Issue 4, 2002 of The SAR Activity Review provides information related to potential terrorist financing activity. This information was been obtained from a variety of sources, including:
It has become clearer since September 11 that it can be difficult to definitively identify terrorist fund raising activities separate and apart from traditional money laundering and financial crime activities.
Currently, there is no exhaustive or exclusive list of terrorist indicators that the government is able to provide. FinCEN and law enforcement continue to develop indicative and distinct typologies which may be associated with terrorist financing.
Information provided in the SAR Activity Review comes from a variety of sources, and while some of it is only available to the government, much of the publicly available information may be useful to financial institutions in detecting suspicious transactions either potentially involving terrorism, or are not commensurate with normal activity and may later prove to be related to terrorist financing.
Financial transaction activity alone may not identify terrorist financing. However, financial institutions are often in a position to compare that activity with other information provided by the government that could produce significant leads and other useful information regarding potential terrorist activity.
Reconstruction of Hijackers' Financial Activities
Through reconstruction of available financial information, the FBI established how the hijackers responsible for the September 11th attacks received their money and how money was moved out of accounts. The 19 hijackers opened 24 domestic bank accounts at four different banks. The following financial profile was developed from the hijackers' domestic accounts:
FinCEN Analysis of SAR Filings and other BSA information
As part of its support to law enforcement, FinCEN routinely prepares proactive referral packages developed from SARs and other BSA information. After September 11th, FinCEN reviewed such referrals to evaluate whether any of those cases could possibly involve mechanisms to fund terrorist activities. Five of such cases revealed that traditional methods of money laundering were used and at least one of the following other indicators was involved:
While these indicators alone may not indicate terrorist funding, when combined with the common indicators of financial crime and money laundering (listed below), the Bank's Investigators may find this information useful and determine that additional scrutiny is warranted. Additionally, when one or several of the potentially suspicious factors exists in regard to a specific financial transaction especially when the individual or entity may appear on one of the lists of suspected terrorists, terrorist organizations, or associated individuals or entities, a financial institution would have cause to increase its scrutiny of the transaction and any associated individuals or entities. The following methods have been used by organized crime and drug traffickers for decades to launder their illegal proceeds. Some of the common indicators of money laundering and other financial crime include:
The following cases provide illustrations of activities that could indicate terrorist financing activities:
FinCEN identified 649 SARs filed by seven depository institutions reporting transactions totaling $9 million involving structured cash deposits and deposits of business, payroll and Social Security benefit checks. These SARs were filed during a 3-1/2 year period. Deposited funds were subsequently wire transferred within one or two days to a company located in the Middle East. The deposit and wire transfer activity involved 37 individuals conducting transactions through 44 accounts on behalf of four businesses. Two of the businesses were wire remittance companies; one was described as a relief organization at the same location as one of the wire remittance businesses; the fourth undescribed business, located in the Middle East, was the beneficiary of the wire transfer activity. The majority of the wire transfers were sent to two accounts in the Middle East. Other wire transfers were made to accounts at three different banks in foreign locations. The majority of the transactions (83%) were structured. Amounts of the deposits ranged from $350 to $636,790; most deposits fell between $2,000 to $8,000.
One bank filed three SARs that reported the activities of a relief organization operating in the U.S., whose stated primary purpose is the collection of donations and funds for worthwhile causes in Middle Eastern countries. Over an approximate 15-month period, the relief organization initiated wire transfers from its U.S. bank account totaling $685,560 through its primary account in a former Soviet Republic to its accounts in other former Soviet Republic countries. The relief organizations U.S. bank account also received wire transfers totaling $724,694 from unknown senders at a European bank and wired a total of $65,740 to a U.S. charitable organization. The filing institution deemed this activity inconsistent with the stated purpose of the account. FinCEN identified two other SARs filed by two banks regarding financial activity of the U.S. charitable organization. The SARs identified $445,325 wired to the U.S. charitable organization's account in the Middle East through the filing bank's U.S. correspondent bank. They also wired $18,000 to a media services business in the Middle East in 2001. Four different accounts were used. SARs also described structured cash deposits totaling $53,800, and check deposits totaling $121,705. FinCEN identified three additional accounts at three other banks through currency transaction reports (CTRs). Those CTRs reported cash deposits totaling $227,519 in 1994, 1999, and 2001.
