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Oregon senator questions ICE 'bulk surveillance' of millions of wire transfer records

ICE effort sought 6.2 million records from customers of Western Union & Maxitransfers in Arizona, California, New Mexico & Texas

The chairman of the Senate Finance Committee is calling for an investigation into what he called "an indiscriminate and bulk surveillance program" that collected data on millions of money transfers managed by federal officials in Phoenix.

U.S. Sen. Ron Wyden (D-Ore.) sent a letter Tuesday to the Department of Homeland Security's Inspector General asking him to review the program managed by Homeland Security Investigations, part of U.S. Immigration and Customs Enforcement.

As part of the program, HSI officials in Phoenix used a form of subpoena power—known as a customs summons—to order two companies to turn over every money transfer over $500 transmitted between Mexico and four southern border states: Arizona, California, New Mexico and Texas. All told, HSI officials in Phoenix sought around 6.2 million records, obtaining these records using a total of eight customs summonses, which were sent to Western Union and Maxitransfers Corporation, demanding records for a six-month period following the order.

Customs summons are limited to investigations related to the collection and examination of records for importing merchandise, including the assessment of customs duties, however federal officials have increasingly attempted to expand the power to drug-smuggling investigations, and widespread collection of millions of records of financial transactions.

Both the DEA and U.S. Customs and Border Protection have been criticized for their own attempt to collect data in bulk, leading Wyden to question why HSI continued the practice.

Further, this data was shared with federal, state, and local law enforcement agencies nationwide through a nonprofit set up to manage the data, Wyden said.

In a four-page letter, Wyden questioned how the program was set up to scoop up a "massive trove of ordinary Americans' financial records," arguing that HSI's efforts "swept millions of financial records about Americans." And, he argued that HSI "abused its customs summons authority to engage in bulk surveillance."

Federal officials can only customs summons to seek information about items being imported into the U.S., and seek items that are "relevant" to an investigation, he said adding that HSI agents "should have known that this authority could not be used to conduct bulk surveillance," he said, noting that the Justice Department's own watchdog "harshly criticized the Drug Enforcement Administration in 2019 for using subpoenas to conduct a bulk surveillance program involving records of international phone calls."

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Wyden asked the federal watchdog to investigate whether HSI officials in Phoenix violated the law, and agency policy when they sought the records.

"Law-enforcement agencies have ample authority to subpoena financial information about individual or specific transactions they believe are related to illicit activity," Wyden wrote. "Instead of squandering resources collecting millions of transactions from people merely because they live or transact with individuals in a handful of Southwestern states or have relatives in Mexico, HSI and other agencies should focus their resources on individuals actually suspected of breaking the law."

The Tucson Sentinel asked for comment from officials with ICE, and were referred to DHS. DHS officials did not respond to multiple requests for comment.

In his letter, Wyden noted that his office requested a briefing from the Department of Security on the use of customs summonses. HSI officials agreed, and held a briefing on Feb. 18. During this briefing HSI officials said that this was "the first time anyone in Congress had been told about the program," and senior officials at the agency said that since 2019, they have been using their "customs summons authority" to "conduct bulk surveillance of Americans' financial records," Wyden wrote.

Wyden also said that after his staff contacted HSI about use of customs summonses in January, "HSI immediately terminated the program," and told Wyden "it would no longer use its authority to request these records."

In his letter, Wyden said he supports what he called "legitimate efforts" by federal law enforcement to crackdown on drug smuggling, and closing loopholes used to launder illegal income and avoid federal taxes.

"Law enforcement agency have ample authority to subpoena financial information about individual or specific transactions they believe are related to illicit activity," he wrote. "Instead of squandering resources collecting millions of transactions from people merely because they live or transact with individuals in a handful of Southwestern states, or have relatives in Mexico, HSI and other agencies should focus their resources on individuals actually suspected of breaking the law."

"Given the many serious issues raised by this troubling program, I request you investigate the program's origins, how the program operated, and whether the program was consistent with agency policy, statutory law, and the Constitution," Wyden wrote. He also asked the OIG to review whether HSI has similar programs, and whether DHS has "established adequate policies and procedures for its customs authority, the purported  legal basis for the program."

Wyden also asked the OIG to review whether HSI had "ensured that its operations are subject to congressional oversight."

Previous fight over wire-transfers

In 2006, Terry Goddard, the Arizona Attorney General, sought to require Western Union to produce transaction data on wire-transfers over $300 or more from any location in Sonora, Mexico, for a three-year period. A lawsuit ensued, and the next year, a three-judge panel at the Maricopa County Superior Court ruled that while Goddard had "demonstrated reasonable grounds to believe" that some portion of the data would show illegal activity, Goddard had failed to show that such data would connect to criminal activity in Arizona.

