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Cutting Money Flow to Terrorists Proves Difficult

Nations at the heart of Al Qaeda's network lack financial safeguards, and the global alliance is weaker. Cells are now deeper underground.

September 28, 2003|Josh Meyer | Times Staff Writer

DUBAI, United Arab Emirates — A U.S.-led campaign to eradicate terror networks by choking off their sources of money is running into roadblocks in many countries that will make it difficult, if not impossible, to prevent the groups from financing attacks, U.S. and other officials say.

Two years after Al Qaeda paymasters helped fund the Sept. 11 attacks from Dubai, one senior U.S. Treasury Department counter-terrorism official says this modern financial crossroads of the Middle East, Africa and Asia remains "a central switching station" of banks, money changers and gold and diamond traders through which terror organizations move cash.

Many countries believed to be at the epicenter of Al Qaeda's re-emerging network -- including Afghanistan, Yemen and Somalia -- are, at best, years away from establishing the financial and legal infrastructures needed to freeze terrorist assets or gain intelligence on how cells are raising, moving and spending money, say U.S. officials and their counterparts in other countries.

Away from the front lines, the effort to build a global coalition to staunch the flow of funds has suffered political, legal, cultural and technical setbacks so serious that some authorities fear it could fall apart. Many Middle Eastern and European countries, including Germany and France, have disagreed with the Bush administration over such basic questions as the definition of terrorism and what constitutes the financing of terrorism.

Nearly all of those who were identified by the U.S. government in the weeks after the Sept. 11 attacks as suspected senior financiers of Al Qaeda remain free, without ever having been detained or charged by foreign governments, and off limits to U.S. officials who want to question or arrest them.

Many other suspected financiers of Al Qaeda, other groups designated by the United States as terrorist organizations, such as Hamas and Hezbollah, and dozens of regional affiliates have simply gone deeper underground or changed to tactics such as using human and animal couriers to move large volumes of cash, officials say. Others have flocked to "soft spots," or countries and cities they have identified as having little scrutiny over their front companies, charities, relief organizations and banks, officials said.

"Two years after we started all this, we don't have a clue, really, as to how they raise their money, how they move it or where it goes," one U.S. official said of Al Qaeda, Hamas and Hezbollah.

Despite the massive crackdown launched in the weeks after the Sept. 11 attacks, cells are still believed to be operating in the United States and as many as 100 other countries, sending messages and money back and forth, recent intelligence shows.

"It is pervasive," said a second senior counter-terrorism official with the Treasury Department. "It is everywhere."

There have been many successes since President Bush signed Executive Order 13224 on Sept. 23, 2001, authorizing sweeping new powers for the Treasury Department and other agencies.

A few senior Al Qaeda paymasters have been killed, and others have been captured. One of those captured, Mustafa Hawsawi, has provided a wealth of information about the network.

U.S. officials have designated 321 individuals and entities as terrorists or terrorist supporters, and more than $136.8 million has been frozen around the world.

Working together and with the United Nations, thousands of officials of the Treasury, Justice and State departments, the Pentagon and National Security Council have crisscrossed the globe, identifying charities, relief organizations and front companies that they believe are being used to finance terror organizations.

Many of those investigations remain open, authorities said. More than a dozen other groups and individuals have been tried in criminal cases.

By one recent Treasury Department estimate, Al Qaeda's cash flow has been dispersed and reduced by two-thirds.

Initially, there were signs that a global coalition would coalesce behind the United States and the U.N. Soon after Bush's order, the Security Council enacted measures to require all U.N. members to freeze assets and outlaw terrorist financing worldwide.

"Jump teams" of U.S. experts were dispatched to more than 20 countries to help them find and freeze suspected terrorist assets. After that, they began an effort to help central bankers, finance ministries and the private sector in those countries build laws and financial mechanisms to prevent their financial systems from being corrupted.

The Treasury Department says that to date, 173 nations have executed blocking orders of some kind, more than 100 have introduced legislation to fight terrorist financing and 84 have established financial intelligence units to investigate suspicious activity and share information.

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