Treasury needs more time for financial data tracking project

Cross-Border Electronic Funds Transfer Program would track some 500 million financial transactions - but technology to datamine all that information is still years away.
Written by Richard Koman, Contributor

The Treasury Department's Cross-Border Electronic Funds Transfer Program - a data-collection program that is supposed to give analysts access to 500 million cross-border financial transactions - will not be ready until 2010, officials told Congress yesterday.

The Washington Post reports:

In a report to Congress to be released today, the Treasury Department concluded that the program was technologically feasible and has value, but said it needs to determine whether the counterterrorism benefit outweighs banks' costs of compliance and to address privacy concerns.

The program would require banks to report to the Treasury Department's Financial Crimes Enforcement Network (FinCEN) all wire transfers of $3,000 or more - they're already required to keep records. Banks would have to report names and addresses of senders, the amount and dates of the transfers, the names and addresses of the beneficiaries and their financial institutions.

Financial institutions oppose the plan as too burdensome.

"We're talking about a volume of transactions that dwarfs anything that has been done in the name of [financial regulatory reporting] up to now," said Richard R. Riese, director of the American Bankers Association Center for Regulatory Compliance.

Beyond the reporting burden, he said, privacy concerns are significant. "All this information will now end up in the hands of the U.S. government for them to sift through at their leisure without any apparent process to assure that it is being used for the most significant national security investigations," Riese said. He likened it to a "fishing expedition" -- "except that the government no longer has to go and put their hook in the water. We have to give all the fish."

Treasury officials' plan is to require only the "first in" and "last out" banks -- the last one in a transfer out of the country, or the first one in a transfer in -- to report each transaction. That doesn't satisfy privacy advocates.

"It's another example of the U.S. government's pattern of sweeping up massive amounts of data that it can't possibly analyze, that is not likely to have any significant security benefit, but does threaten privacy" -- that of Americans and of foreigners doing business with Americans, said Barry Steinhardt, director of the American Civil Liberties Union technology project.

Since we're talking about millions or billions of transactions - most of them quite irrelevant to law enforcement efforts - the program would require some serious datamining capabilities.

In an October interview, Robert W. Werner, who then was director of FinCEN, said most of the data collected would be "commercial oriented" transactions and "irrelevant" to FinCEN's mission to detect and prevent illicit activity. "The key is to have a system that allows you to be able to pull the relevant data without people worrying that irrelevant data is being browsed and used inappropriately," he said.

FinCEN would also need to develop the technical capability to store and analyze the information, the study noted. FinCEN is considering setting up a "federated data warehouse" to store the data, which would be held separately from other financial records data.

FinCEN has proposed taking a year to conduct a $1.1 million cost benefit analysis. Implementation would cost $32.6 million and take 3 1/2 years, officials said.

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