June 28, 2006 7:48 pm ET
SUMMARY: Numerous conservative commentators joined the Bush administration in arguing that, in detailing a secret Treasury Department program designed to monitor terrorists' international financial transactions, a June 23 New York Times article tipped off terrorists to the U.S. government's ability to track their financial activities -- some going so far as to accuse the newspaper of treason. But the Times report was hardly the first indication of U.S. efforts to monitor terrorists' financial transactions: President Bush himself repeatedly touted the government's capability to track and shut down terrorists' international financial networks.
Following the publication of a June 23 New York Times article detailing a secret Treasury Department program designed to monitor terrorists' international financial transactions, President Bush and other senior administration officials accused the newspaper of tipping off America's enemies and jeopardizing national security. Numerous conservative commentators joined the White House in arguing that the Times had informed terrorists of the U.S. government's ability to track their financial activities -- some going so far as to accuse the newspaper of treason, as Media Matters for America noted. But the June 23 report was hardly the first indication of U.S. efforts to monitor terrorists' financial transactions: President Bush himself touted the government's capability to track and shut down terrorists' international financial networks, presumably signaling long before June 23, 2006, that they had reason to suspect their banking activities were being monitored. Moreover, the administration itself acknowledged nearly two years ago having "witnessed an increasing reliance by Al Qaida and terrorist groups on cash couriers."
The Times article reported that shortly after the September 11, 2001, terrorist attacks, the Treasury Department tapped into the "nerve center of the global banking industry" -- a huge database of international financial transactions maintained by a banking consortium known as the Society for Worldwide Interbank Financial Telecommunication (SWIFT). According to the Times, the administration limited its use of SWIFT to "tracing transactions of people suspected of having ties to Al Qaeda." The article appeared on the Times website on June 22, the same day that the Los Angeles Times and The Wall Street Journal (subscription required) posted their own articles on the subject.
Despite the fact that two other print outlets had also reported on the program, the Bush administration and Republican lawmakers largely singled out the Times for criticism:
A chorus of conservative media figures also accused the Times and other outlets of having alerted the terrorists to this capability. Following are several examples:
But while the details of the U.S. government's tracking of terrorist finances may not have been known, the Bush administration itself has signaled repeatedly its implementation of efforts to follow terrorists' money. Beginning fewer than two weeks after September 11, 2001, the Bush administration has "been very public about its efforts to track the overseas banking transactions of Americans and other foreign nationals," as a June 28 Boston Globe article noted. Times editor Bill Keller addressed this issue in a June 25 letter to his readers, noting that the administration had voiced concerns prior to the article's publication that it "would lead terrorists to change tactics." Keller noted in response, "It has been widely reported -- indeed, trumpeted by the Treasury Department -- that the U.S. makes every effort to track international financing of terror." Following are numerous examples:
Moreover, SWIFT's cooperation in international efforts to monitor terrorists' banking activities was a matter of public knowledge long before the Times detailed the Treasury Department program. As former Bush administration counterterrorism official Roger Cressey noted in the June 28 Globe article, "There have been public references to SWIFT before. ... It has been in the public domain before." Indeed, in his June 28 column, WashingtonPost.com columnist Dan Froomkin noted that according to SWIFT's website, the consortium has a "history of cooperating in good faith with authorities such as central banks, treasury departments, law enforcement agencies and appropriate international organisations, such as the Financial Action Task Force (FATF), in their efforts to combat abuse of the financial system for illegal activities." And as former State Department official Victor Comras noted in a June 23 Counterterrorism Blog post, the United Nations Al Qaeda and Taliban Monitoring Group learned of the SWIFT program years ago -- a fact the group incorporated into its December 2002 report to the U.N. Security Council:
The settlement of international transactions is usually handled through correspondent banking relationships or large-value message and payment systems, such as the SWIFT, Fedwire or CHIPS systems in the United States of America. Such international clearance centres are critical to processing international banking transactions and are rich with payment information. The United States has begun to apply new monitoring techniques to spot and verify suspicious transactions. The Group recommends the adoption of similar mechanisms by other countries.
Nonetheless, Tony Snow asserted during his June 27 press briefing, "I am absolutely sure they [the terrorists] didn't know about SWIFT."
The claim that the Times notified terrorists that their financial transactions might be under surveillance also overlooks numerous reports that Al Qaeda and other terrorist organizations shifted to nontraditional money flows shortly after 9-11. For instance, Treasury Department undersecretary for terrorism and financial intelligence Stuart A. Levey testified before Congress on September 22, 2004, that the government had begun "working closely" with FATF to interdict terrorist organizations' increased use of cash. Levey said, "As the formal and informal financial sectors become increasingly inhospitable to financiers of terrorism, we have witnessed an increasing reliance by Al Qaida and terrorist groups on cash couriers. The movement of money via cash couriers is now one of the principal methods that terrorists use to move funds."
