Finance has always been part of intelligence and warfare. The Romans poured salt on the land of Carthage, denying the people the ability to grow and sell crops. During the Civil War, Union military strategists planned the capture of Confederate cities with factories and destroyed railroads. The Federal Bureau of Investigation arrested the organized crime boss Al Capone for tax evasion because he never declared his illegal earnings. However, targeting the finances of terrorists and rogue nations as Financial Intelligence has only developed within the last 20 years. Despite the growing importance of the work, there is still a lack of understanding since it spreads across other intelligence roles and lacks oversight from a single agency.
What is Financial Intelligence
Financial Intelligence is the collection and analysis of the financial funding, transactions, and institutions related to terrorist organizations and foreign nations. Put in simple terms, terrorists and rogue nations require capital to operate. They must access the financial system to store, transfer and withdraw assets without revealing the nature of their ownership. Financial Intelligence analysts follow the money, identifying the owners, recipients, and transmitters, looking to sever the links and divert the funds.
How Financial Intelligence developed
The first federal law surrounding Financial Intelligence passed in 1970 when President Richard Nixon signed the Bank Security Act. The law contained legislation, requiring that banks file Currency Transaction Reports on deposits or withdrawals for amounts over $10,000.00 with the IRS. Before that point, individuals deposited and withdrew unlimited values. In 1996, new amendments required financial officers such as bankers, insurance agents and realtors to file Suspicious Activity Reports on transactions related to money laundering. These actions showed that while the federal government could not halt the drug trade, the money of drug kingpins was not safe.
After the terrorist attacks on September 11, 2001, the perspective on identifying terrorism finance changed dramatically. It came to light that Al Qaeda funded the attacks for less than $500,000, without raising significant red flags from regulators. After that point, drastic changes came about when President George W. Bush signed Executive Order 13224 on September 23, 2001, two weeks after the attacks. This order enhanced the authority of the United States Treasury Department to go after the bank accounts and funds of bad actors and the entities that facilitated and moved the transactions.
These new powers lead to increasingly targeted sanctions, freezing the assets of correspondent banks and businesses from the financial system. Today, these sanctions affect terrorist groups like ISIS, financial networks supporting the North Korean nuclear program, Oligarchs maintaining a relationship with Russian President Vladimir Putin and front companies owned by the Iranian Revolutionary Guard Corps.
Financial Intelligence in combat zones
Today, on an operational level, analysts deploy to combat zones for both the military and intelligence agencies. In this capacity, analysts interact with counterparts from other specialties and special operators to gather information at its source. This action facilitates the breakdown of information that directly influences the operational environment. The analytic conclusions might include identifying which money changers work with terrorist groups, transferring funds for purchase supplies, recognizing how much an AK-47 and ammunition will cost to purchase vs. an RPG or determining the amount of money that it will cost to train and house recruits to add new members into the network.
One major issue with Financial Intelligence is defining the role within the Intelligence Community. It somewhat overlaps Human Intelligence and foreign espionage (which is covered by the CIA), and Signals (which falls under the purview of the NSA). However, there is no one organization analyzing the finances of foreign governments and terrorists. Every agency works the craft from its perspective. The most centralized control over the subject governments and terrorists. Every agency works the craft from its perspective. The most centralization comes with joint task forces like the Afghanistan and Iraq Threat Finance Groups, which analyzes information for specific conflicts.
For this reason, Financial Intelligence will look different depending on the organization and issue it is working. A soldier working in an Army unit in Afghanistan may identify the price of items sold in bazaars for IEDs. Signals Intelligence analysts may focus on cell phone banking or online banks. An analyst at the Department of Homeland Security may examine the records surrounding undervalued TV’s bound for Mexico City that are part of the Black Market Peso Exchange and are the proceeds of drug trafficking.
For some, Financial Intelligence pales in comparison to other tasks like developing informants or breaking a network of safe houses facilitating IEDs. However, consider that ISIS had a net worth of $2 billion and the North Korean leader Kim Jong Un has an estimated wealth of $5 billion. It then becomes clear that depleting these actors of their sources of revenue is vital and needs to be understood by individuals at all levels of the fight.