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Antilaundering offers Postal Service real-time smarts


By Dan Verton

(IDG) -- The United States Postal Service (USPS) has put a new system into place to help crack down on alleged terrorists' illicit money flow.

The Bank Secrecy Act and Anti-Money Laundering Compliance System, developed by the USPS and New York-based Information Builders, is poised to become the de facto standard in suspicious-activity reporting throughout the government and the financial services industry. INFOCENTER
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Although the system isn't being used yet, USPS officials say it's ready to be put into action once Congress and other regulatory agencies finalize new regulations on reporting procedures.

Officials from the Department of Justice and the Department of the Treasury have also expressed interest in using the system.

Passed in 1970, the Bank Secrecy Act (BSA) lays out detailed reporting and record-keeping requirements for banks and other financial institutions.

Undersecretary of the Treasury Jimmy Gurule, who oversees the Financial Crimes Enforcement Network, which is the agency responsible for enforcing reporting procedures at financial institutions, says new regulations governing the types of reports required will be issued by next March. Gurule made that comment at last week's 13th annual Money Laundering Enforcement Seminar in Arlington, Virginia, which was sponsored by the American Bankers Association and the American Bar Association.

The Information Builders system ferrets out patterns that may indicate money-laundering activity and uses sophisticated drill-down, querying and reporting functions to deliver to law enforcement officials the intelligence they need to identify individuals who may be funneling money to terrorists, say officials familiar with the project.

Tracking money orders

The USPS currently controls 30 percent of the money-order market in the U.S., issuing the same type of money orders that were used by some of the alleged terrorists who are said to have taken part in the September 11 attacks. The USPS also sells other financial services, such as fund transfers and stored value cards, that will be tracked by the system once the new reporting regulations are in place, says Henry Gibson, the BSA compliance manager at the USPS.

"We can identify suspicious money orders at the point of sale, track those orders through the banking system and identify accounts through which they've passed, even after they've been deposited," says Al Gillum, a former postal inspector who now serves as an independent consultant on the system. "If the regulations had been out, and had the terrorists used USPS money orders, there's a good chance we would have identified them."

Designed in 1996 for use on a mainframe, the system is being ported to a Web-based interface to improve ease of use, according to Larry Reagan, director of Information Builders' Federal Systems Group in Washington. Depending on which agencies adopt the system, it could be used to ferret out not only terrorists who are engaged in money-laundering schemes, but also corrupt investment bankers, drug dealers and others.

More than 900 software programs support the system, and all can be reused with few if any changes, says Reagan. Several other systems that collect data have been integrated with the system, though Reagan declined to name them for security reasons.

"The whole purpose of all this reporting is to support law enforcement," says Gillum. "We built the system to get data out of the system in a meaningful way."


• United States Postal Service
• Financial Crimes Enforcement Network

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