Following the Money Trail

Not all defenders against terrorism wear uniforms and carry guns. Dan Moger is on the forefront of the new battlefield

Dan Moger is a financial warrior. From his perch near the top of the U.S. Treasury Department’s organizational chart, he disrupts money flows that are the lifeblood of terrorist groups such as ISIS and al-Qaeda, rogue nations such as North Korea and Iran, and criminal enterprises such as Mexico’s Sinaloa drug cartel.

If you didn’t know that Treasury conducted anything so almost-sexy, so almost-Bondian as financial warfare, you are not alone. For one thing, the Treasury Department’s role in our national security is fairly new: Moger’s office, Terrorism and Financial Intelligence, or TFI, was born in 2004 as a consequence of 9/11.

For another, even top government officials possess only a dim understanding of all that TFI does, though this is changing: “We’re a little annoyed now when we have to explain why Treasury is in the room on a national security issue,” says Moger, who is thirty-seven and a native of Riverside, where his parents, Angel, a retired professor of comparative literature and French at Sarah Lawrence College, and Dan, a lawyer in town, still live. “The American people got tired of the boots-on-the-ground approach, and they continue to be tired of it, and yet a strongly worded letter from the State Department wasn’t getting it done.” But pinching off a money supply is bloodless and stunningly effective. “So we end up being the most popular thing.” Moger’s portfolio is bursting at the seams—it encompasses the world, minus the United States. Hezbollah? ISIS? Activity in China with a North Korean thumbprint on it? An attack in Syria with an Iranian thumbprint on it? Counterfeit dollars in Afghanistan? Suspicious cash flows out of Mexico? Money laundering through this bank in Europe, or that bank in Canada? Any one of these thorny issues might land on Moger’s desk.

TFI: THE BASICS
Before we explore his work in greater detail, it would help to know where he fits in Treasury’s scheme. TFI is composed of three parts: the Office of Foreign Asset Control (OFAC), which is in charge of sanctions; the Office of Intelligence and Analysis (OIA), Treasury’s own intelligence service; and the Office of Terrorist Financing and Financial Crimes (TFFC), Moger’s domain, which focuses on strategy—what to do about illicit money flows. Or, to put it crassly, how to inflict discomfort on “bad actors” and those who handle their money. Until last summer, Moger was TFFC’s director of global affairs, but in July he got promoted to deputy assistant secretary for TFFC, where, among his myriad duties, he represents Treasury at senior White House meetings.

TFI represents a muscled-up, twenty-first-century Treasury Department with global reach. Juan Zarate, an acquaintance of Moger’s who headed TFI at its inception, has described the 9/11-era Treasury Department as “emasculated” and “struggling to remain relevant to national security issues”—especially after the Secret Service and Customs, which had been in Treasury, decamped for the brand new Department of Homeland Security. But soon enough, Treasury’s new powers—powers that fall midway between diplomacy and actual warfare—kicked in, transforming the department’s accountant-like crime fighters into “guerillas in gray suits,” as Zarate calls them.

These guerrillas are trained to follow the money.

“With every threat, with North Korea, with Iran, with ISIS, we look to see, okay, where are they vulnerable?” Moger says. The answer is, they’re vulnerable wherever they touch the legitimate international financial system, as they inevitably must, whether to bank, to insure, to ship, or to buy things. Since that system runs through New York, the world nexus of the dollar—the one currency in which all things are traded—Treasury has extraordinary leverage: A bank’s or an insurance company’s expulsion from the international system is nothing less than a death sentence.

“Ultimately, the financial systems are so integrated that they can’t deal with the most powerful actor in that system”—the United States—“opposing them.”

Example: In 2011 Moger, working with a branch of Treasury called the Financial Crimes Enforcement Network (FinCEN), discovered that Lebanese Canadian Bank was linked to money laundering, terrorism financing and drug trafficking for the Lebanon-based militant group Hezbollah. Treasury had a new tool for just such a situation: a “311.” The number refers to Section 311 of the Patriot Act, and the tool itself, beautiful in its simplicity, marks you as a “primary money-laundering concern.” To be hit with a 311 is like acquiring a scarlet letter—no bank will touch you for fear of ruining its own reputation and thus losing vital access to the dollar and New York. “It’s really our most damning finding, that you pose a significant money-laundering threat,” Moger says. “We essentially shut down this bank—well, we did shut it down—by subjecting it to a 311.”

At the same time, Treasury inflicted a glorious black eye on Hezbollah: “We were exposing their connections to drug trafficking—and this was horrific for ‘the Party of God.’”

