Over Arabic coffee and sweet tea, then-Treasury Secretary Paul O’Neill and Saudi Crown Prince Abdullah sat down at his Jedda palace to devise a plan to target an Islamic charity suspected of bankrolling terrorists.
That March 5, 2002, meeting was six months after the deadliest attacks on U.S. soil, and U.S. intelligence had quietly assembled information that branches of the Saudi-based Al-Haramain Islamic Foundation were diverting donations to support terrorist activities.
Six days later, the United States and Saudi Arabia moved jointly to block assets belonging to foundation branches in Bosnia and Somalia. It raised hopes of a fresh wave of international cooperation on the problem.
To date, more than 100 countries have strengthened existing laws or set up new ones aimed at cracking down on terrorist financiers, says the Treasury Department, which has no pre-Sept. 11 figure. And 174 countries or territories have asset-freezing orders in effect, it says.
“It is much tougher for terrorists to move their money,” said Senate Finance Committee Chairman Charles Grassley, R-Iowa. “But their funding remains in place. We only have to look at attacks in Madrid or Baghdad to see that they continue to operate and kill innocents.”
383 persons, groups named
Since the terrorist attacks, the United States has identified 383 individuals and groups believed to have helped finance or otherwise support terrorist activities, leading to the freezing of roughly $141 million linked to al-Qaida and other terrorists worldwide. Of that, more than $37 million has been frozen in the United States.
The total has remained fairly static for two years, but government officials insist they are making inroads in identifying and dismantling money-moving networks terrorists use.
The independent commission investigating the Sept. 11 attacks estimated it cost $400,000 to $500,000 to carry them out. The government has been unable to find the source of that money.
“It takes so few dollars to fund a terrorist operation,” said Bill Fox, director of the Treasury Department’s Financial Crimes Enforcement Network. “The amount of money that is out there is a little bit of a red herring in some respects. I think we are correctly focused on choking off money or using the money trail to locate and capture the bad guys.”
Officials concede it’s difficult to stay on top of the money trail. There are lots of options for terrorists: traditional banking systems, siphoning charitable contributions, trafficking in drugs, cigarettes, diamonds and gold, and smuggling cash.
“Every time we choke off one vehicle ... it causes the bad guys to change tactics and try to find another way to move that money around,” said Fran Townsend, the White House’s homeland security adviser.
Congress’ investigative arm, the Government Accountability Office, urged the government in a report last December to assess how terrorists were using alternate avenues to raise money. This is even more critical as the United States and other countries make it tougher for terrorist financiers to use traditional banking systems.
In March, Fox urged members of the World Diamond Council meeting in Dubai to ensure terrorists don’t use hard-to-trace diamonds to move or hide dirty cash.
The Saudis have taken steps to ensure charitable donations aren’t siphoned off to support terrorist activities, such as creating a commission to filter contributions raised there for causes abroad. That led to dissolving Al-Haramain’s operation in Riyadh, Saudi Arabia.
The United States has created its own voluntary guidelines for U.S. charities, though it’s a touchy issue since no one wants to chill charitable giving for legitimate purposes.
In addition to Al-Haramain, the administration has accused other Muslim charities of diverting money to terrorism, and moved to stop it: Holy Land Foundation, Benevolence International Foundation and Global Relief Foundation.
Hamas funds targeted
The United States is also targeting money being provided to Hamas and other terrorist groups like Jamaah Islamiyah in southeast Asia, believed responsible for the deadly 2002 bombings in Bali. The administration has moved to block its assets.
“We don’t think al-Qaida has pots of money here,” said Juan Zarate, Treasury’s deputy assistant secretary for terrorist financing and financial crimes. “I think the common notion is that bin Laden has one big bank account somewhere in the world from which all his terrorist operatives pull from. It just doesn’t work that way. It’s fluid. Funding has to happen constantly for the organization to be able to survive.”
As of July 2003, the U.S. had frozen roughly $719,832 in al-Qaida assets, the GAO reported in November. Treasury officials declined to release an updated number.
Some Capitol Hill lawmakers and others have questioned the Saudis’ commitment to combat terrorist financiers and whether the administration has been sufficiently aggressive in pursuing possible sources of terror money in the kingdom. Saudi Arabia’s relations with the United States were strained after the 9/11 terrorist attacks — 15 of the 19 hijackers were Saudis.
The isolation factor
Adel Al-Jubeir, foreign policy adviser to Crown Prince Abdullah, rejected allegations that Saudi Arabia is “lax when it comes to finances.”
“We have captured or killed more al-Qaida leaders than, I think, any country in the world,” he said. “We have revamped our financial system to ensure that we minimize the ability of people to take advantage of it. We have regulated our charities.”
One former Treasury official raised concerns that U.S. abuse of prisoners at Abu Ghraib could make it harder to build international cooperation in the financial war on terrorism.
“Are we becoming more isolated in the Islamic world than Osama bin Laden?” asked Joseph Myers, a former National Security Council and Treasury Department official. “Let’s hope not.”