"Because the burden is on the attorney general to establish such a connection prior to the enforcement of his request, we vacate the enforcement order as being overbroad and remand it to the superior court to determine what part, if any, of the request is enforceable pursuant to the standards set forth in this opinion," wrote G. Murry Snow.

In Feb. 2010, Goddard and Western Union settled over a separate complaint regarding money laundering allegations, and Western Union agreed provide bulk data through a new non-profit organization known as the Transaction Record Analysis Center, as part of the larger Arizona Financial Crimes Task Force.

From Feb. 2010 to July 2019, Western Union sent millions of records to the Arizona AG and TRAC as part of this agreement, wrote Wyden, allowing law enforcement officials to review records of money transfers above $500 between Arizona, California, New Mexico, Texas and Mexico. "

In the years following the initial settlement with Western Union, dozens of other money transfer businesses also provided TRAC with similar bulk transaction data, on a voluntary basis," he wrote. And, TRAC allowed federal, state and local law enforcement agencies to query and use this data without court supervision, he said.

However, when this agreement expired in 2019, Western Union continued giving this data to HSI in Phoenix. "Under this arrangement, HSI issued  a series of customs summonses to Western Union, each directing the company to transmit records of money transfers directly to TRAC for the next six months," wrote Wyden. In 2021, HSI also used this authority to receive data from Maxi.

Wyden criticized the way that TRAC gathered and disseminated data writing that the "arrangement raises serious questions" including whether the customs summons authority can be use to force a company like Western Union to give data to a "non-governmental agency."

He said that TRAC's surveillance database "enabled hundreds" of law enforcement agencies to have what he called "unfettered access, without any supervision by the courts, to the financial transactions of millions of people." This includes thousands of people who are low-income, minorities, who are often "unbanked" and therefore rely on wire-transfers, and he said that by giving HSI bulk records, companies like Western Union had "utterly failed to protect the privacy of their customers.

"Moreover, HSI essentially outsourced the data processing and hosting of a bulk service database to an organization outside the control of the federal government," he wrote. "That raises additional questions about whether there were adequate security and privacy protections in place," he wrote. Additionally, it was unclear whether HSI wrote or published a privacy impact assessment about the program. As Wyden put it, HSI officials "acknowledged that they only alerted DHS privacy officials  after my office contacted HSI to request a briefing about the program."

In previous review, OIG found 'lack of clear guidance' on summons

Wyden said that HSI's use of its special authority under customs was "in this manner in highly problematic," in part because DHS officials have already been rapped on the knuckles by the OIG over the improper use of customs summonses.

In 2017, the OIG found that U.S. Customs and Border Protection used this power to seek information from Twitter about an account that was highly critical of Trump administration policies.

For weeks, the account, @ALT_USCIS—a reference to the federal agency under DHS, U.S. Citizenship and Immigration Services—regularly hit the Trump administration, and in March 2017 CBP used the law in an attempt to "unmask" the person behind the Twitter account.

Twitter responded by filing a federal complaint, claiming that summons exceeded the scope of the agency’s authority and said CBP's move infringed upon the person's First Amendment rights. CBP quickly withdrew the summons and Twitter dismissed its complaint.

In the 13-page review, OIG found that there was a lack "clear guidance on the proper use" of customs summonses that "resulted in inconsistent—and, in some cases, improper—use of such summonses."

The watchdog found that CBP used the summons in drug-smuggling cases, violating its own policy at least 1 out of 5 times from Jan. 2015 to May 2017, and the agency also used the subpoenas in other "questionable cases." This included a case when CBP used the summons to obtain records for Craigslist to target a Border Patrol agent accused of selling government-issued night vision goggles. The agency also used the summons to target CBP employees who requested sick leave under false pretenses, the OIG said.

Among the findings, OIG said that CBP's own policies "precluded using customs summons in drug-smuggling investigations, but at least one-fifth of the summonses issues by CBP OPR violated this policy."

Because of the OIG's review of CBP's problems, DHS had "already been made aware of the limits" of the customs summons authority, Wyden wrote.

He noted that as part of the OIG's own review, CBP "committed to a set of reforms" including updating its operating procedures, providing training on proper use of summonses and creating a review process that requires summonses to be approved by counsel and CBP's Assistant Commissioner. The OIG also required an agency-wide review of summonses.

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"Had DHS implemented these reforms across the Department, HSI might have been better equipped to identify the serious legal concerns raised by its own use of the same authority for prospective bulk collection of financial transactions," Wyden wrote.

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HSI agents during an investigation in Nogales in 2018.

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