A 9/11 Paper Trail

Benjamin Franklin, Rolling Over In His Grave

The amount of U.S. currency circulating outside banks rose sharply in July/August 2001.  The growth ran into the billions of dollars, and was concentrated in $100 bills.  These large-scale currency movements matter for anyone who cares about learning the truth about 9/11.

Under money laundering and other laws, assets can be frozen and seized in the banking system.  Knowing this, parties concerned that their assets might be frozen or otherwise at risk after 9/11 would have had an incentive to liquidate securities and banking accounts beforehand, and withdraw their money in difficult-to-trace ways.  This could have happened in U.S. banking and securities accounts, as well as accounts denominated in U.S. dollars outside the United States.  Finding the parties responsible for large-scale withdrawals of currency before 9/11 could help identify people aware of, if not responsible for, those events.

A banking crisis in Argentina can provide a relatively innocent explanation for the mid-2001 surge in currency shipments, at least in part.  But we still have no evidence of an honest, thorough investigation into other possible reasons for those shipments, reasons related to the crimes of September 11, 2001.  And the mid-2001 currency shipments to Argentina are worthy of 9/11 investigation, as well.

A third explanation has gained greater plausibility following recent 9/11 research.  Currency has a long history in covert operations.  Accelerated covert or other military action in Central Asia soon before 9/11 could have played a role in those mid-2001 currency shipments.

July/August 2001 – Where Did the Money Go?

The currency shipments in July/August 2001 were indeed extraordinary.  The currency component of the M1 monetary aggregate reported by the Fed rose by $13 billion (in the non-seasonally adjusted data), posting the highest such June-August growth rate in the 55 years since World War II.  Balance sheet data for the Reserve Banks show a similar decline in inventory holdings of currency in July/August 2001, while data from the U.S. Treasury Department suggest the growth in currency in circulation was concentrated in $100 bills.

If you go to your bank and take $100 out of your checking account, the total amount of M1 (currency + demand deposits) will not increase, because the total in demand deposits will go down by $100 while the currency component of M1 (currency circulating outside of banks) will go up.  Large scale currency withdrawals can cause large increases in the currency component of M1.

Large-scale currency withdrawals can be associated with suspicious, even criminal, activity.  That is why financial institutions are required to file certain money laundering reports like currency transaction reports (in the event of large currency transactions) and suspicious activity reports.

On August 2, 2001, amidst surging currency shipments and a rising tide of warnings about impending terrorist threats, the Federal Reserve Board of Governors issued a non-routine letter to the Federal Reserve Banks urging them to scrutinize suspicious activity reports.  The letter didn’t explain why it was issued when it was issued, nor did it specifically refer to terrorism or its financing.  But terrorism and its financing were known and emphasized as an element of ‘suspicious activity.’  Four days later, the President of the United States received a high-level intelligence briefing warning of terrorism threats within the United States, in a briefing document that explicitly mentioned ‘patterns of suspicious activity.’

More recently, a set of articles from the Broward Bulldog and the Daily Telegraph (UK) a few weeks ago have raised new questions.  These matters were originally discussed in the authors’ September, 2011 investigative work that identified a Saudi family that left southern Florida, and then the United States, in late August 2001.  The group of people included a person associated with members of the Saudi royal family as well as significant banking interests.  And apparently the FBI’s inquiry into these people was withheld from the Congressional Joint Inquiry into 9/11, as well as the 9/11 Commission.

This story raises simple and yet-unanswered questions whether the departure and others like it included people not just fearing for their own safety, but hoping to get body, soul as well as money to safer places, after one of the worst crimes in history.  Under money laundering and other laws, assets can be frozen and seized in the banking system, as they were after the 1998 African embassy bombings.  Some of the flights carrying wealthy Saudis soon before and after 9/11 left not only from Florida, but from Lexington, Kentucky (parenthetically, close to Fort Knox) and Las Vegas (another place with a lot of transportable money).

