The loss of Afghanistan has potentially opened a door for al-Qaida and other blacklisted groups to expand their fundraising networks, and brought the FBI’s closure of its Terrorist Financing Operations Section two years ago into stark relief, sources told ACAMS moneylaundering.com.
In early 2019, the FBI quietly folded TFOS, an independent section formed in the wake of the Sept. 11 attacks to track the finances of terrorist groups and their supporters, into other sections of the bureau’s counterterrorism division as part of a broader, internal reorganization and shift in investigative priorities.
Compliance officers, former TFOS officials and other individuals familiar with the matter said that closing the section and reassigning its personnel risked depriving the federal government of critical financial intelligence, and severing relationships with well-placed contacts in U.S. and global financial institutions.
Several other individuals described the decision as a simple administrative shift that neither frayed the FBI’s ties to the banking industry nor diminished the bureau’s ability to pinpoint remittances, wires and other transfers of funds to terrorist groups.
The FBI did not publicly announce the restructuring, and compliance officers who worked regularly with TFOS told moneylaundering.com that they received only brief and informal notice of the closure, if any notice at all.
Most sources spoke to moneylaundering.com on condition of anonymity because of the sensitivity of the matter. An FBI spokesperson declined to comment on the reshuffle or the internal deliberations that preceded it.
Jeff Ross, a former senior official with the Treasury and Justice departments, said the demise of TFOS began years ago and involved the FBI’s counterterrorism division—and the larger national security branch that oversees it—increasingly chipping away at the section’s independence and resources.
“TFOS was extraordinarily effective at the start in feeding financial intelligence and analysis to field offices,” said Ross, who regularly dealt with the section during his career in government. “It could do anything it wanted. After you’ve diluted it, marginalized it down from a section, who’s going to do that work?”
‘Speak the language’
TFOS achieved notable success during its 17 years, but the concept of a standalone, dedicated counterterrorist-financing unit rose from a failure: namely, the U.S. government’s to synthesize key financial, travel and logistical details on the 19 al-Qaida hijackers and their handlers into a larger, more comprehensive picture in time to stop them.
A predecessor, the Financial Review Group, or FRG, was formed days after the attacks “to bring order to a chaotic financial analysis in which,” according to the bipartisan 9/11 Commission, “every FBI field office conducted its own investigation as though it were the originating office.”
By April 2002 the group had evolved into TFOS, whose existence signified a strategic shift by the FBI: instead of limiting financial investigations to the pursuit of white-collar criminals, the bureau would task its new, standalone section with overseeing all federal probes into how terrorists raise, move and spend funds.
From the beginning, the new section bore something of a unique profile.
Unlike most sections at the FBI’s headquarters in Washington, D.C., TFOS had an operational mission to conduct investigations independent of the bureau’s 56 field offices, in addition to supplying training, expertise and technical assistance to them.
TFOS also coordinated investigations with U.S. intelligence agencies, regulators and foreign counterterrorism personnel, but the section’s largest returns came from years of building relationships with compliance professionals at large U.S. banks and other institutions, whom investigators could call on at all hours for help in an ongoing case.
Those successes rested on the ability of TFOS investigators to “speak the language of accountants and auditors,” a federal prosecutor told the 9/11 Commission.
Between 100 and 200 agents, analysts, support employees and officials from other federal agencies reported to TFOS, and previously the FRG, in the two years following the Sept. 11 attacks, said Dennis Lormel, a former FBI official who led the section during that time.
Staff numbers in later years are harder to come by.
TFOS employed 15 full-time financial analysts from 2007 to 2009, a headcount that the FBI wanted to raise to 33 in 2010, according to the bureau’s request for congressional funding at the time.
The 302-page request does not include numbers or funding estimates for other types of employees assigned to TFOS, and the FBI did not respond to a request by moneylaundering.com to supply the information.
“TFOS capitalized on its capabilities by conducting real-time financial tracking of a terrorist cell and providing specific and identifiable information to a foreign intelligence agency, which resulted in the prevention of four, potential deadly terrorist attacks,” John Pistole, then FBI’s assistant director for counterterrorism, said during a congressional hearing in September 2003.
