What is Financial intelligence? and its functions?
Financial intelligence
Financial intelligence (FININT) is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. Generally the term applies in the context of law enforcement and related activities. One of the main purposes of financial intelligence is to identify financial transactions that may involve tax evasion, money laundering or some other criminal activity. FININT may also be involved in identifying financing of criminal and terrorist organisations. Financial intelligence can be broken down into two main areas, collection and analysis. Collection is normally done by a government agency, known as a financial intelligence organisation or Financial Intelligence Unit (FIU). The agency will collect raw transactional information and Suspicious activity reports (SAR) usually provided by banks and other entities as part of regulatory requirements. Data may be shared with other countries through intergovernmental networks. Analysis, may consist of scrutinizing a large volume of transactional data using data mining or data-matching techniques to identify persons potentially engaged in a particular activity. SARs can also be scrutinized and linked with other data to try to identify specific activity.
Collection
FININT involves scrutinizing a large volume of transactional data, usually provided by banks and other entities as part of regulatory requirements. Alternatively, data mining or data-matching techniques may be employed to identify persons potentially engaged in a particular activity. Many industrialized countries have regulatory reporting requirements for its financial organisations. It may be possible for the FININT organization to obtain access to raw data at a financial organization. From a legal standpoint, this type of collection can be quite complex. For example, the CIA obtained access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) data streams through the Terrorist Finance Tracking Program, but this violated Belgian privacy law. Reporting requirements may not affect Informal value transfer systems (IVTS) the use of which may simply be customary in a culture, and of amounts that would not require reporting if in a conventional financial institution. IVTS also can be used for criminal purposes of avoiding oversight.Analysis
Examples of financial intelligence analysis could include:Identifying high-risk housing tenants on the basis of past rental histories.
Detecting tax payers trying to avoid their fiduciary obligations by moving wealth surreptitiously out of a tax-levying jurisdiction.
Discovering safe havens where criminals park the proceeds of crime.
Accounting for how a large sum of money handed to a targeted individual disappears
Checking to see if a corrupt individual has had any sudden and unexplained windfalls.
Detecting relationships between terrorist cells through remittances.
Financial intelligence units
According to the Egmont Group of Financial Intelligence Units, financial intelligence units (FIUs) are national centres which collect information on suspicious or unusual financial activity from the financial industry and other entities or professions required to report suspicious transactions, suspected of being money laundering or terrorism financing. FIUs are normally not law enforcement agencies, but their mission is to process and analyze the information received. If sufficient evidence of unlawful activity is found, the matter is passed to public prosecutors.
FIUs may simply receive and process raw financial reports, and forward them, as appropriate, to law enforcement or intelligence agencies, include the multinational Egmont Group of Financial Intelligence Units, and national organizations. National FIUs include:
Argentina – Unidad de Inteligencia Financiera
Australia – Australian Transaction Reports and Analysis Centre (AUSTRAC)
Brazil – COAF Conselho de Controle de Atividade Financeira
Canada – Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
France – Tracfin
Germany – Zentralstelle für Finanztransaktionsuntersuchungen
India – Financial Intelligence Unit (FIU-IND)[3]
Ireland – Garda Financial Intelligence Unit (GNECB FIU)
Italy - Guardia di Finanza
Russia - Federal Financial Monitoring Service of the Russian Federation (Rosfinmonitoring)
Spain - Sepblac
United Kingdom – National Crime Agency
United States – Financial Crimes Enforcement Network (FinCEN)
United States examples
The United States has different organizations focused on domestic and international financial activity. The United States has several laws requiring the reporting to the FinCEN. These include the Right to Financial Privacy Act (RFPA) of 1978, the Bank Secrecy Act of 1970 (and other names of revisions), and the Gramm–Leach–Bliley Act of 1999 (GLBA). Some reports also need to go to the Securities and Exchange Commission.