Headway on the Al Qaeda money trail

Although Al Qaeda remains a formidable foe, those working to cut off its cash flow point to significant progress since Sept. 11, 2001.

This effort, say experts including a top Treasury official, is crucial to the war on terror because financing is "the mother of intent" for terrorist activity. Among the accomplishments they claim:

• Al Qaeda's cash flow has been reduced by two thirds.

• $136.7 million in alleged terrorist funds, including $36.6 million in the US, have been frozen, in some 1,440 accounts.

• 320 people and organizations have been listed as Specially Designated Global Terrorists.

• 173 countries have frozen terrorist assets.

• 100 countries have passed new laws, making it more difficult for terrorists to transfer money and receive assistance.

• 80 countries have created intelligence units to share information on terrorist financing.

• The UN Security Council passed resolutions 1372 and 1390 requiring member states to act against terrorism's financiers.

• Three American charities - the Global Relief Foundation, Benevolence International Foundation, and Holy Land Foundation for Relief and Development - were shuttered for alleged sponsorship of Al Qaeda.

• The US in August broadened its list of designated charities to include those providing funds for the Palestinian Resistance Movement (or Hamas).

This progress is due, officials say, not only to unprecedented cooperation among US agencies and the international community, but also to a new strategy, with laws and stiffer regulations that have made it harder to funnel money to terrorist organizations.

Those new conventions have an added benefit, says David Aufhauser, general counsel at the Department of Treasury. "The larger success in this is the wariness and apprehension of donors being made known. Many are now afraid of being caught."

Mr. Aufhauser, who is leaving Treasury next week after 2-1/2 years in his position, has been an unrelenting advocate for attacking the cash pipeline. "It is easier to find the source of the money, which is the mother of intent, than it is to find dozens of terrorists who want to kill."

Aufhauser says that Al Qaeda's cash flow has been reduced by two thirds - though that figure is impossible to verify. Outside experts, while lauding the efforts, question the methodology of that equation.

"When I was looking at these financial issues, I was always cognizant about a great deal that we did not know," says Lee Wolosky, who worked on the National Security Council in the Clinton and George W. Bush administrations. "How can they be sure that they have accurate information about the aggregate amount of money available to terrorist organizations?"

"That determination depends on good intelligence," Aufhauser argues. "We have good, credible intelligence that shows it has had an impact." But he cautions that although he and colleagues have come a long way in assembling an international coalition, much remains to be done: "The flow of funds has stalled and diminished. But it has not stopped."

In June, Aufhauser called Saudi Arabia the "epicenter" of financing for Al Qaeda, and criticized that government's minimal efforts in stemming the cash flow. But since the May 12 attacks by an Al Qaeda cell on Western targets in Riyadh, in which 35 people were killed, officials say the Saudi government has relentlessly pursued Al Qaeda and its financial backers.

"We have Treasury agents and FBI agents who are actually working hand in hand with Mabahith [Saudi secret police] to identify and disrupt terrorist financing," said John Pistole, assistant director of the FBI's counterterrorism division, in a Sept. 25 Senate committee hearing.

Moreover, the Saudis have passed regulations stemming the cash flow, especially on charities, suspected of funding terrorism.

Moreover, Saudi Arabia has banned a 1,700-year-old religious practice of making cash collections in mosques and retail establishments. And it has targeted - and publicly named - some businessmen, now known as the "Jeddah merchants," who have allegedly provided large amounts of cash to Al Qaeda. It has also clamped down on its informal money-transfer system, hawalas.

Other countries in the region - including the United Arab Emirates, Bahrain, Egypt, and Qatar - have also enacted regulations on these money transfers.

"There have been positive developments ... in the past two years," says Mr. Wolosky. "But that doesn't mean that more does not need to get done."

Aufhauser agrees. "If money coming from Saudi Arabia dries to a trickle, there is still a great deal of support from other countries - Pakistan, Afghanistan, Indonesia, Gulf countries, European countries, even right here in the United States. That's why I say this is a global problem."