But in or around February 2019, with the 20th anniversary of the Sept. 11 attacks nearing the horizon, TFOS closed down permanently following an internal review.
Most of the section’s staff and resources moved to two new, smaller units under two other sections of the counterterrorism division.
The first, a financial targeting unit, inherited TFOS’ investigative and analytic mission. The second, a strategic engagement unit, has continued outreach to the private sector, but its scope exceeds terrorist financing and financial services in general to cover other aspects of terrorism and the industries it impacts, including shipping and retail, moneylaundering.com has learned.
Other TFOS agents transferred to other areas of the counterterrorism division to work directly on the financial side of larger investigations into domestic and international terrorism, as well as launch investigations solely focused on terrorist financing.
Michael McGarrity, a 23-year law enforcement veteran who served as assistant director of the bureau’s counterterrorism division from February 2018 to December 2019, signed off on the plan to close TFOS, a decision that sources said had been brewing for years.
Prior to joining the counterterrorism division in February 2018, McGarrity spent two years overseeing criminal investigations at the bureau’s New York office and directed the National Security Council’s counterterrorism efforts from 2010 to 2011. He now works as an executive for Global Guardian, a private security firm in Virginia, according to his LinkedIn profile.
He declined to comment for this story.
John Riggi, who served as assistant section chief of TFOS from September 2010 to July 2012, told moneylaundering.com that the FBI wanted efforts to track the finances of alleged terrorists to become an integral, automatic feature of investigations, on par with pulling suspects’ phone records, social media profiles and travel details.
“I agree in theory that if FBI leadership was reassured that the financial component was being addressed in every terrorism investigation, you wouldn’t really need a separate TFOS,” said Riggi, who emphasized that he did not participate in the deliberations that led to the reshuffle. “However, it’s important to maintain a sufficient cadre of financial investigators in the operational sections, both for guidance and to take the lead on complex financial investigations.”
Al-Qaida and the Islamic State group’s apparent decline and increasing reliance on informal financial channels to raise and move funds, primarily at the local level, may have also helped drive the realignment, he said.
Whatever the case, the decision met resistance both inside and outside the bureau.
Dennis Lormel, who on the morning of Sept. 11, 2001, was overseeing financial crime investigations at the bureau and afterwards led the push to establish the Financial Review Group and later TFOS, vocally appealed the decision all the way up to FBI Director Christopher Wray.
The FBI continues to investigate terrorist financing, but the dissolution of TFOS has lowered the profile of those efforts and potentially dampened their impact, said Lormel, who now works as a consultant in Virginia.
It has also deprived the FBI’s counterterrorist financing function of direct representation at the bureau’s most senior levels, and led to the dispersion of a wealth of knowledge and contacts accumulated over 20 years, Lormel told moneylaundering.com.
“TFOS’ section chiefs had ownership of the work, direct links to the financial institutions, credibility within their top ranks and, as senior executives, power to independently make policy decisions,” Lormel said. “Now they [counterterrorist financing personnel] might struggle to get buy-in from their superiors in even dealing with the banks.”
At a meeting with financial institutions in early 2018, TFOS officials discussed their then-active investigation into a suspected Islamic State financier in Yemen who allegedly used a Chinese front company to procure military-grade drones for a terrorist group in Syria, a New York-based compliance officer who attended the meeting told moneylaundering.com in April of that year.
The information helped the compliance officer’s bank pinpoint other, previously unknown links between Chinese companies, banks and retailers in Yemen and terrorist groups in the Middle East, the compliance officer said at the time.
Officials with TFOS directly met with individual compliance officers at scheduled meetings and industry conferences, and continuously sought to develop new, more seamless channels for sharing information on terrorist financing trends and immediate threats.
TFOS gave bankers increasingly granular details from their ongoing investigations in the months leading up to the closure, including unclassified names, birthdates and addresses of suspects as part of what Jeffrey Cannon, the section’s last director, described as a “reverse see-something, say-something campaign.”
“If they find something suspicious, they will file a SAR [suspicious activity report], and I can use that SAR to open a preliminary investigation and get the information I need to establish a full-fledged investigation and issue a subpoena,” Cannon told attendees of an industry event in Washington, D.C, in October 2018.
