The Most Popular Money Transfer System Handles Money Transfers Between the US and Over 20 Countries

The database, housed at a little-known nonprofit called the Transaction Record Analysis Center, or TRAC, was established by the Arizona Attorney General’s office in 2014 as part of a deal with Western Union to combat drug trafficking. brain is the limit. people from Mexico. Since then it has expanded to allow officers from more than 600 law enforcement agencies—from federal agencies such as the Federal Bureau of Investigation, Drug Enforcement Administration, and Immigration and Customs Enforcement to small police departments in nearly every state—to monitor . the flow of money through financial services between the US and countries around the world.

TRAC information contains both the names of the sender and the recipient and the transaction amount. Rich Lebel, director of TRAC, said that the program has resulted in many leads and destruction of drug traffickers and other criminals who want to spend money, and has revealed the flow of money that helps law enforcement agencies to know more about the trafficking groups.

“It’s a forensic tool,” Lebel said. “We don’t broadcast it to the world, but we don’t run away or hide.” The Arizona attorney general’s office did not respond to a request for comment.

Mr. Wyden, an Oregon Democrat, said TRAC allows the government to “all-you-can-eat the American people’s finances while violating the privacy of the American people.”

Internal documents, including TRAC meeting minutes and copies of 140 subpoenas from the Arizona attorney general, were obtained by the American Civil Liberties Union and reviewed by The Wall Street Journal. He points out that any legitimate law enforcement agency can request the records without a warrant to see what US citizens have done to find evidence of money laundering and other crimes. One demonstration prepared by a TRAC researcher showed how the software’s data could be used to search for categories such as “Middle Eastern/Arabic Names” in many commercial records.

“Private financial records are being stored indiscriminately in a massive database, with access given to any law enforcement officer who wants it,” said Nathan Freed Wessler, deputy director of the ACLU’s Speech, Privacy, and Technology Project. “This program should not have been implemented, and it should be closed now.”

In order to obtain information such as bank records or e-mails, authorities need to demonstrate that the documents are necessary to the investigation and secure them through a subpoena or warrant.

TRAC accepts payments made through companies such as Western Union, MoneyGram,

DolEx and Euronet through its Ria brand. These services are used by millions of people—especially those without bank accounts—to send money between friends and family. It is a very common way for Mexican immigrants to send money they earn in the US to relatives across the border.

Financial services companies are regulated more loosely than banks, often by governments. Congress requires federal agencies to collect bank records and notify customers when they are caught. Under federal law, banks also have to monitor suspicious transactions, report those that exceed $10,000 and do customer due diligence.

The rules do not apply to investment firms, which have been under scrutiny by law enforcement officials for years because of concerns about money laundering, drug trafficking and other illegal activities. Customers who use money transfer companies such as Western Union and MoneyGram are not told that their transactions will be tracked by government agencies.

Mr. Lebel said that because financial institutions do not have the rules to know their customers like banks, a large amount of data must be recorded to detect fraud and money laundering. He said that TRAC sets a limit of $500 to avoid collecting large amounts of money sent by families to Mexico and other countries, which fall below that limit.

Mr. Wyden confirmed last year that the federal government was involved in TRAC, specifically that Homeland Security Investigations, an arm of US Immigration and Customs Enforcement, used summonses, a type of subpoena, to collect nearly six million records of money transfers from. Western Union and Maxitransfers from 2019. All the documents were able to be stored in the TRAC system, said Mr. Wyden.

“The scope of this surveillance program and the role of federal agencies is far greater than previously disclosed,” Wyden said this week in a letter asking the Justice Department inspector general to investigate the FBI and DEA’s relationship with the program.

Homeland Security officials told Mr. Wyden’s office last year that they were reviewing ICE’s efforts to combat drug trafficking in response to his inquiries about TRAC. ICE did not respond to a request for comment.

Mr. Wyden’s office said its ongoing investigation found that three financial services companies – MoneyGram, Euronet and Viamericas – sent TRAC large amounts of customer data in response to subpoenas issued by the US Immigration and Customs Enforcement office in San Juan, Puerto Rico.

Euronet and Viamericas received subpoenas related to customs from the office seeking data on transactions between anywhere in the US and countries including most of the Caribbean and Latin America as well as Canada, France, Spain, Ukraine and China, the companies told Wyden. These subpoenas ordered investment firms to provide information to TRAC.

Euronet said the demand came in 2021 to return to 2019; Viamericas said the data transmission is ongoing but declined to specify dates. MoneyGram said that the ICE office wanted information between 2019 and 2021 about transactions from 21 US countries to Colombia, the US Virgin Islands, the Dominican Republic and Venezuela.

MoneyGram said it does not voluntarily share transfer information with third parties except as required by law and that it “responded to subpoenas it received under the TRAC program as it responds to any other subpoena.”

Euronet said the subpoenas involved had ongoing legal proceedings and declined to comment further. Viamericas said it is committed to consumer privacy and follows up. DolEx did not respond to a request for comment.

On the website of the TRAC database, which is publicly available online, the registration page states that TRAC is a “law-abiding site only” and warns visitors that their access requests will be denied if they do not comply with the law and do not provide a government email address.

Mr. Lebel said TRAC has never been identified in a case where a law enforcement officer improperly obtained data or that the database was breached by outsiders. The program has seen an increase in use in recent years due to the opioid crisis in the US, he said.

Law enforcement agencies use TRAC data to establish patterns of money flows that are suspected of being linked to crime, said Mr. Lebel, and the more data, the better the analysis. TRAC monitors the data that the government provides, he said, and what it receives and stores often fluctuates.

Although he declined to discuss TRAC’s funding, Mr. Lebel said the nonprofit initially stopped short of funds from Western Union that had run out. Mr. Wyden and others have said that TRAC is federally funded.

Most of the subpoenas that TRAC obtains data from are detailed, often requiring money transfer companies to turn over data on transactions between certain locations above $500, the records show.

Even all household income is captured in the TRAC database—such as when an American resident of the border sends or receives $500 or more from another American living elsewhere in the country. Surveillance software that captures household records is under heavy scrutiny by courts because of the privacy concerns they pose.

Courts in the United States have rarely blessed backups of common-law criminal records—often requiring limited, if not all, public scrutiny of criminal investigations. Intelligence agencies operate under different laws, but Mr. Lebel said that TRAC has refused requests from law enforcement agencies and security companies to access data.

Privacy advocates have long argued against the bulk collection, arguing that the practice is ineffective and violates constitutional expectations of privacy.

Western Union, the largest and oldest money transfer company in the US, tried to combat high interest rates on customer information. In 2006, at the beginning of the interest of the attorney general of Arizona to obtain this data, the company challenged the decision of the government that required Western Union to make all records of transactions between Arizona and the Mexican state of Sonora. At the time, Arizona was concerned about high-profile businesses using the company to launder money. An Arizona appeals court ruled that most subpoenas to Western Union were excessive under Arizona law.

Despite its success in court, Western Union later found itself part of an Arizona attorney general’s investigation into whether its operations facilitated money laundering. In a $94 million settlement that ended a dispute between Arizona and the company in 2010, Western Union agreed to pay the Arizona attorney general’s request and help find ways to enforce laws against money laundering. A few years later, the settlement was changed to keep commercial records in a non-profit organization and TRAC was born.

Although the appeals court ruled that the request for more documents for the refund was excessive, the authorities continued to send letters of invitation to more than a dozen other money transfer companies. No such company except Western Union has contested the subpoenas in court.

Contact Dustin Volz at dustin.volz@wsj.com and Byron Tau at byron.tau@wsj.com