(Page 2 of 2)
Follow the money: The U.S. Treasury Department's Financial Crimes Enforcement Network keeps track of all suspicious-activity reports filed by banks. Here's the geographic distribution of reports filed by banks in New York between 1996 and 2006.
Financial Crimes Enforcement Network
Whether a deviation is flagged will depend in part on a customer's risk exposure score, a rating assigned by the bank according to the customer's occupation, geographical location, and other personal details. A retired schoolteacher who has lived in the suburbs of Minneapolis her entire life might have a lower risk score than a 42-year-old import-export businessman from Sicily, for example. So-called politically exposed persons--customers such as politicians, top executives, and judges--will automatically receive a higher level of scrutiny.
Every bank has a group of actual people who personally scrutinize transactions that have been flagged. The vast majority of alerts represent acceptable behavior, and nothing more is done. If the Minneapolis schoolteacher has sold her house, for example, the income will show as a clear deviation from her peer group's norm. The human investigator will understand why and won't pursue the matter any further.
"Banks do not want to be in the position of reporting on a customer without good reason," says Ido Ophir, vice president of product management for Actimize, another large vendor of anti-money-laundering software. "They can't just send in transactions that have no suspicious merits."
However, if the human reviewers can't explain away the activity, they will produce an official suspicious activity report (SAR), including a written narrative describing the transaction, and send it to the Internal Revenue Service and the Treasury Department's Financial Crimes Enforcement Network (FinCen), the federal group responsible for administering the 1970 Bank Secrecy Act.
Most SARs are ultimately reviewed by regional teams of investigators, drawn from the IRS, the FBI, the DEA, and the U.S. Attorney's office. But the reports also go into a Bank Secrecy Act database, which is made available to authorized federal law-enforcement agencies. Agents can search for specific names, account numbers, and details, such as telephone numbers, to see if the subjects of their own investigations have raised any financial flags.
FinCen spokesman Steve Hudek says that automated pattern-analysis software also runs on the Bank Security Act database, helping to spot patterns of activity or links between individuals that humans might miss. He declined to say which software or vendors FinCen uses, however.
As the software has gotten more sophisticated--and the government has applied more pressure to highlight suspicious activity--the number of SARs filed has gone up sharply. In 2000, banks (as distinguished from securities firms or casinos) filed 121,505 SARs. In 2006, they filed 567,080, and by the end of last June, the last month for which figures are available, 2007 was on track to set a new record.
Technologists say that future software will be even better at spotting anomalies, analyzing customers' social networks, tapping into the vast databases of information held by companies such as LexisNexis and ChoicePoint, and using that outside information to help make judgments about customer transactions.
This might be a privacy advocate's nightmare, but it helps keep banks safe from fraud and regulatory fines.
"We're getting to the problem of how to digest larger and larger amounts of information," says Fortent's Recce. "There is fundamentally an enormous amount of information, and people are trying to hide in it."
Accidental Discovery? I think not.
This stinks like day old fish, the same way anything does that's been touched by Bush and Cheney.http://www.gregpalast.com/elliot-spitzer-gets-nailed/
This is proof that SAR limits need to be bumped. . .
Note the dramatic increase in SAR reports over the past 6 years. Does anyone think that all of a sudden 400% more Americans are engaging in suspicious activity? I think not.
This arbitrary $10,000 number has been in place for YEARS, and it needs to be bumped. It is interesting that I can't deposit $11K without being deemed officially "suspicious", and being investigated by a Financial Crimes Enforcement network, but your average illegal alien can send thousands via Western Union across the border without a Social Security number.
Keeping track of financial transactions is a desirable thing, although we all know that the rich and powerful will be exempt from all this. (On a side note, Spitzer's downfall was engineered by his enemies. The other politicians are equally corrupt and immoral as Spitzer was/is. You think they don't go with prostitutes?...)
But the really scary part is how different databases are converging in the hands of the government. Notice that not only they follow financial transactions, but they also combine this with personal data: your job, your daily habits, your social network, and your telecommunications.
Creepy!
