Banks need to face the customer in the fight against terrorism
The financial sector has been a key partner of the security services although the AML and compliance bureaucracy has at times put roadblocks in the way of a crucial relationship. The money trail is critical to tracking criminal finance of all kinds but this sort of data is often opaque, prone to distortion and so massive that leads take a long time to discover.
The more valuable intelligence is less data and numbers than personal contact. Here, banks and financial institutions more generally can play a vital role. Criminals of course may be able and many prefer to use less visible forms of money transfer – hawalla, blockchain, prepaid credit cards and the like. But launderers will also operate through fringe banks, believing them to be less policed than mainstream banks.
It might, in this context, explain why agencies like the US financial regulator FinCEN has gone against low profile institutions such as the Tanzanian bank called FBME and the Andorran bank, BPA in recent times. Neither institution could be considered a mainstream financial operator yet both have been dubbed a ‘financial institution of primary money laundering concern’. I cite these two names because both institutions are publicly contesting the FinCEN claim and have opened their books to scrutiny.
One institution that also opened itself up, in a discreet way, to the authorities was the Bank of Credit and Commerce International, some 25 years ago. UK security agents recruited a bank manager to report on terrorist and arms dealing suspects who were his clients and using the bank to move money. One such terrorist was the notorious Abu Nidal, who assisted the blowing up of Israeli planes.
The key to the relationship between the bank manager and UK intelligence was his personal contact with the criminals and their frontmen. The bank’s ability to sense a dubious client during early meetings is greatly underrated in our data-heavy age, even though tellers are in the front line of customer relations. Yet this is the moment when the miscreant – financial or terrorist - abuser is likely to reveal most about himself. Indeed, banks often comment that they can see patterns of fraud by examining what the criminal says during his first disclosures and what subsequently transpires with his account.
In short, the personal contact between the bank and the terrorist, money launderer or fraudster, is underrated. Yet that can be a moment of opportunity for security and enforcement services to see behind the terrorist mask. Modern banking may be missing a trick by leaving the person out of the relationship.