Financial intelligence
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. One of the main purposes of financial intelligence is to identify financial transactions that may involve tax evasion, money laundering or some other criminal activity. FININT may also be involved in identifying financing of criminal and terrorist organisations. Financial intelligence can be broken down into two main areas, collection and analysis. Collection is normally done by a government agency, known as a financial intelligence organisation or Financial Intelligence Unit. The agency will collect raw transactional information and Suspicious activity reports usually provided by banks and other entities as part of regulatory requirements. Data may be shared with other countries through intergovernmental networks. Analysis, may consist of scrutinizing a large volume of transactional data using data mining or data-matching techniques to identify persons potentially engaged in a particular activity. SARs can also be scrutinized and linked with other data to try to identify specific activity.
Collection
FININT involves scrutinizing a large volume of transactional data, usually provided by banks and other entities as part of regulatory requirements. Alternatively, data mining or data-matching techniques may be employed to identify persons potentially engaged in a particular activity. Many industrialized countries have regulatory reporting requirements for its financial organisations. It may be possible for the FININT organization to obtain access to raw data at a financial organization. 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 data streams through the Terrorist Finance Tracking Program, but this violated Belgian privacy law. Reporting requirements may not affect Informal value transfer systems 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.Analysis
Examples of financial intelligence analysis could include:- Identifying high-risk housing tenants on the basis of past rental histories.
- Detecting tax payers trying to avoid their fiduciary obligations by moving wealth surreptitiously out of a tax-levying jurisdiction.
- Discovering safe havens where criminals park the proceeds of crime.
- 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 units
FIUs may simply receive and process raw financial reports, and forward them, as appropriate, to law enforcement or intelligence agencies, include the multinational Egmont Group of Financial Intelligence Units, and national organizations. National FIUs include:
- Argentina – Unidad de Inteligencia Financiera
- Australia – Australian Transaction Reports and Analysis Centre
- Brazil – COAF Conselho de Controle de Atividade Financeira
- Canada – Financial Transactions and Reports Analysis Centre of Canada
- France – Tracfin
- Germany – Zentralstelle für Finanztransaktionsuntersuchungen
- India – Financial Intelligence Unit
- Ireland – Garda Financial Intelligence Unit
- Italy - Guardia di Finanza
- Russia - Federal Financial Monitoring Service of the Russian Federation
- Spain - Sepblac
- United Kingdom – National Crime Agency
- United States – Financial Crimes Enforcement Network
United States examples
The United States has several laws requiring the reporting to the FinCEN. These include the Right to Financial Privacy Act of 1978, the Bank Secrecy Act of 1970, and the Gramm–Leach–Bliley Act of 1999. Some reports also need to go to the Securities and Exchange Commission.
| Report and definition | Authority | Receiving Agency |
| Currency Transaction Report . 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 . Cash purchases of negotiable instruments having a face value of $3,000, or more. | Bank Secrecy Act | Internal Revenue Service |
| Suspicious Activity Report . Any cash transaction where the customer seems to be trying to avoid BSA reporting requirements. 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:
International
International financial activity comes primarily from the Department of the Treasury and the Central Intelligence Agency. See CIA access to the Society for Worldwide Interbank Financial Telecommunication.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 Network: tracks domestic transactions
- Office of Foreign Assets Control: focused on foreign assets in the US
- Office of Intelligence and Analysis
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.
Terrorist financing scenarios
Gems as an untraceable currency and source of income for terrorists
Following the September 11, 2001 attacks 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.The custom common in Africa, uncut diamonds tend to be the de facto standard currency of the illicit small arms trade. Diamonds may be easily counted with a uniform valuation per carat to people in places of the world where there are no automated teller machines. An entire briefcase filled with uncut diamonds without the serial numbers found on refined precious metals can be used to make large illicit value transfers. The practice coexists with human trafficking, narcotics, weapons dealing, terrorism, and the evasion of economic sanctions and embargoes.
However, the Internal Revenue Service has since instituted new anti-money laundering regulations to control the gem trade.