Financial intelligence

From Includipedia, the inclusionist encyclopedia

Financial Intelligence (or FININT) 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.

Contents 1 Financial Intelligence Collection 1.1 US Examples 2 Financial Intelligence Analysis 3 Financial Intelligence Organizations 4 References

[edit] Financial Intelligence Collection

FININT involves scrutinising 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 mining or datamatching techniques may be employed to identify persons potentially engaged in a particular activity.

Reporting requirements do not affect Informal value transfer systems (IVTS) ^[1], 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.

It may be possible for the FININT organization to obtain access to raw data at a financial organization, but the legalities can be complex. The CIA obtained access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) data streams, but this violated Belgian privacy law.

[edit] US Examples

For example, 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:

1. Any kind of insider abuse of a financial institution, involving any amount;
2. 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;
3. 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;
4. 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
5. 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.

[edit] Financial Intelligence Analysis

Examples of financial intelligence analysis could include:

• Identifying high-risk 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 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.

[edit] 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 Group, and national organizations such as:

• AUSTRAC (Australia)
• FinCEN (United States)
• FINTRAC (Canada)
• Serious Organised Crime Agency (United Kingdom)
• Tracfin (France)
• Unidad de Inteligencia Financiera (Argentina)

[edit] References