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Worldwide, almost all countries have set up Financial Intelligence Units (FIUs) to investigate suspicious financial transactions in the fight against crime and terrorism. FIUs need to collaborate with each other as these transactions often cross national borders. Political scientist Pieter Lagerwaard investigated how FIUs work across operational difference and geographical distance. He concludes that transnational collaboration between FIUs is made possible by the legal grey zone within which FIUs are able to operate fairly autonomously and independently. ‘This does raise questions about accountability and oversight of their operations.’

Financial transactions leave far more digital traces than the use of cash. Payment data therefore provides a source of information for investigation authorities to investigate and combat the financing of crime and terrorism. FIUs play a key role here. They investigate reports of unusual transactions, for example by banks and casinos, determining whether these can be declared suspicious and forwarded to the police or the judiciary.

Financial transactions relating to drug transactions or terrorist activities often cross national borders. FIUs around the world must therefore collaborate on an ongoing basis and share their expertise and intelligence, in order to follow illicit finance. This is a challenge because national rules and laws often differ, for example in the areas of privacy, data protection or human rights.

How do FIUs work together worldwide?

Lagerwaard investigated how FIUs collaborate worldwide and bridge distances and differences between each other. He spoke with employees of FIUs in the Netherlands and Europe about the daily practice, their challenges, dilemmas, negotiations, conflicts and political stakes.

In doing so, Lagerwaard zoomed in on automated and manual search techniques used to mark transactions as suspicious and the exchange of data between FIUs in Europe and worldwide. He also focused on the informal networks between employees of FIUs that make it possible to share information.

Information sharing: a legal grey zone

Lagerwaard concludes that the transnational collaboration between FIUs is made possible by the legal grey zone within which FIUs are able to operate fairly autonomously and independently. ‘The combination of the relatively informal nature of international agreements and the relative autonomy of FIU operations enables FIUs to share information worldwide,’ explains Lagerwaard. This raises questions, because the information that is shared is privacy-sensitive. ‘Just look at your banking app, for example, which shows a lot of personal information: what you buy, where you've been and even which political or religious organisations you support.’

Copyright: Pieter Lagerwaard
The FIU can share information with countries with a worrying human rights record Pieter Lagerwaard

There are no clear privacy standards and data protection systems for sharing this sensitive information with sister organisations. ‘The data subject does not know when the bank will share transaction data with the FIU,’ says Lagerwaard. ‘This is understandable from an investigative point of view, because this data can contribute to the fight against crime. However, it can become problematic when the FIU declares data suspicious and shares it with investigation authorities and sister organisations worldwide. For example, with countries that have a worrying reputation in the area of human rights. This might include Egypt, Belarus, Saudi Arabia and Venezuela, all of which are members of the Egmont Group: the global platform through which FIUs exchange information.’

Questions for public debate

Lagerwaard would like to see more public debate on the accountability, oversight and proportionality of FIU operations. ‘How do we want the government to handle our transaction data? Much attention is paid to privacy violations by major companies such as Google and Facebook, while the large-scale use of transaction data for security purposes hardly receives attention.’ According to Lagerwaard this is necessary because the digitisation of payment transactions is providing new data about society. ‘As in the case of Google and Facebook, we have to ask ourselves what this data may be used for and what the social consequences might be.’ 

Lagerwaard also wonders whether the current financial surveillance is proportional to the revenues. ‘Institutions that have an obligation to report unusual transactions, such as banks, deploy tens of thousands of people and spend billions on this even though the proceeds of the investigation are unclear, or modest at best.’ But the consequences and side effects are substantial according to Lagerwaard. ‘People and organisations can be excluded from the banking system without it being clear who is responsible for this. Which authority is responsible if a mistake is made? Who monitors our data when it is made available to sister organisations worldwide? In sum, how do we want our transaction data to be handled by the government? These are questions that I would like to see featuring more prominently in the public debate and on the political agenda.’

Thesis details

Pieter Lagerwaard, 2023, ‘Following Illicit Finance across Distance and Difference: The Coordination and Practices of Financial Intelligence Units'. Supervisor: Prof. M. de Goede. Co-supervisor: Dr R. Bellanova.

Time and location

Friday 31 March, 14.00-15.30, Aula, Amsterdam, or follow it online

P. (Pieter) Lagerwaard

Faculty of Law