The Congressional Research Service (CRS) has repeatedly highlighted the terrorists' new financial methods as well. In a December 6, 2002, report, CRS noted that "al Qaeda is relying increasingly on non-bank mechanisms to move and store funds, such as converting assets to untraceable commodities, including gold and diamonds, or moving funds via informal value transfer ['hawala'] systems that leave virtually no paper trail." In a November 2003 report, CRS further documented these "alternative financing mechanisms" and noted the failure on the part of the government to produce corresponding strategies.
A December 14, 2003, Washington Post article quoted Comras making a similar point:
Victor Comras, a former State Department official who helped write the U.N. report, said that, in the immediate aftermath of the terrorist strikes, the United States and other countries effectively froze some terrorist assets, but that the success was largely limited to halting money in the banking system.
Once al Qaeda understood the weaknesses and loopholes in the sanctions regime, Comras said, "money was quickly moved out of harm's way" by taking it out of banks and putting it into commodities, such as diamonds and gold, or into front companies.
"Al Qaeda had assets, and those assets are still around," Comras said. "They had a number of different ways to handle the problem, and they are using all of them."
An October 14, 2005, Economist article also noted the ongoing adaptation on the part of terrorist organizations:
Indeed, the terrorists have shown an ability to keep changing their money flows. "The bad guys are definitely getting smarter," says a European expert on financial crime. "The banking system is so well patrolled they're resorting to more primitive means." Counter-terror experts say some groups have simply switched to using more cash, slipping across borders undetected. Authorities say they recognise the changing money flows, but cutting them off is no simple matter, particularly in cash-based economies with loose border controls.
Further, an April 4, 2006, backgrounder on terrorist financing produced by the Council of Foreign Relations highlighted terrorists' efforts to leave "less of a paper trail":
The greatest difficulty is that terrorist networks have stayed aware of governments' efforts to stymie their activities and adjust their operations accordingly. [Terrorism expert Loretta] Napoleoni says "terrorist financing mutates continuously," which generally keeps terrorists a step ahead of the authorities.
Terrorists have increasingly relied on illegal activities, like smuggling or counterfeiting, to generate revenue that is difficult to track through the financial system. Terrorists have also begun to rely more on cash, leaving less of a paper trail. According to Napoleoni, much of the funding for Abu Musab al-Zarqawi's al-Qaeda organization in Iraq is brought into the country by couriers carrying cash. The July 2005 attacks in London were also funded entirely by cash, which Napoleoni says is untraceable.
From the June 24 edition of Fox News Watch:
THOMAS: Well, I think the White House is right in complaining about this. Up until recently, we had more reticence and more withholding of sensitive information if the White House, if the administration -- whatever administration -- could make its case that this was injurious. If our -- if our enemies now see the way we are going after them on the front page of The New York Times, the L.A. Times, The Washington Post, all they have to do is wait a little bit and counteract our counteracting measures.
ERIC BURNS (host): So you feel that way about the story about the phone records, too? That that information shouldn't be out there.
THOMAS: Yeah. Well, look, I think there are some things that can be reported, and others not. But -- but when you give too much information to the other side, you're simply setting yourself up for another attack or defeat.
From the June 25 edition of Fox Broadcasting Co.'s Fox News Sunday:
JUAN WILLIAMS (National Public Radio senior correspondent): Well, the question is, how long does a time of war last for? This is a program that was put in place right after 9-11, never has really has come before the Congress for any kind of long-term authorization saying this is an effective plan. I do think that the plan has lots of merit. I think it works effectively. I think there have been specifics cited where you have had terrorist cells exposed as a result of this plan. So I don't understand even why The New York Times revelation undercuts it. What we're doing is essentially taking away this SWIFT international banking program as a mechanism for terrorists shifting money around.
HUME: And now they know it. That's the problem. Now they know it.
WILLIAMS: So then they won't use it. So we've taken it away, Brit. They don't have --
HUME: The objective is not to take it away from them and allow them to make their transactions through some secret channel. The objective is to find out what channels they are using, who's got the money, and where it's coming from.
WILLIAMS: Correct.
HUME: You don't want to drive this stuff further underground because it undermines your ability to track it and to stop it.
[...]
KRISTOL: I do not have a right to damage U.S. national security willfully when there's no evidence this --
WILLIAMS: Oh, come on. Damage?
KRISTOL: Yes, damage U.S. national security.
WILLIAMS: How did it damage national security, Bill?
KRISTOL: Because this has broken up plots that now they may be able to go around the international banking system.
&mdash J.K.
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