$22 mln in laundering, terror deals found

U.S. authorities have identified thousands of transactions amounting to more than $22 million since implementing in 2002 a rule to target money laundering or terrorist financing suspects, a top U.S. banking regulator said on Friday.

Sheila Bair, chairman of the Federal Deposit Insurance Corporation, said in a speech to the Puerto Rico Bankers Association the progress is largely due to new rules under the USA PATRIOT Act enacted after September 11, 2001.

One of the rules, called Section 314, authorizes the Financial Crimes Enforcement Network (FinCEN) to administer the Bank Secrecy Act (BSA), which allows FinCEN to collect financial information.

"Specific leads have surfaced for such crimes as arms and drug trafficking, international identity theft, nationwide investment fraud and operations with a U.S. sanctioned country," she said.

Bair said between November 2002 and January 2007 law enforcement officials have identified more than 3,200 transactions and 2,200 new accounts that match names of suspects.

Authorities have issued more than 1,700 subpoenas during those years in investigations that have led to more than 100 indictments, 99 arrests and nine convictions, Bair said.

She added that law enforcement have located more than $22 million in funds related to suspects in their investigations since November 2002.

DATA VITAL TO THE MOSAIC

"The BSA data, particularly suspicious activity reports or SARs, are a vital part of the mosaic that law enforcement assembles to combat and prosecute terrorist activities," Bair said in a prepared speech.

Bair said SARs was instrumental in helping FinCEN coordinate with their foreign intelligence counterparts in locating those responsible in the 2004 Madrid bombings, 2005 London underground bombing and the discovery of a 2006 terrorist plot involving trans-Atlantic commercial airlines.

At her own regulatory agency, the office of the inspector general is looking into 95 open investigations involving about $1 billion in potential fraud, she said.

"Over half of these investigations are being pursued jointly with the FBI," she said.

Bair said the FDIC culls through SARs and currency transaction reports (CTRs) in its investigations, which last year resulted in 44 indictments, 36 convictions and $100 million in restitution.

Last month the U.S. House of Representatives approved legislation that would help banks reduce CTRs sought by financial law enforcement.

Financial institutions including banks and credit unions have complained about the cost, work hours and staff needed to file CTR documents for transactions of at least $10,000.

The U.S. Senate has not introduced similar legislation.

Bair said she recognizes law enforcement efforts come with a regulatory burden for financial institutions. "But the difference we can all make in preventing terrorist activity and financial crimes cannot be overstated," she said.

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