8/17/2005

FBI - Congressional Testimony 9/12/2001 - WAS using data mining

A significant focus of the FRG is predictive/preventive analysis. In this capacity, the FRG conducts data mining and financial profiling to identify common characteristics of terrorist financing. The FRG has developed numerous data mining projects in order to provide further predictive abilities and maximize the use of both public and private database information. This information will be used to identify terrorist cells operating in the U.S. and abroad in an effort to prevent further terrorist acts. Through the FRG's aggressive national and international outreach and liaison efforts, appropriate information regarding patterns and profiling is shared and coordinated with appropriate private and public sector entities. .

The FRG directly supports the FBI's Counterterrorism Division through financial analysis of terrorism investigations. While the FRG plays a key role in the overall Counterterrorism effort, it is but one piece of the big picture. Accordingly, careful coordination at all times is critical to ensure financial investigations complement the overall strategy and do not adversely impact other efforts. Based on the FRG's role in the FBI's Counterterrorism Division, its international investigative abilities, and its close association with the intelligence community, the review group is in a unique position to coordinate anti-terrorism financial investigations domestically and internationally, and to ensure those investigations are in harmony with the overall goals and objectives of the United States' Counterterrorism program.

Testimony of Dennis M. Lormel, Chief, Financial Crimes Section, FBI
Before the House Committee on Financial Services, Subcommittee on Oversight and Investigations
February 12, 2002

Good afternoon Madam Chairman and members of the Subcommittee on Oversight and Investigations. On behalf of the Federal Bureau of Investigation (FBI), I would like to express my gratitude to the Subcommittee for affording us the opportunity to participate in this forum and to update the Subcommittee on what the FBI has learned since the September 11, 2001, terrorist attacks about the patterns of financing associated with Al Qaeda and global terrorist networks, and the extent to which U.S. anti-money laundering statutes provide the necessary tools to detect and disrupt those patterns.

As this Subcommittee is well aware, the FBI, in conjunction with law enforcement and intelligence agencies throughout the U.S. and the world, is engaged in the largest, most complex and perhaps the most critical criminal and terrorism investigation in our history. The FBI continues to dedicate considerable resources to this investigation and remains committed to determining the full scope of these terrorist acts, identifying all those involved in planning, executing and/or assisting in any manner the commission of these acts and others, and bringing those responsible to justice. The investigation does not end at the events surrounding September 11th, our mission extends far beyond that in the FBI's key leadership role in the global war on terrorism. First and foremost among our priorities, however, is taking all possible steps to prevent the occurrence of any additional acts of terrorism.

The acts of terrorism on September 11th highlighted the need for a comprehensive law enforcement response to international terrorism. With the help of Congress, the FBI had previously established joint terrorism task forces (JTTF) in key areas of the country which brought together the combined expertise and resources of other local, state, and federal law enforcement agencies. By the end of 2003, we expect to have a JTTF in each of the FBI's 56 field offices.

Identifying, tracking, and dismantling the financial structure supporting terrorist groups is critical to successfully dismantling the organization and preventing future terrorist attacks. As is the case in so many types of criminal investigations, identifying and "following the money" plays a critical role in identifying those involved in the criminal activity, establishing links among them, and developing evidence of their involvement in the activity. In the early stages of the investigation into the events of September 11, it was financial evidence that quickly established direct links among the hijackers of the four flights and helped identify co-conspirators.