Driving Bank Customers Overseas
Clearly this level of intrusion and scrutiny into the personal affairs of individuals will drive hordes of bank customers to open offshore bank accounts. We are becoming a much more mobile society and this constant chipping away at our freedoms will likely cause a serious migration of wealth to occur.
We live in a country where there are more laws than anyone can possible be aware of. When it come to finding fault with an individual, we need only turn the lights on high beam. I no longer feel safe in this country.
Transaction Monitoring - Hookers and Drug Dealers
The lesson lost on Mr. Spitzer is that he failed to recognize that Drug Dealers have been "structuring" transactions for quite a while as to "fly below the radar". That said - this is an excellent tool to stop drug dealers, and other non-tax paying business interests. I prefer to see this expanded myself, and combine it with a US Treasury rule that does away with the $10, $20, $50 and $100 bill and convert $1 and $5 to some metalic form so a person involved in cash transactions has to pocket a bunch of coins to do business. A $1000 transaction - like the Governors Ball, would force the lawbreakers into carrying about 200 pounds of metal for every trick turned. Drug dealers on the other hand would clink their way down the street -an easy target even for the most over-weight-donut-eating cop to chase down.
My 2 cents!
Spitzer Caught in his Own Mouse Trap?
Borald's article is very interesting, but here is another spin... Some may not be aware that Spitzer was an important catalyst in developing the market for robust transactional monitoring technologies that the financial services industry today uses to uncover money laundering, fraud and market manipulation. Eliot Spitzer as Attorney General was a major proponent for the use of transactional monitoring technologies within the securities industry. As such, he was intimately aware of the types of sophisticated ‘suspicious’ scenarios analytics can uncover from mountains of data. To read more on the topic, go to: http://circularnumber6.blogspot.com/2008/03/spitzer-caught-in-his-own-mouse-trap.html
Please tell me exactly what is wrong with America. This is so Big Brother I am amazed that your not all kicking in the door of the Outhouse over this blatant abuse of government power.
Banks do analysis and then make reports to the police based upon their own criteria for finding evidence of fraud.
Isn't this a form of vigilantism?
Isn't vigilantism against the law?
Aren't there laws against making false claims? Everytime these guys submit a suspicious activity report, and it pans out wrong...isn't that the equivalent of a citizen making a false report to the police?
Using arbitrary analysis rules may catch some, but these rules have never been validated and statistically tested therefore they are the equivalent of assisting the government in "fishing expeditions", i.e. targeting citizens without probable cause.
I wonder if they track Karl Rove?
Now you don't thiink the Feds were using this for political purposes, do you? Do they monitor Karl Rove? Tom Delay? Bush Senior (all that Saudi money, you know.)
They wouldn't be using this for political purposes would they? The Bush Administration would NEVER do that!
Re: I wonder if they track Karl Rove?
Is anybody else here reminded of the government investigator who noticed that cash in circulation made a five billion dollar spike just before and after 9/11/01? He was told to ignore the information by superiors, and when he didn't, he was fired. The money trail would have obviously led straight to the real 9/11 perps, just as all of the un-investigated short trades against certain airlines would have led to the people who had fore-knowledge of the attack. Some people DO have a free pass.
Manufacturing in the United States is in trouble. That's bad news not just for the country's economy but for the future of innovation.
This document is part of the “How-To Guide for Most Common Measurements” centralized resource portal. This tutorial provides a detailed guide for measurement and device considerations to take temperature measurements using thermocouples. Get an introduction to thermocouples, which are inexpensive sensing devices widely used with PC-based data acquisition systems. Also review some specific thermocouple examples and learn how thermocouples work and ways to integrate them into a data acquisition measurement system.
View full PDF >
Listen to story > 
Our list of the 50 most innovative companies, including the following:
On Twitter
Become a Fan on Facebook
Subscribe to the Feed
boustrephon
50 Comments
Tracking Spitzer
Of course - it may be that this was a secondary factor and that Spitzer was brought down by people setting investigators onto him.
WSJ Blog
Reply