American spies use US Federal Reserve to monitor foreign banks
June 27, 2017 1 Comment
American intelligence services have made use of a little-known confidentiality exception to spy on the financial activities of foreign banks who have accounts with the United States Federal Reserve, according to Reuters. Established in 1913, the Federal Reserve System is the central banking structure of the US. It oversees and regulates the nation’s financial institutions, and is tasked with —among other things— maintaining the stability of the American financial system. Additionally, however, the Federal Reserve offers a host of financial services to official (government-owned or sanctioned) foreign institutions. Thus, over 250 foreign banks (typically central banks) from dozens of countries have deposited nearly $3.3 trillion in assets at the Federal Reserve Bank of New York, one of 12 Federal Reserve Banks in the US. Depositing assets at a US Federal Reserve Bank, allows these foreign ‘depository institutions’ to use the US Federal Reserve as a ‘custodial institution’. Through it, they get direct and immediate access to American debt markets, where they can trade directly in dollars — the reserve currency of the global economy.
As one would expect, the ‘custodial services’ provided to foreign state banks by the US Federal Reserve are subject to strict confidentiality rules. However, according to a report published yesterday by Reuters, US intelligence agencies have found ways to circumvent these rules and monitor the activities of foreign banks who use the US Federal Reserve’s services. The news agency said it interviewed “more than a dozen current and former senior [Federal Reserve] and [US] Treasury [Department] officials”, including executives and division heads. It concludes that the US Intelligence Community has “leveraged the [US Federal Reserve’s] position at the center of global finance” to gain insights into the financial activities of foreign governments.
Specifically, the report alleges that American spies have made regular use of a little-known “need to know” exception clause to the US Federal Reserve’s confidentiality rules, and have been able to monitor the financial activities of selected foreign governments. These include Libya, Yemen, Iraq, China, Russia and Turkey, among others, says Reuters. In its report, the news agency says that the exception clause has been used at least seven times in the past 15 years. In some of these instances, the intelligence gathered led to “specific US responses” in relation to the financing of terrorism, or large-scale money-laundering. In other cases, the intelligence gathered helped Washington closely monitor market activity in areas of interest around the world, says Reuters.
The news agency contacted the New York Federal Reserve Bank, and was told by a spokesperson that the exception to the Federal Reserve’s confidentiality rules “has been used on rare occasions and on a limited basis”. These instances related to “issues as compliance with sanctions requirements and anti-money laundering principles”, said the spokesperson. The US government did not respond to calls for comments.
► Author: Joseph Fitsanakis | Date: 27 June 2017 | Permalink
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Ex-CIA contractor says Pakistan’s leaders helped him escape murder charges
July 4, 2017 by Joseph Fitsanakis 1 Comment
On January 27, 2011, while driving in downtown Lahore, Davis opened fire against two men riding on a motorcycle, killing them instantly. Soon after the incident, Davis appears to have contacted the US consulate in Lahore, which rapidly dispatched a consular vehicle to remove him from the scene of the shooting. However, the vehicle was unable to reach Davis, who was surrounded by an angry crowd. Unable to pick up Davis, the car then returned to the consulate after running down and killing a motorcyclist who was unconnected with the earlier incident. Eventually Davis was arrested and charged with double murder and illegal possession of a firearm. The Pakistani government dismissed Washington’s assertion that Davis was an accredited diplomat, and was thus not subject to Pakistan’s legal system because of his diplomatic immunity. With public opinion in Pakistan heavily against Davis, the case sparked a diplomatic crisis between Washington and Islamabad. Unexpectedly, however, Davis was released in March of the same year, after the families of the two men he killed appeared in court and said they forgave him and wanted him to be pardoned. It later emerged that the families of the murdered men had been given a total of $2.4 million as compensation for their deaths.
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