Financial Review Group

In order to provide a comprehensive analysis of the financial evidence, the DOJ and FBI established an inter-agency Financial Review Group (FRG) operating out of FBI Headquarters. Other participants in the FRG include representatives of the Central Intelligence Agency, National Security Agency, Defense Intelligence Agency, Drug Enforcement Agency, and components of the Treasury Department including the U.S. Customs Service, Internal Revenue Service, Bureau of Alcohol, Tobacco and Firearms, Office of Foreign Asset Control (OFAC), United States Secret Service and Financial Crimes Enforcement Network, U.S. Postal Inspection Service, National Drug Intelligence Center, the Federal Reserve, and the Inspector General Community. From the initial focus on the events of September 11th, the mission of the FRG has evolved into a broader strategy to investigate, prosecute, disrupt, and dismantle all terrorist-related financial and fund-raising activities. In the days immediately following September 11th, the FRG was formed with a two-fold mission. On one track, a comprehensive financial analysis of the 19 hijackers was conducted to link them together and to identify their financial support structure within the U.S. and abroad. Collateral to this was the development of a template for pro-active, preventive, and predictive terrorist financial investigations.

A significant focus of the FRG is predictive/preventive analysis. In this capacity, the FRG conducts data mining and financial profiling to identify common characteristics of terrorist financing. The FRG has developed numerous data mining projects in order to provide further predictive abilities and maximize the use of both public and private database information. This information will be used to identify terrorist cells operating in the U.S. and abroad in an effort to prevent further terrorist acts. Through the FRG's aggressive national and international outreach and liaison efforts, appropriate information regarding patterns and profiling is shared and coordinated with appropriate private and public sector entities. For example, the FRG meets regularly with representatives from the banking community and the financial services industry to share such information and to jointly develop and refine methods to detect and identify potential terrorist and/or terrorist activity. The FRG is also reviewing and conducting additional financial analysis of prior terrorist acts in an effort to identify links and patterns that would complement current and future terrorism investigations.

The FRG directly supports the FBI's Counterterrorism Division through financial analysis of terrorism investigations. While the FRG plays a key role in the overall Counterterrorism effort, it is but one piece of the big picture. Accordingly, careful coordination at all times is critical to ensure financial investigations complement the overall strategy and do not adversely impact other efforts. Based on the FRG's role in the FBI's Counterterrorism Division, its international investigative abilities, and its close association with the intelligence community, the review group is in a unique position to coordinate anti-terrorism financial investigations domestically and internationally, and to ensure those investigations are in harmony with the overall goals and objectives of the United States' Counterterrorism program.

Given the enormity of the task and the long-term nature of the effort, I cannot sit here today or next week and tell you we have all the answers. It will take time to effectively and pro-actively address terrorism financing. This is not to say that progress hasn't been made. In conjunction with pro-active long-term efforts, the FRG continues to aggressively conduct intensive financial investigations as circumstances arise; dedicating necessary resources to react immediately to new information and evolving events. The FRG has made substantial progress in our efforts and I would like to offer this Subcommittee a brief summary of this progress, subject of course to restrictions related to the disclosure of information that might compromise or undermine ongoing criminal investigations.

We have focused our financial investigations in four main areas: (1) mission specific terrorist cells such as the 19 hijackers, (2) so called "sleeper" cells that are more loosely organized but blend into communities easier through legitimate employment, (3) terrorist groups that fund their terrorist activity through fraud schemes, and (4) the funding of terrorist organizations through Non-Governmental Organizations (NGO) and charities. I would like to focus the remainder of my statement on describing what we are doing in these areas and what progress has been made.

Mission Specific Terrorist Cells

Through financial information, we have established how the hijackers responsible for the September 11 attacks received their money, details of their flight training, where they lived, and details concerning individuals associated with the hijackers. The 19 hijackers opened 24 domestic bank accounts at four different banks. The following financial profile was developed from the hijackers' domestic accounts:

ACCOUNT PROFILE

* Accounts were opened with cash/cash equivalents in the average amount of $3,000 to $5,000.
* Identification used to open the accounts were visas issued through Saudi Arabia or the U.A.E.
* Accounts were opened within 30 days after entry into the U.S.
* All accounts were normal checking accounts with debit cards.
* None of the hijackers had a social security number.
* They tended to open their accounts in groups of three or four individuals.
* Some of the accounts were joint accounts with other
* Addresses used usually were not permanent (i.e. mail boxes, etc.) and changed frequently.
* Hijackers would often use the same address/telephone numbers on the accounts.
No savings accounts or safe deposit boxes were opened.
* Hijackers would open their accounts at branches of large well known banks.
* The majority of hijackers (12) opened accounts at the same bank.

