This Bulletin is provided to alert financial institutions to financial transactions and methods that could indicate fundraising associated with various criminal activities including terrorism.
This Bulletin provides synopses of FinCEN is investigative support describing financial transactions that may be associated with criminal fundraising activities. This information was derived from Suspicious Activity Reports (SARs) and other Bank Secrecy Act (BSA) information filed by depository institutions. Each case example is followed by a set of indicators of fundraising activity that were extracted from the case. SAR narratives were used extensively in the development of these indicators.
The information provided in this Bulletin is intended to assist financial institutions in identifying transactions that may be linked to potential terrorist financial activity. The indicators of such activity outlined in this Bulletin are intended to augment existing systems and procedures used by financial institutions to identify suspicious or unusual activity that may be of interest to law enforcement.
Taken individually, the indicators do not necessarily equate to terrorist or other criminal financial activity. Combinations of indicators should raise the level of concern about potential terrorist financing or other criminal context. For example, references to occupation or nationals of countries associated with terrorist activity as reported in SARs should not, on their own, be taken to indicate potential terrorist activity. But such indicators when part of the larger grouping of indicators could add to the suspicion of potential terrorist activity.
Case # 1
SAR reporting identified activity involving multiple payments by check from a business account of approximately $420,000 to a securities brokerage in the U.S. The account was also used to wire transfer a total of $2.1 million into and out of business and personal accounts in a Persian Gulf State. In addition, a Currency Transaction Report (CTR) was filed on a cash withdrawal of $11,000 from the account by an individual with a foreign passport. Two individuals with signature authority on the account were also involved in two other businesses, both of which are the subject of CTR filings for cash withdrawals totaling $43,000.
The indicators and patterns of activity described in the SARs that could be associated with funds collection and movement relating to terrorist financing include:
Case # 2
SARs outlined activity involving three grocery markets, two of which share a common location. The activity was conducted by nationals of countries associated with terrorist activity using a single address, which corresponds to one of the business locations. Two individuals employed by a grocery market, and a third whose occupation was unknown, each deposited funds just under CTR reporting thresholds and immediately made checks payable to a fourth individual. The checks cleared through two different banks in a Middle Eastern country. All three bank customers supplied the same address. In addition, two individuals associated with a second grocery market located at the common address above each purchased cashier’s checks or bank drafts just under the BSA record keeping threshold at the same bank branch, at the same time but from different tellers. One of the checks was purchased on behalf of the second grocery market, the other on behalf of a third party. The checks were payable to two different individuals, one of whom shared the same last name as one of the purchasers. In related activity, a third business used the common address discussed above when opening a business account. The new account immediately received a $20,000 wire transfer from a wholesale grocery located in a different state. CTR filings indicate that a total of approximately $72,000 was withdrawn in cash from other accounts associated with this business.
The indicators and patterns of activity described in the SARs and CTRs that could be associated with funds collection and movement relating to terrorist financing include:
Case # 3
SARs were filed by both a wire remittance company and a depository institution, outlining the movement of approximately $7 million in money orders through the U.S. account of a foreign 2 business. The wire remittance company reported various individuals purchasing money orders at the maximum face value of $500 to $1,000 and in sequential order. Purchases were made at multiple locations, primarily in the Northeast corridor, with several purchases also reported in the Southeast area. The money orders were made payable to various individuals, negotiated through banks in Lebanon and later cleared through three U. S. depository institutions. The foreign business endorsed the money orders. In some instances, the funds were then credited to accounts at other U. S. depository institutions or foreign institutions (one in Lebanon, the second location not identified). SARs filed by the depository institution reported similar purchases of money orders in the Northeast corridor negotiated at the foreign business. Various beneficiaries were identified, all with Middle Eastern names. They received amounts ranging from $5,000 to $11,000. The foreign business identified by the wire remittance company was also identified as a secondary beneficiary. The money orders cleared through a foreign bank’s cash letter account at the U.S. depository institution.
Case # 4
SARs filed by a U.S. depository institution identified an import/export business, acting as an unlicensed remitter, generating $1.8 million in outgoing wire transfer activity during a five-month period. Wire transfers were sent to beneficiaries (individuals and businesses) in North America, South Asia, Asia and the Persian Gulf. Cash, checks, and money orders were also deposited to the suspect account totaling approximately $1 million. Approximately 60 percent of the wire transfers were sent to individuals and businesses in foreign countries, who were then responsible for disseminating the funds to the ultimate beneficiaries. A significant portion of the funds was ultimately disseminated to nationals of Afghanistan residing in various countries. Individuals conducting these transactions described the business as involved in refugee relief or money transfer. The individual with sole signatory authority on the suspect account had significant CTR activity reporting deposits of $17.4 million and withdrawals of $56,900 over an extended period of time to what appear to be 15 personal accounts at 5 different depository institutions. The individual also traveled on a U. S. passport returning to the U. S. from Europe and Asia, several times over a three-year period.
Case # 5
A pattern of cash deposits below the CTR reporting threshold generated a SAR filing by a U.S. depository institution. Deposits were made to the account of a foreign currency exchange on a daily basis totaling $341,421 over approximately a two and one-half month period. During the same period, the business initiated ten wire transfers totaling $2.7 million that were sent to a bank in the United Arab Emirates. When questioned, the business owner reportedly indicated he was in the business of buying and selling foreign currencies in Iran, the Persian Gulf States, and other countries in the Middle East, and his business never generated in excess of $10,000 a day. CTRs for a three-year period reflected cash deposits totaling $137,470 and withdrawals totaling $29,387. The business owner and the cash out transactions were conducted by nationals of countries associated with terrorist activity. Another U.S. depository institution filed a SAR on this individual indicating an $80,000 cash deposit, which was deemed unusual for his profession. He also cashed two negotiable instruments at the same depository institution for $68,000 and $16,387 according to CTR filings.
What to do:
FinCEN has established a Financial Institutions Hotline, 1-866-556-3974, for financial institutions to voluntarily report to law enforcement suspicious transactions that may relate to recent or potential terrorist financial activity. The purpose of the Hotline is to facilitate the immediate transmittal of this information to law enforcement.Hotline use is voluntary and does not negate an institution is responsibility to file a Suspicious Activity Report (SAR) in accordance with applicable regulations with the IRS Detroit Computing Center. You may obtain more information about the Financial Institutions Hotline and SAR preparation guidelines from FinCEN is web site at: http://www.fincen.gov/