Financial Intelligence: A Primer

What you need to know to be a good financial intelligence analyst

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Today I want to talk to you about a little-studied “int” in the intelligence community: financial intelligence. This type of intelligence is generally considered to be the domain of financial intelligence units, but as I wrote about here, lots of other types of collection generate financial intelligence (or FININT, for short). I also talk about the use (and abuse) of FININT in my new book, Illicit Money: Financing Terrorism in the 21st Century.

So who generates FININT? Well, banks, financial institutions, money service businesses like MoneyGram, WesternUnion, and many others, all generate financial data. But in my view, that data doesn’t actually become intelligence until it’s combined with other sources of information and contextualized.

This is part of the problem in the counter-terrorist financing, anti-money laundering, and sanctions evasion world. Most reporting entities (as banks and other financial bodies are called when they are required to report transactions to financial intelligence units) don’t actually generate financial intelligence. They generate financial data. In some cases, they’re able to contextualize their reporting (usually through suspicious transaction reports), coming close to providing intelligence, but mandatory reporting fall squarely in the realm of financial data, not intelligence. It’s up to the financial intelligence units (FIU), law enforcement agencies, and security services, to turn that into FININT.

So how do they do it? Well, banks and other entities report suspicious transactions, and in some jurisdictions, they report other mandatory transactions. (For instance: in Canada, any international transfer of funds of $10,000 or more is required to be reported to FINTRAC, Canada’s FIU. Regulations vary by country.) These transactions are reported to the FIU which in turn discloses relevant information to law enforcement and security services. (Again, there’s a lot of variation in how this happens, and in some countries, the FIU IS a law enforcement entity.) This information is then combined with other information holdings - often human intelligence, police reports, or, in some cases, signals intelligence, to determine the relevance of the transaction to an investigation.

But this is not the only source of financial intelligence. FININT can actually be derived from a lot of other reporting mechanisms. For instance, human sources can (and do!) report on subjects of investigation and their financial situation, transactions, and relationships. Pocket litter and refuse collection can also provide financial intelligence. All of these types of collection can fall into the category of FININT. FININT can also be obtained directly from banks and other financial institutions, through SIGINT collection, and lots of other collection platforms. With the advent of the blockchain and social media platforms, some FININT can now also be obtained through open source collection methods.

Like most other “ints”, there is expertise required to analyze and assess FININT. Analysts need to understand the source of the information - is it being generated by mandatory or suspicious reporting? What are the grounds of suspicion? Is the information being reported as a form of defensive reporting, or are the grounds of suspicion well-established? Does the source have direct knowledge to the information? Is their access well-understood, established, and trustworthy?

A particular challenge comes in dealing with FININT reporting derived from human sources or by listening to a conversation. People often talk about future activities - things they will or want to do. I’ve often seen this reported as a completed transaction, which it’s not. And in some cases, that information is being shared to influence the recipient of the information - potentially also including intelligence agencies.

Aside from these fairly standard concerns about source information, financial intelligence also requires a facility with technical information. Analysts need to know what the various types of SWIFT reports mean, for instance, and often need to understand corporate structures, reporting requirements in particular countries, and many other things. Analysts also need to establish a pattern of life for subjects of investigation - something that can become quite complicated if that extends to corporate structures. Establishing a corporate history or pattern of practice can involve looking over years worth of information - a time consuming, and often unsatisfying - endeavour.

Financial intelligence analysts also have to have a real interest in personal finance. Lots of people I talk to have no interest in their own finances, let alone those of other people. To do this work properly, you have to be really nosy, and willing to dig deep to understand the purpose of a transaction.

FININT is a powerful source of information. It can shed light on the capabilities, planning and preparations of a subject of investigation - this of course applies to counter-terrorism investigations, but also extends to other threats to national and international security, such as sanctions evasion, proliferation activities, espionage, influence activities, etc.

Making use of FININT

Financial intelligence is an under-used, and poorly-understood type of intelligence. Part of this is because financial intelligence analysts have failed to contextualize the information properly. In some cases, it’s because they have made logical leaps trying to establish a link to threat activity that is poorly articulated or non-existent, failing to accurately describe the relationship or association between entities or individuals. In other cases, the fault lies with investigations and a disinterest / inability to assimilate financial intelligence. Yes, you are probably going to have to use a spreadsheet, and probably advanced analytic visualizations that are available in programs like Tableau. Globally, states are required to generate and use financial intelligence - and they have to dedicate serious resources to doing that. So I’m on a mission to improve intelligence analysis of FININT, encourage its exploitation, while also keeping an eye on the misuses of this type of intelligence collection.

At the same time, it’s important to remember that FININT (as with other types of intelligence) can be used by repressive regimes to enhance their surveillance capabilities. But FININT is unique globally in that the development and exploitation of financial intelligence is an international requirement. Unfortunately, the international community has yet to fully come to grips with the mis-use of financial intelligence and the implications for human rights and lawful protest.