Follow the Money: The NSA’s real-time electronic surveillance of bank transactions

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Today I publish exclusively the complete transcript of an old, yet important PBS Television documentary entitled „Follow the Money,“ because it is an amazingly candid explanation by the Reagan National Security Council staff on the then new mission in the 1980’s for NSA to begin real-time electronic surveillance of bank transactions.

By Lars Schall

I thought you might be interested in reading the transcript of the PBS Television documentary on the NSA Follow the Money Project in the second half of the 1980s, in which former Reagan White House National Security Council staff boasted with unusual candor about the effectiveness of that NSA SIGINT penetration of the banking sector, including with regard to surveillance of currency manipulation.

The Prosecutor’s Management Information System (PROMIS) was originally developed by William A. Hamilton’s software firm INSLAW for the US Justice Department. However, according to Guy Lawson’s book “Octopus,“ that sophisticated piece of software “had been so successful that the American intelligence agency apparatus had secretly stolen the software to put it to use covertly. The CIA had reconfigured the code and installed it in 32-bit Digital Equipment Corporation DAX minicomputers. The agency had used front companies to sell the new technology to banks and leading financial institutions like the Federal Reserve. Hidden inside the computer was a ‘trapdoor’ that enabled intelligence agencies to covertly monitor financial transactions digitally for the first time. The highly classified initiative, known as ‘Follow the Money,’ had allowed the Reagan administration to trace the Libyan government’s secret funding of a terrorist group that had bombed a disco in Berlin in 1986, killing an American soldier and wounding two hundred civilians. In Bob Woodward’s book Veil, former CIA director William Casey said the secret money-tracking system had been one of his proudest achievements.” (1)

Furthermore, Bob Woodward explained in his book, Veil: The Secret Wars of the CIA 1981-1987, that this program enabled the “penetration of the international banking system, allowing a steady flow of data from the real, secret set of books kept by many foreign banks …” (2)

While being interviewed by the Public Broadcasting System (PBS) for a July 12, 1989 television documentary entitled “Follow the Money,” the former national security official Dr. Norman A. Bailey acknowledged that NSA used INSLAW’s PROMIS software for its Follow the Money Program. He stated further that the Reagan White House tasked the NSA in 1981 with implanting “powerful computing mechanisms” in three major wire transfer clearinghouses, CHIPS (the Clearing House Interbank Clearing System) in New York City, which reportedly records payments and settlements for foreign trade, foreign exchange, and syndicated loans for its 139 member banks in 35 countries; CHAPS in London, which reportedly performs similar functions for Sterling-denominated transactions; and SIC in Basel, Switzerland, which reportedly records the same types of transactions when they involve Swiss Francs. Dr. Bailey described the new NSA signal intelligence penetration of the banking sector as giving the United States the capability to follow the money flowing from foreign governments to international terrorists through the international banking system, intercepting the fund transfer messages from one bank to another as they occurred in real time. He also stated in that PBS television documentary that the new NSA SIGINT penetration of the banking sector enabled the United States to detect illicit transfers of technology to the Soviet bloc (of integrated circuits that had been engineered for use in military and defense applications, buying them illegally through front companies in three European countries – Sweden, Switzerland, and Austria), and indebtedness to Western banks of governments in danger of defaulting on their obligations.

The Reagan NSC staff members, especially Dr. Norman A. Bailey, are widely credited with the creation of the Follow the Money SIGINT mission for NSA. They provided considerable details in the PBS documentary, extraordinary for a SIGINT project, about the use of NSA’s bank surveillance project in the fight against international terrorism, including the decision by President Reagan to bomb Libya based on precise Follow the Money SIGINT evidence that Libya had financed a terrorist attack in Germany that killed an American soldier.

NSA obtained in 1981 for its new Follow the Money SIGINT mission an unauthorized, copyright-infringing copy of the IBM mainframe computer version of PROMIS from the Justice Department. INSLAW had licensed that version of PROMIS earlier in 1981 to Justice’s Land and Natural Resources Division.

The Reagan NSC also later sought a legal opinion for a major expansion in 1986 of NSA’s Follow the Money bank surveillance project to add approximately 400 major commercial banks that comprise the inter-bank system. There were also published reports about U.S. intelligence’s installation of PROMIS in international financial institutions, including the Bank of International Settlements in Basel, Switzerland and the World Bank in Washington, D.C.

In May 1998, Dr. Bailey published a monograph entitled “The Strategic Plan That Won The Cold War,” which references the importance of NSA’s Follow the Money SIGINT mission and also includes a Foreword written by William P. Clark, President Reagan’s National Security Advisor in 1982 and 1983, extolling the role of Reagan’s NSC staff in “bringing about the end of the cold war.” (3)

In 2008, when he was interviewed for an article by Tim Shorrock in Salon Magazine, Dr. Bailey said on the record that the PROMIS database and search application has been given to the NSA. As Salon Magazine wrote about it: “His admission is the first public acknowledgement by a former US intelligence official that the NSA used the PROMIS software.” He was also quoted as stating that INSLAW’s “PROMIS was the principal software element used by the NSA” for its real-time surveillance of bank transfers. (4)

Here are the transcripts of the PBS documentary about that “Follow the Money” mission in four parts as PDF files:

Part 1; Part 2; Part 3; and Part 4.

SOURCES:

(1) Guy Lawson: “Octopus: Sam Israel, The Secret Market, and Wall Street’s Wildest Con”, New York, Crown Publishers, 2012, page 144. On the PROMIS saga see also Cherie Seymour: “The Last Circle: Danny Casolaro’s Investigation into The Octopus and the PROMIS Software Scandal”, Walterville, TrineDay, 2011.

(2) Compare “INSLAW’s ANALYSIS and REBUTTAL of the BUA REPORT: Memorandum in Response to the March 1993 Report of Special Counsel Nicholas J. Bua to the Attorney General of the United States Responding to the Allegations of INSLAW, Inc.”, published here.

(3) See Norman A. Bailey: “The Strategic Plan that Won the Cold War”, published here.

(4) See Tim Shorrock: “Exposing Bush’s historic abuse of power”, published here

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