The 311 designation has inspired panic around the world since 2005, when Treasury slapped one on a little bank in Macau, Banco Delta Asia. What Treasury noticed was that BDA was doing a lot of business with the heavily sanctioned North Korea. “We’ve caught [North Korea] in myriad sanctions evasion schemes,” Moger says, including setting up front companies all over the world; exporting arms; trafficking drugs; and counterfeiting U.S. $100 bills of such high quality that the Secret Service christened them “supernotes.”

North Korea appeared to be laundering illicit gains through BDA, with the added benefit that BDA gave Pyongyang access to a constellation of international banks. Then came the 311 and its startling domino effect: Exposed as a pariah, BDA went into free fall, and then banks around the world cut ties to North Korea, fearing a similar fate. The blow to North Korea was crippling.

“But the real crime,” Moger observes, “is that they’re spending what little funds they do manage to drum up on nuclear and other military progress—not on their own people.”

OF TIGERS & NUCLEAR WEAPONS
Daniel W. Moger III is a sturdy, bearish-looking man with a close-cropped head and a full, light-brown beard. There’s an almost soulful weariness about his eyes—until he laughs—that tells of long hours and heavy responsibility. Jennifer Fowler, Moger’s predecessor and former boss, says of the job, “You’re asked to make decisions and analyses very quickly. The pressure to be right and give good advice is intense. That takes a toll.”

Each morning Moger walks the thirty-five minutes from his Victorian townhouse—brick turrets, limestone trim, Romanesque arches—to the massive neoclassical Treasury building, next to the White House, and enters by the great bronze statue of Albert Gallatin, who served as Secretary of the Treasury under Jefferson and Madison. In a sense, Moger is home. When asked about his interests outside of work—are hobbies even possible?—he mentions only food. (Fine food and good wine, though he’s equally keen on the lowly Big Mac, a former coworker elaborates.) At least he carved out enough of a non-Treasury life to get married last October, to Julie Mills—but he notes with an abashed chuckle that she, too, works at TFI.

Moger does not really like the spotlight and would rather do almost anything than give a speech, according to Andrew Jensen, his former deputy at global affairs, now a sanctions expert at Scotiabank. On the other hand, Jensen says, Moger is a commanding presence at meetings with a “booming, thunderous” voice and laugh; he also happens to be, usually, the smartest person in the room. “And Treasury has some of the most brilliant people on the planet.”

During interviews, Moger must make a constant mental review of what is public, and thus okay to tell, and what is not. “Over the years I’ve accumulated stories of, you know, seizing a narcotics kingpin’s mansion in which there is a tiger,” he’s saying now. “What do you do with the tiger?” Then he launches into another, far more unusual, animal story, but interrupts himself: “Actually, I don’t know if that’s public.”

Much of what he does is secret. He can’t discuss the Panama papers—the enormous cache of leaked documents that provided a window into how the powerful keep their money hidden—nor can he discuss the politically fraught Wikileaks. He goes silent on all matters Russian, except to say that Treasury is stepping up use of the Global Magnitsky Act—named for Sergei Magnitsky, an accountant who exposed Russian corruption and then died in a Moscow jail—which imposes tough sanctions on those who abuse human rights and profit from it. And these are subjects the public already knows something about; we can only guess at what shadow worlds occupy the main share of Moger’s time and worry.

Within Treasury, Moger is known for an intensity of purpose leavened by his abundant good cheer. “He’s such a joy to be around,” says Hagar Chemali, who worked with Moger at TFI and today heads her own communications firm in town, Greenwich Media Strategies. “His job requires being a boss of a significant-sized office in a field that is very fast-paced and very stressful, and he has that perfect personality to be able to produce a really good product while keeping the team happy.”

Jennifer Fowler adds, “He comes at the job with a lot of passion—he feels things very deeply.” This means he can get frustrated when a policy argument does not go his way, but he never lets his emotions rule him. “At the end of the day,” says Chemali, “it’s about being a civil servant and serving at the pleasure of the President, regardless of the administration, regardless of the policy. It’s about going after criminal actors and going after their money, whether it’s a drug trafficker or a terrorist organization or a rogue regime. Dan just loves the good fight—he loves the mission.”

The mission, though, can get tricky when administrations change. Under President Obama, Treasury played a key role in the Iran nuclear accord of 2015—when Tehran agreed to halt its nuclear ambitions in exchange for sanctions relief—only to watch the United States exit the deal last year under President Trump. “I won’t give you my own view of the nuclear deal, but I’ll give you both schools of thought,” Moger begins. He proceeds to outline how a nuclear Iran would be tantamount to a neighborhood bully, emboldening it to behave badly and threaten the entire region. A nuclear Iran might even touch off a nuclear arms race with Israel.

