By Mark Hosenball and Stella Dawson
WASHINGTON (TrustLaw) – The U.S. government has considered giving spy agencies instant access to a huge database of suspicious financial transactions submitted by U.S.-based banks for many years, but government agencies until now were reluctant to move forward due to privacy and policy concerns, according to current and former U.S. officials.
The proposal for a Treasury agency, known as the Financial Crimes Enforcement Network (FinCEN), to link its computer with intelligence agencies, as reported by TrustLaw and Reuters last week, would strengthen the U.S. government's ability to scour masses of data collected as part of an effort to track down corruption, criminal organisations and potential terrorist activities.
Michael Hayden, former director of both the Central Intelligence Agency (CIA) and the National Security Agency (NSA), said sharing data with intelligence agencies had been discussed before – but there had been reservations.
"One potential concern was the use of such data for purposes other than for which it was collected," Hayden said.
"Privacy concerns" were another reason why such a plan had not made much progress in the past, said a current U.S. official.
But over the past few years, the idea of tracking financial transactions to lead the intelligence community to individuals and organisations wanting to harm the United States has taken powerful hold in Washington.
The idea grew from the success of tracking terrorist financing in Iraq and then in Afghanistan and from the squeeze on Iran’s finances, where the Treasury worked with the Federal Bureau of Investigation (FBI) and the military to trace money flowing through illicit channels.
The U.S. Defence Department wants to increase its capacity to use financial data to better understand networks of criminals and terrorists, Caryn Hollis, the deputy assistant secretary of defence for counternarcotics and global threats, said in an interview.
"We are looking at the convergence of transnational crime, drug smuggling, organised crime and terrorism and the threats they pose and we find there is a heck of a lot of money out there," she said.
Hollis, who was speaking broadly about the Pentagon's plans, not specifically about linking computers, said the defence department is increasing its training of military personnel to spot money laundering or illicit financial activities.
This could tip them off to terrorist networks that use the same channels to move money around as kleptocrats or criminals. It is called threat finance.
But privacy advocates are concerned about the proposal to give spy agencies access to some customer financial information from U.S.-based banks. Texas Attorney General Greg Abbott called it the latest example of overreach by the federal government and a violation of the U.S. constitution.
“Although cloaked in the appearance of fighting terror - which of course all Americans are in favour of - the scheme in reality exposes virtually all American citizens to having their personal financial files rifled through by unelected officials. This appears to be a blatant threat to the 4th and 5th Amendment principles and protections enshrined in our constitution," Abbott said in a statement.
The 4th and 5th Amendments protect the right to privacy of personal information and possessions.
LOOSENED INHIBITIONS
Steven Aftergood, a secrecy expert with the Federation of American Scientists, said the Sept. 11, 2001, al Qaeda attacks on New York and Washington, D.C., had loosened historical governmental and political inhibitions about sharing sensitive information with spy agencies.
"A generation ago, there was a clear distinction between foreign intelligence and domestic law enforcement. They were two worlds that rarely overlapped," Aftergood said.
But he added that since the 2001 attacks, "that distinction has gradually eroded. Under the pressure of transnational terrorism and nearly unconstrained data collection, almost anything is fair game under the rubric of information sharing. As happens so often, the technology of today has outpaced the policies of yesterday."
TrustLaw and Reuters reported on March 13 that the Obama administration was preparing a plan to give all U.S. intelligence agencies full access to FinCEN's suspicious activity report database. Until now, the FBI had direct access to the database, but spy agencies, such as the CIA and NSA, had to request the information from FinCEN on a case-by-case basis.
In response to the Reuters story, Jacob Lew, the new treasury secretary, played down the significance of the information-sharing proposal. "I can tell you that there’s been no change in policy," Lew told a press conference last week.
"We have a very high standard on protecting individual privacy... I’m not aware of any new policy to open up new records. I think there’s always efforts to do what we do more efficiently, so it doesn’t take as long and it’s not as difficult." Lew said.
((Mark Hosenball is a national security correspondent for Reuters. Nate Raymond also contributed to this report))
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