Tips from TFOS helped JPMorgan Chase map out a network that smuggled bulk cash on behalf of the Islamic State group across the Turkish-Syrian border, Brian Filbert, an early TFOS official who has led JPMorgan’s financial intelligence unit since August 2017, said at the ACAMS AML & Financial Crime Conference in Las Vegas three years ago.
Two New York-based compliance officers who dealt with TFOS on a regular basis said they never received any communication of the section’s shuttering. A third told moneylaundering.com that McGarrity, the former head of counterterrorism, announced the change at the end of the section’s final public-private outreach meeting in Washington, D.C.
“The FBI has no obligation to seek industry’s feedback on internal decisions, but given the significant interaction between industry and TFOS in particular, and because industry had played a key role in major terrorism cases, it was a bit odd that there wasn’t any outreach,” said the third compliance officer, who also interacted with TFOS in his previous roles in government.
Those compliance officers and three others who collaborated regularly with TFOS differed on what happened after TFOS closed down, and why.
The compliance officer who learned of the section’s dismantling at the outreach meeting in early 2019 said the frequency and quality of his institution’s counterterrorism-related interactions with the FBI have decreased since the closure, but not completely disappeared.
“They were not entirely clear on how they intended to replicate that experiment, or interact with the banks,” the compliance officer said. “It was a confusing decision, this was something that was working really well, and there were no particularly good reasons to close it down.”
Two other compliance officers said their exchanges with the FBI in Washington, D.C., and various field offices have remained as valuable and regular as before the closure.
Others attributed the diminishment of their institutions’ relationships with the FBI to unforeseen events such as the novel coronavirus pandemic, and the unexpected death of Tim Moyer, an FBI veteran and former TFOS official who was the first point of contact for many banks.
Immediate outreach on urgent cases has continued, said a compliance officer in the southeastern U.S., but larger fora, including an annual conference that TFOS organized in the past, have ceased.
TFOS’s slow decline may have begun around the same time that U.S. focus on terrorist financing in general waned.
By 2019, the perceived threat posed by al-Qaida and the Islamic State group had diminished, and counterterrorism authorities in the FBI and across the federal government turned their sights on lone wolves with minimal funds and increasingly active far-right extremists on the domestic front.
The banking industry appears to have followed suit.
Compliance officers at banks in the U.S. submitted 778 SARs on terrorist financing in 2016, 606 in 2017, 518 in 2018 and 491 in 2019, according to data maintained by the Treasury Department’s Financial Crimes Enforcement Network. FinCEN received only 382 terrorist financing SARs from banks in 2020, a drop of 50 percent in five years.
Money services businesses continued to flag suspected terrorism-related transactions at a steady rate, filing 1,074 reports in 2016, 1,568 in 2018 and 1,397 in 2020.
As for the FBI, the fall of Afghanistan could present the bureau an early test of its ability to investigate transactions by terrorist organizations after TFOS.
On July 21, three weeks before Taliban convoys entered Kabul, a U.N. panel warned in a 14-page report that U.S. and western withdrawal from the nation risked catalyzing a resurgence of al-Qaida and the Islamic State group.
Al-Qaida continues to operate out of at least 15 provinces in Afghanistan under the Taliban’s protection, while the Islamic State group’s local affiliate, the Islamic State in Iraq and the Levant-Khorasan, or ISIS-K, has formed “sleeper cells” across the country and remains especially active in the capital, the panel found.
ISIS-K claimed responsibility for the suicide bombing near Hamid Karzai International Airport in Kabul on Thursday that killed at least 180 civilians and 13 U.S. soldiers.
A compliance officer for a financial institution that conducts business in Afghanistan told moneylaundering.com a week after the Taliban entered Kabul that the FBI and other government agencies have yet to ask the company about its most recent transactions in the nation.
Such queries would have arrived much faster in previous years, the compliance officer said.
Daniel Bethencourt contributed to this story.
Contact Valentina Pasquali at email@example.com and Daniel Bethencourt at firstname.lastname@example.org
|Topics :||Anti-money laundering , Counterterrorist Financing|
|Source:||U.S.: Law Enforcement|
|Document Date:||August 30, 2021|