Then again, Moger says, nukes are but one of many Iran-engendered headaches. “Iran is a problem in everything. They really are. Their malign activities in the region, frankly, cannot be overstated. And their malign activities worldwide—I mean, you can’t divorce them from Hezbollah, which is one of their primary bad-actor proxies. They’ve conducted operations all over the world, including in the United States.” Treasury recently exposed Iran’s attempts to counterfeit Yemeni currency.

In the end, though, the Obama administration decided that eliminating the nukes was the critical mission, even if we had to live with the headaches. “We agreed that we wouldn’t be putting their other shenanigans on the table for negotiation,” Moger says. “Nor would we stop pursuing them.”

For now, the accord has given us a safer world. The hope was that it would bring Iran so profitably into the international fold that it would give up both the nuclear ambitions and the mischief for good—but that hope has faded since the U.S. reneged. (Five countries remain in the deal, but our departure is believed to have badly weakened it.) Meanwhile, critics of the accord point out that Iran’s windfall in unfrozen assets—billions of dollars—probably bolstered its missile program and funded some of the malign activities Moger speaks of. So who’s right? “There’s merit on both sides,” Moger says diplomatically.

It’s known, however, that Treasury considered the nuclear deal an unambiguous victory. This much Moger will say: “People are always asking, ‘Do sanctions work? Do they work, ever?’ And the answer is complicated. I would say that sanctions are the only reason Iran came to the table in the first place—that we broke them. And they finally agreed to come to the table and agree to do some pretty amazing things, in terms of laying their nuclear program bare and giving up material and so forth. The nuclear deal, whether you like it or not, was nonetheless viewed in our world as a success.”

FROM HIGH SCHOOL TO HIGH CRIMES
Moger steeped himself in world affairs from an early age. During high school, at Phillips Academy Andover, he latched onto development economics, which focuses on improving the fiscal lot of poor countries. This was the late nineties; the Cold War had ended; there were no major hot wars in progress; and Francis Fukuyama had declared “the end of history,” wherein liberal democracy was acknowledged to be the final, most ideal form of human government. “Everything was right in the world,” Moger recalls. “We were involved in a few minor skirmishes of choice, but the world was getting along—it was the brightest spot of my lifetime in terms of world relations.” What remained was to raise up those lagging places. “I saw economics as a high calling, as a way of seeing if the world could do better at supporting its citizens.”

At Wesleyan University, Moger broadened his range, enrolling in the College of Social Studies, nicknamed “the College of Suicidal Sophomores” for its punishing workload. He also studied French. From a café in Paris he watched the events of 9/11 unfold, knowing the bright era—the end of history—was over, but not yet knowing how his career would fit into the new reality.

After a thrilling interval in the field (Moger was supervising election observers in the country of Georgia when the opposition stormed parliament—right before Moger’s eyes—in what became known as the Rose Revolution), he earned his master’s at Johns Hopkins’ renowned Nitze School of Advanced International Studies. It was there, while taking a course in terrorist financing taught by Matt Levitt, a noted academic who had served at Treasury, that he learned of the Department’s more exotic capacities. “I didn’t know they had a role at all in national security, to be honest,” he says. “I thought Treasury collected taxes and determined budgets and so forth.”

He arrived at TFI in 2008, when the office was only four years old and still under construction, as it were, despite early successes like North Korea. In fact, the successes had been propelled into the background by more urgent events. “That was bailout time,” says Moger, who started in June, three months before Lehman Brothers’ collapse triggered a chain reaction that threw our whole financial system into chaos. “We were building something exciting, but in the Treasury Department it was still second fiddle to the $700 billion bank bailout. I used to come out of the Treasury Department my first year there to protests over bailing out the banks.”

Moger’s early work centered on the Middle East. In 2011, the Middle East and its Arab neighbors in North Africa erupted in what was optimistically called the Arab Spring. “Things tumbled very quickly. Tunisia went first, then Egypt and Libya—Syria is the enduring one—but these all happened at the same time, within a few months of one another. And suddenly we were overwhelmed with what our responses were supposed to be. Where once people were like, ‘Well, should we hold this conference, or should we do that?’ now it was like, ‘What do we do about a country collapsing?’”

The Arab Spring—a series of democratic uprisings against oppressive regimes—seemed like good news at first, but the reality has proved far more complex. Yemen and Syria remain devastated war zones. Libya is unstable and known to be an ISIS haven. In 2011, however, the political landscape looked ripe for a Libyan intervention: Muammar el-Qaddafi, the country’s eccentric dictator, was vowing to hunt down the civilian opposition—“the rats”—house by house and alley by alley, and Europe and much of the Arab world agreed that Qaddafi should be stopped, even if it meant ousting this War on Terror ally from power.

