This is a time of year filed with anniversaries and memories – the recall of events that have tremendous significance for the financial services industry, and that also illustrate just how critical banking and financial services are to the United States and nations around the world. This week marks the fifth anniversary of the failure of Lehman Brothers, one of the triggers of the global financial crisis. And today, of course, is the 12th anniversary of the September 11, 2001, terrorist attacks on the World Trade Center in New York City and on the Pentagon in Washington, D.C.
The impact of 9/11 has been thoroughly reported, analyzed and debated, but it's worth noting on this 12th anniversary (and also when the prospect of U.S. military action against Syria is looming) the extent to which banking not only has been affected by the event, but also has been at the center of our nation's response to terrorism. The PATRIOT Act, the post-9/11 legislation that made data mining a common term, places a number of specific requirements on financial services companies. And the banking industry has played a significant role in sanctions and anti-money laundering efforts aimed at cutting off the funding of terroristic governments and organizations.
Details of these efforts are provided in a new book, Treasury's War: The Unleashing of a New Era of Financial Warfare, by Juan Zarate, a senior adviser to the Center for Strategic and International Studies (CSIS), and a former deputy assistant to the president and deputy national security adviser. In an interview this morning on NPR, Zarate talked about the role of the Treasury Department (which was the only government entity to receive an A grade in the 9/11 Commission's report on the tragedy) in fighting terrorism in the post-9/11 world.
According to Zarate, "It was clear that Al Quaeda had deep support in the Middle East … and also had the ability to raise and move money around the world." The Treasury Department determined "it had to deter those that would help Al Quaeda … by going after its money."
The new powers Treasury obtained, Zarate related, included "a broad array of tools, not just the ability to freeze assets … but [the ability to] threaten to freeze assets of those facilitating" terrorism. He singled out Section 311 of the PATRIOT Act includes Section 311, which has to do with anti-money laundering efforts. Zarate calls this a "Scarlet Letter" that has helped Treasury isolate banks and governments that are funding terrorism.
In the NPR interview, Zarate stressed his opinion that this kind of financial pressure is missing from the U.S.'s current efforts to address the crisis in Syria. "[We are] lacking a much more aggressive financial strategy against Syria," he said. "You can always turn the dial up or down on financial sanctions. We've done lot in the Treasury department, but you can always do more" -- for example, he added, potentially sanctioning Russian banks that are funding the Assad regime. Zarate continued, "Have we launched preemptive asset hunt? Why don't we do that now? These are all things that can be done even absent a UN mandate."
[Check out the Advanced Threat Confidential: 14 Lessons Learned from Real Cyber Attacks session at Interop on October 4.]