22 January 2007
Treasury Cautious About Terrorist Finance Data Collection Program, January 22, 2007(Cites need for further cost-benefit analysis)
By Jaroslaw Anders
USINFO Staff Writer
Washington -- The U.S. Department of the Treasury says that massive collection of data on cross-border electronic money transfers is technically possible and could help track down terrorist financing but requires more time for implementation and more analysis of its costs to businesses.
The Intelligence Reform and Terrorism Prevention Act of 2004 requires the secretary of the treasury to determine if reporting of such transfers is necessary and feasible.
One approach would require all cross-border transfers above a certain limit to be reported to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The Treasury estimates the measure could result in half a billion financial reports per year.
In a January 17 report to Congress, the Treasury Department says the completion of the data collection system would take approximately 3.5 years and cost around $32.6 million. The report also raises a number of issues that need to be studied, including the cost to the financial institutions and U.S. agencies and the government’s ability to use such data effectively.
The report further points to the program’s possible negative effects on dollar-based global transactions, including a shift away from the dollar to other currencies, the creation of a mechanism for clearing dollar-based transactions outside the United States and interference with the operation of central payment systems.
The proposed data collection program has been criticized by human rights organizations and some European officials, who see it as a potential violation of privacy. It also is opposed by the banking community, which says the proposed program is burdensome and invasive.
“Our current anti-money-laundering program already suffers from overload of unnecessary data -- with over 14 million reports submitted in 2006,” says a statement published by Wayne Abernathy, executive director of financial institutions policy at the American Bankers Association. The statement calls for “more effective policies to combat financial crime by looking at focused programs that provide materially useful information rather than pushing significant resources into a new mass data-gathering exercise.”
If such a data collection system were implemented, the U.S. government would impose strict limits on the use and redissemination of the data provided to law enforcement and regulatory agencies, and to its foreign counterparts, the report said. It also would monitor closely people and organizations with access to the data.
But the report recommends an incremental process, during which the U.S. financial authorities would engage with law enforcement, regulatory and intelligence agencies, as well as with representatives of U.S. and foreign financial services in a cost-benefit analysis.
The full text of Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act is available on the Treasury Department Web page.
