BORDER ISSUES

Scope of Arizona's snooping into money transfer payments wider than previously known, new documents reveal

Surveillance of wire transfer records began in Arizona in 2014 under a settlement agreement.

Rafael Carranza
Arizona Republic
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The Arizona Attorney General’s Office found in the early 2000s that Western Union's money-wiring service was being abused by Mexican cartels to launder money generated by drug and human trafficking.

New documents detailed the massive scope of an ongoing surveillance effort that has collected data on millions of financial transactions involving money wire transfers sent between the four U.S. border states and northern Mexico. The Arizona Attorney General's Office collected that data over nearly 20 years to fight human and drug smuggling along the U.S.-Mexico border.

The American Civil Liberties Union published this week over 200 documents the organization obtained from the Arizona Attorney General’s Office describing the collection of at least 145 million records of money transfers above $500 that were sent to and from the states of Arizona, California, New Mexico and Texas.

In addition to the large number of records collected so far, the documents showed how several federal agencies within the U.S. Departments of Homeland Security and Justice also actively sought wire transfer data.

Those records are part of a database maintained by a Phoenix-based nonprofit called the Transaction Record Analysis Center, which was established in 2014 as part of a $100 million settlement between the Arizona Attorney General and wire transfer company Western Union over money laundering claims.

“It's really pretty staggering how large and extensive and illegal this program has become,” said Nathan Freed Wessler, the deputy director of the Speech Privacy and Technology Project at the American Civil Liberties Union.

“Thousands of law enforcement officers from more than 700 police agencies and other law enforcement officers around the country have been given free login access to that system without any judicial supervision,” he added.

“No limitations on what those police officers can query," added Wessler. "So it's a huge violation of people's privacy, and in granting virtually unfettered access to any police officers who want it around the country.”

The documents showed that 28 wire transfer companies, including some of the most popular services like Western Union and MoneyGram, have provided transfer records to the database, which are accessible to about 440 local, 80 state and 53 federal law enforcement agencies, plus 152 field offices under federal agencies.

The Arizona Attorney General’s Office under Mark Brnovich filed about 140 administrative subpoenas between 2014 and 2021 to compel these companies to provide the transfer records, the documents showed. For all subpoena requests, an Arizona judge first had to sign off for them to take effect.

But while some are concerned about the privacy implications for millions of people who depend on these services to send money to loved ones, others point to it as a successful example of cooperation between law enforcement agencies to target and disrupt transnational criminal groups who prey on vulnerable migrants.

Chief among them is Terry Goddard, who launched the probe into wire transfers when he served as Arizona Attorney General from 2003 until 2011.

“I think that the issue is not new. The procedure is not new. It's been vetted at every level, and it's carefully monitored by the court system. So I think it's a very important tool in the arsenal that law enforcement has,” Goddard said.

At the time that served as Attorney General, Arizona was experiencing large waves of unauthorized migration and was the busiest smuggling corridor along the U.S.-Mexico border. It was also a lucrative time for smuggling networks who would routinely use drop houses in Tucson and Phoenix where they would hold migrants until their smuggling fees were paid off.

During this time, the state government proposed and passed a series of harsh laws targeting undocumented immigrations in the Arizona. While in the Phoenix area, Maricopa County Sheriff Joe Arpaio set up sweeps in Latino areas of the county in his bid to take on illegal immigration.

Goddard, a Democrat, sued Western Union, accusing the company of facilitating smuggling operations. The case was resolved by a $100 million settlement in 2010. An amended settlement four years later under his successor, Republican Tom Horne, led to the creation of TRAC.

Although he has not been involved in the process since he left office, Goddard said getting access to wire transfer records allows agencies like the Attorney General’s Office to weed out transfers, looking for patterns that suggested criminal activity. Under his term, the Attorney General seized about $20 million in forfeitures tied to smuggling.

Some of those patterns included looking for one-way transactions in large quantities that signaled an incoming payment for smuggling, or recording seasonal spikes in transfers originating from certain cities in neighboring Sonora state that were commonly associated with smuggling such as Caborca or Cananea.

“The people who are involved in the transactions are not being criminally prosecuted,” he added. “It's the coyote. It's the people that are managing the money, and it's the transmitters who are sending it illegally that are the focus of this investigation. So, I don't think individual rights are being jeopardized.”

Details about the surveillance program came under renewed scrutiny nearly one year ago when Sen. Ron Wyden (D-Oregon), the chairman of the Senate Committee on Finance, raised questions about the federal government’s involvement in this program.

Starting in 2019, the Phoenix field office of Homeland Security Investigations, the investigative branch of U.S. Immigration and Customs Enforcement, issued customs summons, a subpoena-like authority that is more commonly used to seek information about merchandise that is transported through border ports of entry. Those summonses forced wire transfer companies to continue to provide transfer data to TRAC, without vetting those requests. After Wyden raised the issue before the Homeland Security’s inspector general, HSI withdrew those summonses and stopped providing transfer records to the TRAC database.

U.S. Sen. Ron Wyden speaks to supporters after winning re-election during a Democratic Party of Oregon Election Night Event at the Hyatt Regency in Portland, Ore. on Tuesday, Nov. 8, 2022.

But in a letter published Wednesday, Wyden signaled the federal government’s involvement had been deeper than previously known. He revealed that other field offices for Homeland Security Investigations had issued similar legal demands to hand over transfer data from four other states, as well as 23 other countries and territories.

Wyden’s letter, addressed to the inspector general for the U.S. Department of Justice, also said the Federal Bureau of Investigations and the U.S. Drug Enforcement Agency had made legal requests to hand over bulk-data on wire transfers.

In his letter, Wyden said that while he supported efforts to crack down on drug trafficking and money laundering, he expressed concern about the potential impact on the people who rely on wire transfer companies, especially low-income, minority and immigrant communities.

“Instead of squandering resources collecting millions of transactions through this bulk surveillance program, the government should focus its resources on individuals actually suspected of breaking the law,” Wyden said.

Wessler, with the ACLU, claimed the 140 administrative subpoenas that the Arizona Attorney General’s Office filed between 2014 and 2021 violated a 2007 ruling from the Arizona Court of Appeals that ruled these types of requests were too broad.

But while Brnovich did not comment for this story, Goddard disagreed with the ACLU's judgment. He said the administrative subpoenas issued by the Attorney General’s office have to be signed off by an Arizona judge, so there is court supervision to these types of requests.

Goddard said another reason why the wire transfer records are a valuable tool in fighting transnational criminal groups is because smugglers can quickly adapt to law enforcement tactics.

“They're going to smoke out every new effort and investigation very quickly,” he said. “And so you have to try to be just as flexible and just as quick on your feet from the law enforcement side as the criminals are. And that requires some secrecy.”

The office of Arizona’s new Attorney General Kris Mayes recognizing how valuable the wire transfer records have been in combatting money laundering, as well as sex- and drug-trafficking.

“Courts have held that customers using money transmitter businesses do not have the same expectation of privacy as traditional banking customers. While Attorney General Mayes values privacy, she will continue to utilize this tool to protect the people of Arizona," the statement read.

A spokesperson for Mayes said the agency submits demand letters for the wire transfer data under on the state's racketeering laws, adding that the last batch was issued in October under Brnovich.

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