The Wall Street Journal
Last year, Mohamed Atta, the suspected ringleader in Osama bin Laden’s terrorist plot, was sent $100,000 in several transfers from the United Arab Emirates. At the time, at least one bank was suspicious enough about the transaction to file a report with federal authorities.
It triggered no action.
In the month following the disaster, United States investigators have focused intensely on the complex money trail left behind by the 19 suspected terrorists and those who may have financed them. Although much of the suspected terrorists’ financial dealings remain cloaked in mystery, this much is clear: The capacity of the United States banking system to detect possible terrorists is extremely limited — and potential clues went unheeded.
In fighting the financial war on terrorism, the government has now turned up the heat on the nation’s 8,000 banks. President Bush has asked them to freeze the assets of organizations and individuals that are believed to have links to bin Laden’s al-Qaida network. An Oct. 5 letter sent by the Federal Reserve and other regulators instructed banks to designate a senior-level point person to funnel information about suspected terrorists to law-enforcement authorities. The Treasury Department has asked the American Bankers Association to help it in coming weeks to develop guidelines on how banks can spot suspected terrorist activities.
The latest moves to give banks more snooping power are likely to spark opposition.
To date, the ability of banks to provide financial reconnaissance about terrorists has proven limited. For one thing, banks’ detection systems are geared — not very successfully — toward catching drug lords who try to launder large amounts of cash. In some cases, the 19 suspected terrorists appear to have avoided banks altogether. But when the suspected hijackers did make use of the United States banking system, they did so in a way that made them virtually indistinguishable from any other small-time bank customer.
"There’s nothing about the way these terrorists have been operating that would have provided a clue," said Jerome Walker, a former senior enforcement official at the Office of the Comptroller of the Currency, the nation’s largest bank regulator. "It’s not like they walked into a bank looking or acting like terrorists working for Osama bin Laden."
Particularly popular both with many lawmakers and the banking industry is a provision in a Senate banking committee bill that would allow law-enforcement and intelligence agencies to share tips on suspects with banks. "For the first time, the intelligence agencies can say to the banks, ‘Look out for this, this and this," said Sen. Charles Schumer, D-N.Y.
Already, regulators have begun encouraging banks to write the word "terrorism" in the box marked "Other" on the suspicious-activity reports they send to law enforcement. Until now, none of the 20 categories — from "check fraud" to "mysterious disappearance" — has squarely addressed the possibility of terrorism.
Banks are required by the government to report cash deposits or withdrawals of more than $10,000. But the suspected terrorists rarely dealt in that kind of money. It is estimated they may have spent up to $500,000 in total, a relatively modest sum given the damage they caused. But expenditures were made in many venues and in small increments.
One obstacle faced by banks is that law-enforcement authorities often have been resistant to disclosing names connected to sensitive investigations before a crime has been committed.
In late August, the Central Intelligence Agency told the Immigration and Naturalization Service to place two of the suspected hijackers, Khalid Almihdhar and Nawaf Alhazmi, on a watch list that would bar their entry into the United States The INS response: Both men were already in the country. The FBI then launched its own search, but never found them. All the while, Alhazmi was making purchases on a Visa card, issued by Dime Bank in July, according to people familiar with the matter.
One purchase: A ticket for American Airlines flight 77 that crashed into the Pentagon. The ticket was purchased from Travelocity, the online travel agency on Aug. 27, using an address in Fort Lee, N.J.
If the bank had known that Alhazmi was a wanted man, "it could have picked up the phone and said, ‘Do you want us to call you if he steps into the branch again?" said Walker, the former senior bank regulator.
When it comes to flagging larger money movements, banks are better equipped because their software typically spots unusually large transactions in an account. That may explain why Atta’s $100,000 worth of wire transfers were viewed as suspicious.
Banks, like anyone else, can call the police to report suspected crimes, but their official alerts are filed at an Internal Revenue Service computer center in Detroit. These suspicious-activity reports have to be sent by United States mail because the IRS computers can’t accept electronic filings. Large banks usually file on magnetic tape or floppy disk, which is available to law enforcement within three days, according to government officials.
But for authorities to get access to the information from small banks — which usually file on paper forms — the process is even more archaic.
After the paper reports arrive in Detroit, they are sent to a company in North Dakota that has a data-entry contract with the IRS. This company, in turn, sends some of them to the Turtle Mountain Band of Chippewa reservation in North Dakota. At a tribal-owned company called Uniband Inc., about 170 employees furiously transcribe the paper reports onto old-fashioned magnetic tape. The tape is then shipped back to Detroit, where it is loaded into Internal Revenue Service computers for review by law-enforcement officials.
Total elapsed time: up to nine days.
The bank that handled Atta’s $100,000 transaction was sufficiently suspicious that some crime was involved that it alerted authorities last year, people familiar with the matter say. But the first time the Treasury Department’s Financial Crimes Enforcement Network, which is the chief reviewer of these reports, became aware of the document in its own file was after Atta is believed to have flown a plane into the side of the World Trade Center.
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