Outside the United States, these decisions were met with caution. As the head of the Russian State Duma Commission for Combating Corruption Mikhail Grishankov said in an interview with Itogi, “there are doubts that the American innovations have anything to do with the real fight against terrorism and corruption. The task of the US intelligence services is to gather maximum compromising material on specific high-ranking officials and members of their families and use it to achieve specific political goals.”
And SWIFT with them
But that is not all. A grand scandal recently erupted, requiring the personal intervention of George Bush. It turned out that banking secrecy had already died. The US government gained access to the holy of holies of the global financial system - the SWIFT database, through which virtually all banking operations in the world pass.
The US president stated that there is “no justification” for the situation around SWIFT. At the same time, George Bush meant that those officials who “leaked” to the press information about the hacking of the global system of bank transfers by US intelligence services should be punished as an example. In Belgium, however, the opinion is different. The Belgian prime minister ordered an investigation into the penetration of a database that, after all, was considered strictly secret.
The fact is that the headquarters of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is located in a suburb of Brussels. This unique institution processes information about the movement of money around the world. Every day, information on more than 11 million transactions settles in its databases. Anyone who gains access to the system will learn all the financial secrets of corporations, the richest people in the world, or, for example, the exact structure of a country's gold and foreign exchange reserves. Therefore, strict secrecy was an indispensable condition for its successful functioning. Until recently.
Representatives of all sorts of anti-terrorist structures had been trying, since the early 1990s, one way or another, to get their hands on the data accumulated in SWIFT. The leaders of the international consortium, with the support of many governments, successfully resisted these attempts, fearing a loss of confidence in the global banking system. But, as it turned out, SWIFT could not withstand the pressure from the American administration after the September 11, 2001 attacks: perhaps because the US accounts for the lion's share of the consortium's business activity, or perhaps because it is headed by an American, Leonard Schrank. As a legal basis, George Bush used the rights granted to him by the law on economic powers in the context of an international emergency: to “investigate, regulate, or prohibit” international financial transactions with signs of an “unconventional or extraordinary threat.” And that was it—bank secrecy was over.
Official Washington stood up in defense of its actions. In the press service of the US Treasury Department, Itogi was told that the penetration into SWIFT “helped uncover terrorist cells, prevent their operations, and save many lives.” True, as specific examples, White House spokesman Tony Snow named only the arrest of Indonesian terrorist Nurjaman Riduan Isamuddin and the identification of an Al-Qaeda associate in New York, Uzair Paracha. The outgoing Treasury Secretary John Snow spoke of the SWIFT affair as “the matter he is most proud of.” His deputy for terrorism and financial intelligence, Stuart Levey, insists that the financial surveillance program is strictly limited in scope and that there have been, are, and will be no abuses.
Not everyone finds these assurances convincing. Especially outside America. After all, in terms of protecting banking secrecy with respect to foreign citizens, the American government bears no responsibility. However, even Americans sounded the alarm. The first lawsuit has already been filed in a Chicago court against SWIFT for illegally disclosing private financial information to the government.
Familiar Faces
For all its scandalousness, the SWIFT story can somehow be explained by the tasks of fighting terrorism. But this is difficult to do with the amendments to Section 314(a) of the US Patriot Act that came into force on July 5. They expand the powers of the Financial Crimes Enforcement Network (FinCEN), requiring American banks to take a more careful approach to opening “correspondent accounts of foreign financial institutions, private bank accounts of foreign citizens, and accounts of influential foreign politicians.” Now, before opening an account for the amount of one million dollars or more, an American bank must check the risk of using this account for money laundering. Foreign clients will have to explain the origin of money and report on the purpose of each transaction, etc. US banks are also required to take measures to identify all nominal owners and beneficiaries of the account.
Deposits of high-ranking officials come under total control. The document explains that, firstly, such a person means “a former or current high-ranking person of the executive, legislative, administrative, military, or judicial branch of a foreign state,” a leader of a political party, as well as “a senior manager of a commercial enterprise owned by a foreign state.” Secondly, increased attention should be paid to the entourage of a high-ranking person, which includes all his close relatives, as well as “persons who are publicly known or known to a given US financial institution to be in close contact with such a person.” The definition of illegal income of the aforementioned persons, according to FinCEN rules, includes all types of income from foreign corruption. The most interesting thing is that from October 2, similar requirements will be applied not only to new accounts, but also to already opened accounts in American banks, and without a statute of limitations.
Washington financial experts surveyed by Itogi are somewhat surprised by the latest FinCEN measures. In their opinion, existing legislation was capable of preventing, for example, the opening of personal accounts at the former Riggs Bank by former Chilean dictator Augusto Pinochet. Nothing prevented demanding from former Ukrainian Prime Minister Pavlo Lazarenko, who is still awaiting his fate in California, explanations about the origin of his money in American banks. "But here, apparently, there is a peculiar administrative-game moment," emphasized one of Itogi's interlocutors. "When there is an opportunity to expand or supplement the rules of the game in one's favor, the special services and the administrative system as a whole try not to miss this moment. I fear that on the whole this will not benefit American financial institutions. They have already lost much of their attractiveness in many respects."
Politicians in Moscow hold the same point of view, where, moreover, they believe that Washington, by introducing control over presumed American accounts of foreign officials, pursues the goal of obtaining a tool of pressure on the respective states. According to the head of the Duma commission on combating corruption, Mikhail Grishankov, there are universally recognized and effective mechanisms for cutting off channels of terrorism financing - for example, within the FATF. In the deputy's opinion, the innovations have nothing to do with combating corruption either, since the United States even before this "had a fairly effective system of fighting money laundering." Nevertheless, Grishankov is confident that the effect of tightening American banking legislation will follow: "I would not be surprised if after your article there is an additional outflow of funds of Russian origin from the US banking system."