In 2004, three years after the Federal Reserve Board issued the August 2, 2001 supervisory letter urging Reserve Banks to scrutinize suspicious activity reports, a large bank was fined $25 million for money laundering violations, including failure to file reports like suspicious activity reports.  This bank was Riggs Bank.

Riggs was actually three entities in one.  Riggs National Corporation was the bank holding company, headquartered in Washington DC.  Riggs Bank was its wholly-owned subsidiary, organized as a nationally chartered bank, and also headquartered in DC.  In turn, Riggs International Banking Corporation was an Edge Act (international banking) subsidiary of Riggs Bank, located in Miami, Florida.

Riggs’s structure helps illustrate the quilted layers of our banking regulatory agencies.  The Federal Reserve Board of Governors has regulated bank holding companies, and held principal regulatory authority for Riggs National Corporation.  The Office of the Comptroller of the Currency (OCC) in the Treasury Department regulated nationally chartered banks, and the OCC regulated and supervised the Riggs Bank subsidiary of Riggs National Corporation.  In turn, the Federal Reserve was responsible for regulating and supervising Edge Act corporations, like Riggs International Banking Corporation in Miami.

The May 2004 $25 million fine for Riggs was levied by the OCC, and a day later, the Federal Reserve issued a cease and desist order to the Riggs National Corporation, an order that also directed the Bank to retain an outside consultant to review accounts in the Miami subsidiary for transactions related to ‘suspicious activity.’   A May 2004 article in the New York Times stated that

“The case involved Riggs’ handling of cash transactions in Saudi-controlled accounts under investigation for possible links to terrorist financing.”

As we’ve noted earlier, the final report of the 9/11 Commission was originally scheduled to be released in May 2004, but the release was postponed after a compromise, and the report was then released in July 2004.  Riggs Bank went unmentioned in that final report, along with other material things.

In late 2003, while working in a money laundering role at the Federal Reserve Bank of Chicago, I noticed the above-noted surge in currency shipments in mid-2001 and the August 2, 2001 supervisory letter urging the Reserve Banks to scrutinize suspicious activity reports.  I then asked a relevant person whether that letter reflected intelligence warnings of terrorist threats, and was planning to follow up with some ideas about how and why those currency shipments could be investigated.  About a week later, my money laundering assignment was terminated and I was told I had committed an “egregious breach of protocol.”  About a month later my position in the bank was eliminated.

Riggs may not be the only bank of interest in examining large-scale currency movements.  And Riggs may matter not only on questions about suspicious large-scale currency withdrawals.  Riggs had long developed a franchise serving the diplomatic community in Washington D.C., and accounts at Riggs reportedly were used to help fund alleged 9/11 hijackers.

In his 2004 book Intelligence Matters, released well after the final report of the 9/11 Commission, former Florida Senator Robert Graham wrote that ‘apparently’ an FBI agent had obtained a copy of a check that may have been related to the 9/11 hijackers, and noted it had been drawn on a Riggs Bank account for a Saudi Princess.  Graham went on to state:

I asked the FBI to undertake the review of the Riggs Bank records to determine if there was a money trail to other terrorists. I suggested the FBI look at other Saudi firms with ties to al-Qaeda’s “Golden Chain.” I wondered if the FBI had a plan to monitor suspect Saudi interests in the United States. To my knowledge, none of these investigations have been completed.

Argentina – An Innocent Explanation?

The Argentine banking system was in a crisis in 2001.  Many people banking in Argentina held U.S. dollar denominated accounts as well as peso-denominated accounts, and as the crisis intensified, the demand for U.S. currency withdrawals rose sharply.  Currency shipments to Argentina certainly explain some of the extraordinary increase in the currency component of M1 in July and August 2001.

