The recent designation of the Lebanese Canadian Bank (LCB), along with its subsidiaries, as a “financial institution of primary money laundering concern” under Section 311 of the PATRIOT Act, compels the Financial Crimes Enforcement Network (FinCEN) to continue its IT modernization project, despite multiple setbacks. The DEA-led investigation, conducted in conjunction with the U.S. Treasury Department, focused on the use of LCB to move hundreds of millions of dollars (as much as $200 million per month) of drug proceeds generated by the trafficking of narcotics from South America to Europe and the Middle East via West Africa.
From a national security perspective, the investigation also exposed Hezbollah’s direct connection to LCB and international narcotics trafficking and money laundering.
In conjunction with the designation, FinCEN has filed a Notice of Proposed Rule Making (NPRM) in which it proposes prohibiting U.S. financial institutions from opening or maintaining correspondent accounts with LCB.
FINCEN, long regarded as a significant investigative resource in the war on terrorism, is progressing with its “BSA IT Modernization” project, which will provide for the more efficient law enforcement use of the bureau’s databases. Plans to revise how FinCEN collects and analyzes Bank Secrecy Act (BSA) data has been in the works since 2003. The 2003 effort was plagued with mismanagement and staffing issues, causing FinCEN to terminate and re-evaluate the project in 2006. The project was re-launched in 2009 (a loss of over 3 years) and is expected to be completed by 2014 (11 years after its initial start).
When finished, the modernization project will provide over 300 law enforcement agencies with more complete and accurate records when searching suspicious activity reports and other bank regulatory filings. The FinCEN data will not only be more complete and accurate but also more easily searched and retrieved.
The LCB case is once again a reminder of the significant role of FinCEN, not only in the investigation of major criminal organizations, but also in the investigation of the movement of funds used to support organizations that threaten U.S. national security and interests. It is critical that FinCEN get the IT modernization project right this time.