Once the Obama administration decided to intervene militarily (albeit in a limited way), Treasury, too, swung into action. “We blocked a whole government that was very, very wealthy and very involved in the international financial system,” Moger says. “There were billions and billions of dollars—I won’t give you the exact figure—that were being ‘subcustodized’ in banks in New York. Financial institutions in New York were calling us and saying, ‘So-and-so in this European country parks a couple of billion dollars in funds here overnight to collect interest. We don’t have to block that, do we?’ And we’d say, ‘Yeah, you actually do have to freeze those funds. Sorry.’”

This is the “beautiful leverage point” that Moger often speaks of: If you trade with bad actors, you’ll find yourself out in the cold. “Libya was a fascinating example of the extreme ends of power of Treasury’s authority,” Moger continues. “We took Qaddafi’s last resources from him overnight. All of a sudden he couldn’t pay people. He was struggling to pay militias that he was hiring throughout the African continent to come fight his war for him, and he ran out of money real fast. That was one of the biggest overnight actions that we’ve ever done, if not the biggest.”

On October 20, 2011, rebels found Qaddafi hiding in a storm drain—in a gold suit—and shot him dead.

IT’S NOT POLITICS
Treasury seldom resorts to large-scale freezing. Usually “conversations” suffice, though Moger’s usage of the word sounds like a euphemism for arm-twisting: When speaking to Turkish bankers, for example, he might say, “You need to take care of this problem before we make it public.” Not even superpowers are immune to Treasury’s toothy charms. “The Chinese government will stare stoically at us while we deliver our carefully prepared talking points about the risks of North Korea, and just respond with a curt head nod. Because they can—they can just say no. Chinese banks don’t have quite that liberty. They have New York branches.”

But what about something like ISIS? “Isis was a nightmare,” Moger allows with a sigh. “It was clear that this was a new brand. This was not a group that was interested in winning the hearts and minds of their population. They were horrifying. They horrified even traditional al-Qaeda financiers. They were like, ‘Those guys are crazy.’”

Al-Qaeda’s business model, if you will, relied on deep-pocket donors in the Persian Gulf. (The 9/11 attackers availed themselves of bank accounts from Dubai to Germany to Florida—just the sort of thing TFI would disrupt today.) Hamas and Hezbollah rely on “charities” to fund their darker operations, as well as their social services. But ISIS? “These guys were just stealing money in the territory they controlled. And selling oil”—on the black market, possibly to Turkey. It would seem, then, that ISIS was self-contained, beyond Treasury’s reach. Not so. Oil fields require supplies and maintenance, for starters. “They aspire to a caliphate. That means they have to pay for things,” Moger says. “In order to be a legitimate anything, you’ve eventually got to spend money places. And in order to do that, they eventually need to touch people who care about the Treasury Department.

“So the point was to find where ISIS was vulnerable, where ISIS was trying to sneak into the legitimate world, in order to buy supplies or fund their media empire or send money to their branches. That’s where we had the greatest effect in shriveling down their presence, as the military currently does in shriveling down their physical presence.”

But the world keeps changing. Storm clouds on the horizon include cryptocurrencies, whose wide adoption would circumvent the dollar and the international financial system, not to mention make life easy for the ISISes of the future. From Treasury’s viewpoint, cryptocurrencies are still a minor irritant. In the coming years, treasuries of many nations will seek to regulate them, “before they become too much of their own ecosystem,” Moger says. “You can buy heroin on the black market with cryptocurrency, but I don’t think you can buy a house yet. So there are limitations. You’re going to have to transfer it into a normal currency at some point to a financial institution.” A greater, but more diffuse, storm cloud is the quietly growing international dissatisfaction with the primacy of the dollar and the special power it gives America—but that’s for another story.

In 2014 Moger left Treasury for the private sector; but he returned months later, having failed to shed what Hagar Chemali calls “the bug,” the almost obsessive ardor for the mission. “You actually are able to pursue the Greater Good,” Moger observes cheerfully. “It’s the reason why we all do it for less money than we could be making.” Yet America in 2019 finds itself disunited. Does our swirling, bipolar, vituperative national mood affect his work? “It shouldn’t—it shouldn’t,” Moger begins. “And until recently, it hasn’t.” He explains that after an unusually smooth transition from Bush to Obama—many top people stayed on—the Trump transition proved “difficult” because of the huge influx of new people at Treasury. But is that the whole of it? In January The Daily Beast reported that Treasury is rife with discontent: “Treasury Department Chaos Leads to Exodus of Key Staffers,” the headline read, and the chaos could be traced to “the changing whims of the White House.” On this Moger offers no comment. “People outside of Washington always ask me about politics,” he says. “I don’t deal in politics, I deal in national security. Parties and candidates and administrations can claim to have different views, but they don’t actually have different views—national security is apolitical. It’s not politics when you’re going after the bad guys.”

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