Follow the money: Broader landscape means greater depth for financial intelligence

Like human intelligence and signals intelligence, financial intelligence can and does improve decision making in the public safety sphere. It can guide decisions about what cases to investigate and illuminate the activity of criminal or terrorist networks. It can shed light in a very unique way, by focusing on the money trail connecting individuals, accounts and businesses, a trail that can only be exposed through the analysis of financial transactions. Unlike human (Humint) or signals (Sigint) intelligence, financial intelligence is derived from a unique source of information and it can be used effectively alongside these other forms of intelligence to confirm or refute what is already known and to triangulate the existing perspective.

There are challenges facing financial intelligence, challenges which are common to all the intelligence disciplines: the challenge of producing intelligence in an “evidentiary” world, the challenge of getting the balance right between privacy and other legal rights and operational effectiveness. And there are challenges of analytical tradecraft – getting the questions and assumptions right, and having the right tools and mindset.

We in the intelligence community must also remain cognizant of our strengths and the value we add – as individual agencies – to the robustness of Canada’s security and intelligence system. We must live the lessons of 9/11, we must acknowledge that Cold War “need-to-know” principles must evolve to include an “obligation to collaborate” approach, becoming partners in what is being referred to by our American counterparts as a “networked and integrated intelligence enterprise” which leads to decision-making advantage.

Since FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) was created eight years ago, financial intelligence has begun to have a demonstrable effect on both law enforcement and national security investigations and will have a greater impact in the years to come as it becomes better understood and more widely available.

Financial intelligence units like FINTRAC exist in many countries around the globe. These units have a variety of organizational forms and reporting relationships, but all of them are generally founded on the simple proposition that something of value can be produced from the analysis of financial transactions – that focusing on the money trail will shed some light on the relationships and the activities of criminal or terrorist organizations. Financial transactions are a unique set of facts that can yield remarkable insights.

Often we uncover related parties hitherto unknown to investigative agencies. Knowing who is involved in the transactions sheds light on the extent of the network’s activity, its resources, and the network itself. Our intelligence has identified individuals previously unknown within investigations, it has provided information necessary to obtain search warrants and for the identification of financial assets. Perhaps our single greatest contribution is our work for police forces and joint task forces who are investigating large criminal networks, with so much money moving between so many players and countries – a hugely complex task were it not for our unique skills and information technology. Recently, for example, we have contributed financial intelligence to investigations of organized crime in Montreal, terrorist activity financing in Toronto and drug investigations in Vancouver.

There is an old superstition that has survived since the First World War that lighting three cigarettes from a single match was bad luck. It is believed this superstition was a lesson from the harsh world of the trenches: that a sniper would notice the flame as the match lit the first cigarette, take aim as it lit the second, and shoot the soldier as he lit the third.

There is a lesson in this superstition – a repeated behaviour is more
vulnerable to detection. There is truth in that as well. FINTRAC has been producing financial intelligence of suspected cases of money laundering and terrorist activity that involve transactions that are sometimes carried out over many years. Transactions are repeated, running through the same accounts and through the same hands. We have reached a stage of our development where we are able to see a financial transaction landscape stretching over a seven-year period. It has augmented our capacity to detect, to take aim and to zero in. Like the soldiers who tempt the sniper with a view of the third cigarette, those engaged in criminal activity have been made more vulnerable by repeating the same behaviour. To the extent that this has made them more noticeable, it is indeed bad luck for them.

FINTRAC’s collection of financial transaction reports covers a sufficient period of time to allow our analysts this sort of perspective. This is an advantage for our tactical intelligence, but it also improves our strategic intelligence: it permits a macro-analysis of the information that we hold. The ability to see trends over time and patterns within the data only becomes possible when a critical mass has been reached.

Having a depth of information that spans seven years is only one of the advances that have improved our output. Our intelligence product has also been improved by recent legislative changes brought forward by C-25, adopted in late 2006, which have significantly expanded the information FINTRAC is able to share with its partners. This will allow a richer, more detailed picture of financial activity.

Surely, financial intelligence and other intelligence products were not meant to be messages in a bottle, thrown into an ocean of other information in the hopes that they would find some useful end. The production of financial intelligence must be aligned with the priorities of those that put it to use. The recipients of FINTRAC’s financial intelligence have investigative priorities. We try to align ourselves with those priorities to understand where we can be of the most service. This has allowed us to contribute to ongoing investigations.

I want to continue to build on these improvements and to bridge the gap that exists between the production of intelligence and those that make use of the intelligence we provide. Demand for FINTRAC’s financial intelligence is very high. This speaks well of the product we are producing. And we are striving to produce more intelligence and to produce it more quickly. My hope is that we not only become faster, but that we produce better financial intelligence with greater detail and more contextual information that will allow a sharper and more meaningful picture of financial activity.

For FINTRAC to produce intelligence that is valuable to its partners in a timely way, we want to become even more engaged with our partners to know more about how our financial intelligence is employed. To do so, we need to hear from our partners at two important stages: the beginning and the end of the process. We need to receive information that might guide our work and allow us to understand priorities. We also need feedback once our intelligence product has been received, to know what value it provided and how it might be improved. Taking these two steps will help us bridge the gap between what is produced and how it is used.

A remarkable investment has been made to collect and analyze financial transaction information, and I think it’s an investment that is needed and valuable as we try to help the security and intelligence community and law enforcement to identify and understand the financial dimension of crime and terrorism.

Jeanne Flemming was appointed director of the Financial Transactions and Reports Analysis Centre of Canada in March 2008. A former head of the Investigations Directorate with the Canada Revenue Agency, she has over 30 years of government experience. For more on FINTRAC, see www.fintrac.gc.ca

Author: Jeanne Flemming from the Nov/Dec 2008 issue published

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