But Argentina wasn’t just in a banking crisis in 2001.  The collapse in financial and public confidence included a political and money laundering crisis as well.  Senior officials, including a central banker, were facing criticism and scrutiny.  Some of these officials had ties to Saudi Arabia, and speaking of the above-noted “Golden Chain,” Saudi Arabian investors like large real estate and financial investments in Argentina.  Back in the late 1980s/early 1990s, Argentine financial markets were entangled in the international BCCI network, and the BCCI network has been investigated for a convergence of Saudi and U.S. intelligence interests.  More recently, the “tri-border” region of Argentina, Brazil and Paraguay has been under scrutiny for ties to terrorist financing, even before 9/11.  An energy company in Argentina was related to rancorous mid-2001 negotiations over access for a gas pipeline in Afghanistan, negotiations that reportedly included military threats from the United States.  And some significant mid-2001 intelligence warnings of a terrorist attack were coming from Argentina, as well.

Just because cash was flowing to Argentina in large amounts in mid-2001 doesn’t mean the cash going to Argentina is not worth scrutinizing for possible ties to the events of 9/11, or that Argentina-related shipments account for all of extraordinary mid-2001 increase.

Some Darker, Scarier Places

The thought of people with a lot of money ‘in the know,’ and scrambling to get cash out of banking systems before 9/11, without any investigation or prosecution by U.S. authorities of the possibility, well, that can be scary enough.  But here’s another angle worth considering.

Currency has a long history in covert action and military operations.   Stephen Kinzer’s book “All the Shah’s Men” is replete with references to the use of U.S. currency in the covert operations during the coup that overthrew the Mossadegh government in Iran in 1953, for example.  More recently, currency shipments have been the subject of investigations into corruption of U.S. ‘aid’ in operations in Iraq as well as Afghanistan.

Soon after 9/11, U.S. military operations in Central Asia certainly included a lot of cash.  For example, Tim Weiner’s book Legacy of Ashes describes U.S. forces arriving with “bales of $100 bills.” And Gary Schroen’s book about Operation Jawbreaker, titled First In, includes numerous references to the use of cash in the operation soon after 9/11.

In light of the huge surge in U.S. currency shipments in July/August 2001, the question arises — when were the bills used in Central Asian military operations originally shipped?  Were Schroen’s forces really “First In?”

This past Monday, March 19, the Asia-Pacific Journal published an article by Peter Dale Scott titled “Launching the U.S. Terror War:  the CIA, 9/11, Afghanistan and Central Asia.”   In this article, Scott states his belief that two principal alleged hijackers were likely “sent to America by the Saudi GID intelligence service,” and if they were, “they would almost certainly have been admitted to the U.S. under the terms of the liason agreement between the GID and the CIA.”

Steve Coll reports that Richard Blee and his superior Cofer Black, excited about the opportunities presented by liaison arrangements for expanding the scope of CIA reach in critical regions, had flown together into Tashkent in 1999, and negotiated a new liaison agreement with Uzbekistan.⁵¹ According to Coll and the Washington Post, this arrangement soon led, via Tashkent, to a CIA liaison inside Afghanistan with the Northern Alliance.⁵² Thomas Ricks and Susan Glasser reported in the Washington Post that, beginning after the embassy bombings in Dar es Salaam and Nairobi in 1998, “The United States and Uzbekistan have quietly conducted joint covert operations aimed at countering Afghanistan’s ruling Taliban regime and its terrorist allies …, according to officials from both nations.”⁵³

In turn, in light of reports of souring negotiations over energy issues in Central Asia, negotiations that included military threats, these two entries at the History Commons timeline provide some further context for the beginnings of an honest investigation into the surge in currency growth in mid-2001.  Referring to an article in Vanity Fair from 2004, and its discussion of the U.S. relationship with the Northern Alliance in Afghanistan before 9/11, one of those entries includes:

Blee hands Massoud a briefcase full of cash.

It is still possible that the billions of dollars in currency shipments in mid-2001 have entirely innocent explanations.  But without a formal, honest investigation, it is hard to conclude anything – except that we need a formal, honest, transparent investigation.  This investigation should include investigation of previous investigations.

Bill Bergman

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