A total of nine SARs and 14 CTRs were filed regarding the personal account activities of a used car dealer/car salesman/exporter during the period September 1991 through December 1999. Early activity involved check cashing by the account holder. In early 1996, he began structuring his transactions weekly and sometimes daily, primarily making cash withdrawals and cashing negotiable instruments, apparently to avoid the CTR reporting requirements. SARs were filed reporting structured cash withdrawals that ranged from $3,000 to $9,900. This activity continued through mid-1999. Beginning in September 1998 and continuing through December 1999, the individual's personal account began receiving large dollar wire transfers from jurisdictions in the Middle East. In 1999, large dollar wire transfers were generated from the account to the benefit of businesses and individuals in the Middle East and North America. Account activity including withdrawals, checks cashed and negotiable instruments cashed totaled $556,350; deposits and wire transfers received amounted to $1,447,888.90 and wire transfers sent amounted to $465,246. Total account activity reported in SARs and CTRs, was in excess of $2 million.
FinCEN identified five SARs filed by one bank, two SARs filed voluntarily by a money services business (MSB) and many CTRs filed by two different east coast financial institutions. These filings identified significant cash deposits and wire transfer activity by a business described as an import/export business and as a leather goods store. Over an approximate one-year period (July 1999 through June 2000), wire transfers totaling $702,366 were sent from a corporate account at one bank to businesses and individuals in numerous jurisdictions, including two NCCTs, one country designated as a state sponsor of terrorism, and one country subject to a travel warning for a high level of anti-American terrorist activities. Wire transfer amounts varied from a high of $22,150 to a low of $3,000. During the same period, CTRs reflected cash deposits into this account at New York and Florida branches, totaling $616,231 and monetary instrument deposits totaling $238,986. The majority of the cash deposits occurred weekly and was structured below CTR reporting thresholds. Monetary instruments were deposited at three branch locations and included commercial and U.S. Postal money orders, and bank, personal, and business checks. An individual using a New York address attempted to make a $12,995 cash deposit into this account at a California branch in March 2000, but when asked for additional identifying data, the individual refused and stopped the transaction. Cash withdrawals totaling $13,500 and four negotiable instruments cashed totaling $55,300 was reported for a second corporate account at a different bank.
A SAR narrative filed by the same bank links this business via telephone number to a second business described as an import/export and wire service business. The individual with signature authority on the original corporate account made cash deposits totaling $920,649 to the account of the second business during a ten-month period in 1998. Another SAR, for what appears to be his personal account, reflects cash deposits at New York and Florida branches of the bank that totaled $26,770 during a three-month period in 1999. The bank filed SARs because the deposits were structured. During the same period, wire transfers totaling $30,000 were sent to an individual in an NCCT and a business in Europe.
A SAR was filed reporting two same-day deposits ($3,500 and $9,900) made three hours apart to a savings account by a bank customer. The bank initiated a review of the customer’s accounts. The review identified additional suspicious activity in four of his personal accounts, including the original savings account. From December 1999 through April 2001, 38 cash/non-cash deposits and one wire transfer deposit totaled $2,202,384. During the same time period, one withdrawal, two cashings of negotiable instruments, three wire transfers and two other debit transactions totaled $2,256,223. Of this total, $2,040,370 flowed into the original suspect's savings account and $2,097,323 flowed out of the account. Cash and non-cash deposits were described as even dollar amounts ranging from $1,000 to $100,000. Wire transfer activity included a $25,000 wire transfer received from an individual and three (3) transfers totaling $100,000 sent to two different individuals. The SAR and related CTRs describe the individual as the owner/president of a pharmaceutical company and the owner/CEO of a biochemical lab.
In July 1996, this individual transported $11,200 into the U.S. from a Caribbean country and in December 2000, he transported $11,500 from the U.S. to Europe. In both instances, he claimed citizenship in a country subject to a travel warning for anti-American terrorist activity and provided a non-U.S. passport as identification. He is also cited as entering the U.S.a total of 32 times from March 1996 through August 2001. Identification provided, as cited in the entry records, was an alien registration number.
Note: Transactions to or from, or conducted by persons with possible affiliations with jurisdictions associated with terrorist activity should not be the only factor that prompts the filing of a SAR. However, this information may be relevant and should be considered in conjunction with other relevant information in deciding whether a SAR is warranted, as set forth in 31 CFR 103.18 and the regulations prescribed by the bank regulatory agencies, such as a lack of any apparent legal or business purpose to a transaction or series of transactions. Resources that should be consulted about such jurisdictions include: the State Department's list of State sponsors of terrorism; the Treasury Department's Office of Foreign Assets Controls (OFAC) lists of foreign terrorists; and FATF's list of non-cooperative countries and territories.
1 Pursuant to Section 6(j) of the Export Administration Act of 1979, the Departments of State and Commerce have designated the following countries as state sponsors of terrorism: Cuba, Iran, North Korea, Sudan, and Syria. Further information about these designations is available at online at the US State Department's website