News

The recent rise in racially, religiously and politically motivated mass killings in the United States has challenged compliance professionals to flag and investigate transactions tied to the alleged perpetrators more promptly.

But the often sparse finances associated with domestic terrorism and the perception that federal laws do not target the crime specifically make spotting funds tied to a planned attack exceedingly difficult, lawmakers, investigators and anti-money laundering specialists said publicly or in interviews with ACAMS moneylaundering.com.

“Being domestic, it tends to be far less expensive, and generally does not require cross-border transactions,” said one compliance executive at a large financial institution. “You also don’t see what a person is buying, you just see where their payments are going.”

White supremacists and other domestic extremists killed more than 50 people in the U.S. last year, 35 percent more than the number of victims in 2017 and the fourth-highest tally in nearly five decades, according to the Anti-Defamation League, an advocacy group headquartered in New York.

Over the course of just eight days at the end of July and beginning of August, another 35 people lost their lives at a food festival in Gilroy, California, a Walmart in El Paso, Texas, and a popular nightlife district of Dayton, Ohio, to mass shooters who seemingly espoused racist, extremist or generally violent ideologies.

“There have been more arrests and deaths caused by domestic terrorists than international terrorists in recent years,” FBI Assistant Director for Counterterrorism Michael McGarrity told members of the House Homeland Security Committee at a hearing in May.

Investigative Framework

The FBI typically attributes incidents of domestic terrorism to racism, anti-government ideology, pro-environmental and animal rights activism or opposition to legal abortion, McGarrity told lawmakers.

Fifty percent of the roughly 850 domestic terrorism investigations that the bureau was pursuing as of May involved anti-government groups and another 40 percent targeted racially or religiously motivated suspects, he said.

Several federal statutes list broad definitions of terrorism without distinguishing between its international and domestic strains.

In 2001, the U.S. Patriot Act went further by defining domestic terrorism in particular as “acts” carried out in the U.S. that endanger lives and aim to “intimidate or coerce” civilians or officials through “mass destruction, assassination, or kidnapping.”

But that definition does not translate into a standalone offense, a perceived legal void that leaves prosecutors of domestic terrorism cases with only a patchwork of criminal statutes to indict suspects and no option of pursuing “material support” charges as they often do against the associates and financiers of blacklisted foreign terrorist organizations.

Legislation introduced by Sen. Martha McSally (R-AZ) on Aug. 14 and Rep. Adam Schiff (D-CA) on Aug. 16 would elevate domestic terrorism to a standalone crime and activate the “material support” statute, which would allow prosecutors to take action against individuals involved with terrorist groups before an attack occurs.

Another proposal recently floated in Congress would have the Treasury Department label foreign extremist groups, and white supremacists in particular, as terrorist organizations to facilitate prosecutions of their U.S.-based supporters and financiers.

“If someone says I want to declare allegiance to ISIS and … hurt people, we have an amazing amount of law enforcement resources … when they say the exact same thing about a white nationalist organization we do not,” Rep. Max Rose (D-NY) said at Sep. 10 hearing. “We have to fix that, and the first step I believe is to start establishing some of these organizations as true terrorist organizations.”

Canada put that idea into practice in June, when authorities for the first time designated neo-Nazi group Blood and Honour and its armed branch, Combat 18, as terrorist organizations, exposing their members and financiers to asset freezes and prosecution.

Growing interconnectivity between white supremacists in the U.S. and overseas, particularly through dark web forums, social media and other messaging platforms, has already convinced American investigators to target those suspects more aggressively, said Dennis Lormel, former head of the FBI’s Terrorism Financing Operations Section.

“Traditionally, law enforcement treated white supremacists more as violent criminals,” Lormel, now an anti-money laundering consultant in Virginia, said. “But quietly we have transitioned to where we are saying those groups are terrorists, too.”

Lormel attributed the shift to attacks by a self-avowed white supremacist on two mosques in Christchurch, New Zealand, that left 51 dead. The 28-year-old Australian man responsible for the attack left behind a 74-page racist “manifesto” that has brought him a cult-like following across the world.

In the months before the attack, the attacker donated a combined $4,000 to two white supremacist groups in France and Austria, according to German and Austrian authorities cited by the Associated Press.

Financial investigations

U.S. federal agents in the past two years have used a Bank Secrecy Act-related authority to advance their investigations into the alleged perpetrators of domestic terrorist attacks, moneylaundering.com has learned.

On multiples occasions, including after a 20-year-old white supremacist intentionally drove his car into a crowd of protestors in Charlottesville, VA, in August 2017, killing one woman, investigators have pinged U.S. financial institutions for data on suspected domestic terrorists under section 314 of the Patriot Act.

Meanwhile, financial institutions remain limited to only reacting to such events, including by complying with a 314 request or running negative news checks in the wake of an attack.

“As far as creating typologies, I just don’t know there’s anything very reliable,” a compliance executive at a regional lender on the West Coast told moneylaundering.com on condition of anonymity. “Domestic terrorism is not a cash-intensive event, and it’s not necessarily funded through illicit activities.”

AML officers may want to consider placing any clients who publicly espouse extremist views on their high-risk list and monitor them accordingly, the executive said.

U.S. officials, including those from Justice, Homeland Security and Treasury, have yet to produce formal guidance on red flags associated with the financing of domestic terrorism.

On June 5, Rep. Bennie Thompson (D-MS) introduced a bill that would require the FBI, Justice Department and Department of Homeland Security to report annually on domestic terrorism incidents and on trends in global terrorism that have “ideological, financial, logistical, or other” relevance for domestic extremists.

Lawmakers approved Thompson’s proposal, the Domestic Terrorism DATA Act, in a bipartisan vote on Sept. 26.

Contact Valentina Pasquali at vpasquali@acams.org