Continued Debate over the SWIFT Disclosure by the New York Times

By Dennis Lormel

Following the New York Times article disclosing the U.S. Government’s SWIFT monitoring program, the Bush Administration harshly criticized the Time for publishing the article when the Government requested the story be withheld. The Times was strongly taken to task for disrupting and diminishing an important investigative tool. In response, a number of critics have argued that the Government made numerous previous disclosures about tracking and monitoring the financial activity of terrorists. Because of such disclosures, critics reason that the Times article caused minimal damage because terrorists knew that the Government monitored the formal financial system, and therefore, terrorists moved to the informal financial system or alternate remittance system such as the hawala network. This argument is overly simplistic, one-dimensional and flawed. Terrorist financing is complex and multi-dimensional.

In a one-dimensional context, the position of those that the Times SWIFT disclosure was not harmful to Government operations has an element of accuracy from a theoretical standpoint. Theoretically, it’s reasonable to assume that terrorists responded to Government reports about financial monitoring and tracking initiatives by avoiding the formal financial system and moving their activities to the informal system. In actuality, an element of terrorists and their supporters did move to alternate financial channels; however, many more elements did not change their financial practices for a multitude of reasons, a few of which are addressed below. One essential ingredient of a successful terrorist organization is funding.

Terrorist groups require financial support in order to achieve their goals. They must have effective financial infrastructures to include: sources of funding, the means of laundering funds, and the availability of funding. These factors necessitate use of the formal financial system. It should be noted that terrorist organizations have had many years to perfect their methodologies.

Many elements of terrorists and their supporters have no choice but to operate in the formal financial system. This is attributable to factors to include business considerations, fundraising activities, operational requirements, financial conduits, investments and other factors. The Times SWIFT disclosure will spur many individuals and entities in this dimension to better insulate themselves from U.S. Government detection and tracking. The 9/11 Commission Monograph on Terrorist Financing discussed the challenge confronted by the Government in establishing financial links to terrorists and developing compelling evidence against them. There are numerous high profile individuals and entities who have been linked to terrorism but who continue to operate undeterred because compelling evidence is lacking. The Times SWIFT story will certainly cause those identifiable with this element to develop methodologies that better insulate them. This will create greater challenges for investigators.

Another element of terrorists and their supporters believe that in spite of Government financial tracking and scrutiny as long as they operate with a sense of anonymity and without causing suspicion they will avoid detection. In that context they are right, when considering the totality of daily financial transactions. This element has been expert at operating by moving smaller and non-descript amounts of funds and commodities that avoid suspicion. These operatives did not consider the operational proactive tracking mechanisms articulated by the Times. The Times disclosure will likely change that mind set with the realization that intelligence information was used for financial tracking. This will cause terrorists and their supporters to adapt new financial methodologies, seek to exploit new areas of vulnerability in the financial system, or to use informal financial mechanisms to a greater extent.

Returning to the simple argument, one of its flaws was resonant in the Times article itself. The Times article mentioned select operational investigative SWIFT program successes, to include the capture of Jamaah Islamiah leader Hambali. How could that happen if terrorists had stopped using the formal financial system because of Government disclosures of financial tracking mechanisms? Another factor is that many of the skeptics lack operational familiarity with the SWIFT program and do not understand its operational capability or more importantly its continuous operational success up until publication of the Times article.

In taking the argument out of the realm of the theoretical and into the operational, and coupling it with specific and not generic factors, one can better identify the multi-dimensional considerations that should be factored into the debate. The reality is the Times SWIFT disclosure has been harmful. At a minimum, it has disrupted an innovative and productive investigative tool. One fact is certain…the disclosure has received intense media coverage and has caused terrorists and their supporters to sit up and take notice. This will cause terrorist operational changes and significant new challenges for the Government in identifying and countering evolving terrorist financing methodologies.

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