TRANSACTION PROFILE

* Some accounts would directly receive/send wire transfers of small amounts to foreign countries - UAE, Saudi Arabia, Germany.
* Hijackers would make numerous attempts of cash withdrawals which often would exceed the limit of the debit card.
* High percentage of withdrawals were from debit cards vs. low percentage of checks written.
* Numerous balance inquiries were made.
* Hijackers would often travel domestically.
There was a tendency to use Western Union to wire money.
* One deposit would be made and then the money would trickle out a little at a time.
* Account transactions did not reflect normal living expenses for rent, utilities, auto payments, insurance, etc.
* There was no normal consistency with timing of deposits/disbursements.

* Funding for normal day to day expenditures was not evident from transactions.
* Overall transactions are below reporting requirements.
* Funding of the accounts dominated by cash and overseas wire transfers.
* ATM transactions occur where more than one hijacker present (uninterrupted series of transactions involving several hijackers at the same ATM).
* Use of debit cards by hijackers who did not own affected accounts.

INTERNATIONAL ACTIVITY

* Three of the hijackers supplemented their financing by opening foreign checking accounts and credit card accounts at banks located in the UAE.
* While in the U.S., two of the hijackers had deposits made on their behalf by unknown individuals.
* Hijackers on all four flights purchased traveler's checks overseas and brought them to the U.S. These traveler's checks were partially deposited into their U.S. checking accounts.
* Three of the hijackers (pilots/leaders) continued to maintain bank accounts in Germany after moving to the U.S.
* Two of the hijackers (pilots/leaders) had credit cards issued by German banks and maintained those after moving to the U.S.
* It is suspected that other unknown foreign accounts exist that were opened by the hijackers to further supplement the financing of the September 11, 2001, attacks.
* One of the hijackers (pilot/leader) received substantial funding through wire transfers into his German bank account in 1998 and 1999 from one individual.
* In 1999, this same hijacker opened an account in the UAE, giving power of attorney over the account to this same individual who had been wiring money to his German account.
* More than $100, 000 was wired from the UAE account of the hijacker to the German account of the hijacker in a 15-month period.

NON-FINANCIAL PROFILE

* Hijackers ranged in age from early 20s to mid 30s.
* Born in Middle Eastern country.
* Limited use of the English language.
* They mainly used bank branches located in high Muslim areas.
* Usually came into bank in groups to open accounts.
* Usually there was one spokesman for the group.
* May not want to deal with women bank personnel.
* Wanted to deal with one person at bank.
Sleeper Cells

One pattern of terrorist financing that has emerged involves Al Qaeda cells in Europe. Financial investigation has identified cells that derive income from legitimate employment/businesses within the European country in which the cell exist. For example, one company run by cell members provided home repairs involving masonry, plumbing, electrical wire, etc., and hired mujahadin arriving from areas of conflict, such as Bosnia. Another enterprise operated by cell members purchased dilapidated automobiles, repaired them, and resold them. The cars were purchased in one European country and resold in the country where the cell was located. Other investigations have identified cell members transferring money between accounts with little attempt to hide the transactions. Accounts have been funded by salaries and government payments for students, and members of the cell were supported by family members to some extent. They appeared to be living day to day and not funneling funds through their accounts. Terrorist funds were deposited into the accounts either by cash or wire transfer. Most of the money went through one or two persons' accounts. Not all members of the cell were receiving monies. Money was spent from the accounts through ATM or other cash disbursements. The German terrorist cell operated in much this same fashion.



Federal Bureau of Investigation - Press Room - Congressional Testimony

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