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Arizona Wants to TRAC Your Financial Transactions

by Michael Dean Thompson

The State of Arizona’s Attorney General, together with the Phoenix Field Office of the Department of Homeland Security’s Homeland Security Investigations, has collected more than 145 million records of private financial transactions — and that number is likely still growing. The transactions were collected from companies like Western Union that provide a service to people who often do not have traditional bank accounts and live on the margins of society. The civil rights of these often underrepresented people are being intentionally violated despite a court ruling against Arizona.

Senator Wyden revealed the program’s existence last year, spurring the ACLU to submit public record requests. More than 200 documents illuminated the breadth of the program. They found Arizona had issued more than 140 illegal subpoenas, demanding transaction information from money transfer services. Once collected, the private financial data was delivered to the Transaction Record Analysis Center (“TRAC”). One 145 million records of people sending money to or from Arizona, Texas, California, and New Mexico, as well as Mexico, are available to thousands of officers at hundreds of law enforcement agencies across the country.

TRAC has not just been growing the number of records it keeps. While keeping the program a secret from the public, it has been actively recruiting new agencies to use and develop the data. Currently, 440 local agencies, 80 state, and 53 federal agencies are among the users. An additional 152 field offices of federal law enforcement have access. By 2021, more than 12,000 individual users had login access. And the system continues to grow. In one year alone, TRAC conducted 32 training sessions to more than 550 users. Meanwhile, the Drug Enforcement Administration added more transaction records from its own subpoena of another payment processing company.

The program’s first attempt to seize consumer transaction data was in 2006 when the Arizona Attorney General issued subpoenas to Western Union for transactions to a particular state in Mexico. However, Western Union fought the subpoenas and won. A state appellate court found the subpoenas violated state law because they were overbroad and were seen as an attempt to acquire “limitless” investigative power. Undeterred, the Attorney General sued Western Union under a state money laundering statute and acquired a settlement from them in 2010. As a result, Western Union agreed to turn over even more records for four years from the border states and Mexico.

In 2014, a new agreement was signed, and TRAC was created. The new organization was funded by Western Union with hundreds of thousands of dollars and controlled by the Arizona Attorney General’s office. When that agreement expired, Arizona went to the Department of Homeland Security (“DHS”), which immediately began issuing its own subpoenas. Arizona did not rely solely on Western Union. From 2014 to 2021, the Attorney General issued 140 administrative subpoenas to other financial organizations under the same statute the appellate court had already declared could not be used for indiscriminate requests of money transfer records. Subsequently, dozens of companies have submitted records to TRAC.

After Senator Wyden questioned the use of the subpoenas, the DHS withdrew theirs. Nevertheless, Arizona’s strong arming of Western Union for the data after the subpoena tools were removed remains an example for future tactics to extend their overreach into surveilling American lives. TRAC continues to operate. Minutes from TRAC Board meetings indicate that Immigration and Customs Enforcement as well as Customs and Border Protection took over funding once the Western Union funds dried up.

Writer’s Note: TRAC’s mining of financial transactions can be used to track coyotes who accept payments for the immigrants they are holding hostage, either here, or just over the border. However, the techniques used to find those transactions can extend much further into American lives than is obvious. One technique, called Node Mapping, looks at measures such as frequency and size of transactions, number of connections, etc. to identify people of interest. So, a coyote may have quite a few connections, each with very low frequency (in other words, a large number of people send money only a few times). A Node Map would easily identify transaction recipients (busy coyotes, for example) in this category, as well as their customers. But its use does not stop there. A user can then follow the chain.

It is easy to fall into the Node Map user’s view under completely innocent conditions, such as sending money to a family member who then pays a coyote or receives a payment from one. A Node Map user will be aware of a node with connections to nodes of interest irrespective of their size and frequency. That is because Node Maps require exhaustive data to become accurate. Until TRAC possesses every financial transaction within the U.S. and Mexico, anomalies within the data will always draw the user’s attention because they look more like missing data than innocence. Even a lack of data can be damning under the subjective interpretation of a motivated agent.

Sources: ACLU.org, Wall Street Window, Newswires EIN

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