GALESBURG -- United States financial institutions need to pay as much attention to the front page as they do to the business page, to help detect evidence of terrorist financing, according to Max R. Tappeiner, a specialist in the field of money laundering.

Tappeiner, a 1999 Knox graduate and anti-money-laundering analyst at ABN AMRO bank in New York, said banks must keep track of news developments, because the traditional investigative methods for uncovering money laundering will not work with the networks that terrorists use to fund operations.

Tappeiner gave a talk, "Needles and Haystacks: Detecting Terrorist Financing Moving Through Banks," February 26 on the Knox campus in Galesburg, Illinois.

"With terrorist financing, we're talking about what are often very, very small transactions, and so it does feel like looking for a needle in a haystack," he said. "It can be based on decentralized, small amounts of money, in contrast to the large amounts usually involved in drug trafficking and money laundering."

Tappeiner cited an FBI report that estimated the cost of carrying out the terrorist attacks of Sept. 11, 2001 at between $300,000 and $500,000, spread among 19 highjackers over a period of two years.

With trillions of dollars coursing daily from bank to bank and country to country, there are ample opportunities for terrorist funds to blend in with the torrent of legitimate transactions, he said. Banks need to "change their mindsets" and keep an eye on the news, said Tappeiner, who majored in international relations at Knox.

Tappeiner relies on analysis and reports from the media, including the New York Times, The Washington Post, MSNBC, and the Economist magazine.

"Knowledge of current events is essential in seeking to detect terrorist financing," he said. "Banks need to stay abreast of what the news media are saying about sub-state areas of concern, such as the three-frontiers area of South America" -- where Paraguay, Brazil, and Argentina share common borders, Tappeiner said. "Al-Qaeda cells and a great deal of illegal activity have been reported there."

Tappeiner said banks should also pay attention to the news media to learn what kinds of things might be on terrorists' "shopping lists," what kinds of potential targets terrorists might be looking at, and the types of businesses that may be serving as potential fronts for terrorist financing.

Tappeiner also recommended that banks create positions like his, or special investigative "data-mining" teams, dedicating resources to investigate potential terrorist transactions in detail. He said banks should also have strong automated transaction monitoring systems, which can help flag unusual activity. He said banks in all geographical areas, rural and urban, need to change their methods in order to spot signs of terrorist-funding transactions.

"I'm talking about banks in grocery stores, small town banks, savings and loan institutions, all banks big and small," he said. But before banks can begin hunting for evidence of terrorist financing, he said, they must first understand what they are looking for.

Terrorists often favor U.S. currency, because of its universal acceptability; gold, because its form can be changed without losing value; and gem stones, Tappeiner said. "Gems are small and easy to transfer. They won't show up on metal detectors, and dogs can't sniff them out. They don't leave a paper trail."

"This has only been on banks' radar screens for a short time," Tappeiner said. "Detecting terrorist financing in turn disrupts terrorist networks. Every door we close makes it that much harder for them, and they have to look somewhere else," he said "The attacks of Sept. 11 brought terrorism to our shores, and now it's up to banks to help detect evidence of terrorist funding."

International Relations Department

Max Tappeiner