Terrorism Investigation Pushes SWIFT into Spotlight

Until now, SWIFT was a little known banking organization. Last week's revelation that treasury officials were investigating its connection to terrorist financing put SWIFT on the front pages. According to insiders, the operation is not easy to understand, even for those in the banking industry.

LIANE HANSEN, host:

The news that U.S. Treasury officials have been delving into financial records of an international banking group called SWIFT pushed the little-known cooperative into the spotlight, a place it would rather not be.

NPR's Laura Sullivan examines what SWIFT is and what it does.

LAURA SULLIVAN reporting:

If you go to SWIFT's website you can see its high security campus in Brussels, Belgium, with manicured lawns and high-tech offices. It has 25 board members, from some of the most prominent financial institutions in the world. And according to its annual report, it brought in half a billion dollars in revenue last year.

But until this week, when U.S. officials disclosed that they were using the group's records to examine financial transactions, most people had never heard of it.

What does SWIFT stand for?

Mr. BERT ELY (Banking Consultant with Ely & Company): Well, bear with me while I get out the (unintelligible) read this. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication.

SULLIVAN: Bert Ely is a banking consultant in Washington, DC.

Mr. ELY: What SWIFT is, is a messaging system. Please transfer $25 million to account so-and-so in Bank B, and the message is being sent by Bank A, which is going to take that $25 million out of one of its customer's accounts.

SULLIVAN: So if I go down to my bank and I want to transfer money to a credit union, is SWIFT involved in that?

Mr. ELY: It's highly unlikely that it would be.

SULLIVAN: If I go down to my bank and I want to transfer money to a bank in Saudi Arabia, is SWIFT involved in that?

Mr. ELY: There is a very good chance that it would be, particularly if that Saudi bank did not have an office in the United States.

SULLIVAN: That's because banks really can't talk to each other very well without SWIFT. Thirty years ago, banks were relying on the mail and telegraph machines to send detailed messages about money their customers were transferring. It was slow, and worse, the banks all used different forms and coding. That's when officials at 239 banks got together in Brussels to set some standards and to find an electronic way to send information. They sent their first bank message in 1977. Now almost 8,000 banks are part of SWIFT and they send more than 11 million messages a day.

Still, Bert Ely says it's not an easy business to understand, even for bankers.

Mr. ELY: There are many people in the banking industry who, you know, they may have heard of SWIFT, they may have - you know, just that name. I suspect there are only a handful of those that actually have much, you know, more than a superficial understanding of what SWIFT is, if they have any at all. The people who really understand it are the ones that have to work with it.

SULLIVAN: And that's just fine with SWIFT. The organization has rarely granted press access to its inner workings. Officials declined requests for an interview. As one explained, SWIFT is quote "a shy company." That makes this current situation all the more difficult for them. The U.S. records searches have been front page news here and abroad.

Treasury's Undersecretary Stuart Levey said investigators had searched the group's records quote "at least tens of thousands, maybe hundreds of thousands of times." SWIFT says they were only complying with U.S. subpoenas and have not violated their members' privacy, something that has long been a hallmark of its corporate policy.

A SWIFT spokesman based in the United States said he had a statement from the chairman of the board and CEO, but he says he was only permitted to read it if his name wasn't used.

Unidentified Man (Spokesman, SWIFT): Our fundamental principle has been to preserve the confidentiality of our users' data while complying with the lawful obligations in countries where we operate. SWIFT values the trust that our members have placed in us for more than 30 years and we will continue to work vigorously to protect and maintain that confidence.

SULLIVAN: These records may remain confidential, but at least for now, SWIFT executives may have to get used to operating in the spotlight.

Laura Sullivan, NPR News, Washington.

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