimanjaro. It is used as a gemstone...
stones were being used as an untraceable currency and source of income for terrorists. This has not since been firmly established. See possible examples.
However, the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
has since instituted new anti-money laundering regulations to control the gem trade.
Front-running the market in a terrorist attack
Another intriguing possibility is that a terrorist might buy stocks which are likely to appreciate in the event of a terrorist attack, such as defense industry stocks, or sell short stocks which are likely to depreciate, such as airlines. This possibility led to many investigations of the financial markets subsequent to the September 11, 2001 attacksSeptember 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
.