Terrorism Money is Still Flowing

Via LATimes.com -

WASHINGTON -- The U.S.-led effort to choke off financing for Al Qaeda and other terrorist groups is foundering because setbacks at home and abroad have undermined the Bush administration's highly touted counter-terrorism weapon, according to current and former officials and independent experts.

In some cases, extremist groups have blunted financial anti-terrorism tools by finding new ways to raise, transfer and spend their money. In other cases, the administration has stumbled over legal difficulties and interagency fighting, officials and experts say.

But the most serious problems are fractures and mistrust within the coalition of nations that the United States admits it needs to target financiers of terrorism and to stanch the flow of funding from wealthy donors to extremist causes.

"The international cooperation and focus is dropping, the farther we get from 9/11," said Michael Jacobson, who was a senior advisor in the Treasury Department's Office of Terrorism and Financial Intelligence until March 2007. "Some countries lack political will. Others just don't have the basic capacity to govern their countries, much less create a viable financial intelligence unit."

Many current and former officials and experts say that because of political, legal, cultural and technical problems, the administration-led coalition is deteriorating.

"Al Qaeda, the Taliban and other terrorist groups continue to have access to the funds they need for active and expanded indoctrination, recruitment, maintenance, armament and operations," said Victor D. Comras, a former United Nations terrorism finance official.

Internationally, the sense of urgency over terrorism financing has waned since the 2001 attacks. As political climates have changed and negative perceptions of the United States have risen, key allies are cooperating less, current and former officials say.

In the Middle East and elsewhere, many countries have resisted U.S. pressure to investigate and identify financiers.

Saudi Arabia, Pakistan and other key nations have not taken the necessary steps to crack down on terrorist financing or suspect money flowing across their borders. Other countries, including Afghanistan and some African nations, lack the financial infrastructure to cooperate meaningfully.

Also, the most deadly terrorist attacks since Sept. 11, 2001, have cost so little -- often less than $10,000 -- that they are virtually impossible to detect by following a money trail.

Terrorist networks need larger sums to travel, train operatives, bribe government officials, evade capture and expand support bases. Increasingly, however, they are moving funds below the radar of U.S.-led enforcement and intelligence-gathering efforts, officials and experts said.

Cash couriers use donkeys and camels in places like Pakistan and Afghanistan, for instance, and private jets are used in oil-rich Persian Gulf kingdoms to move cash, gold and jewels. The networks continue to rely on a centuries-old informal banking system known as hawala, which leaves virtually no trail.

Overall, it is nearly impossible to distinguish funds meant for potential terrorism from legitimate transactions, said a senior State Department official, who, like some of the those interviewed, spoke on condition of anonymity because of prohibitions against commenting on the record on counter-terrorism.

Current and former U.S. officials acknowledge they are struggling, especially because much-needed allies are unwilling or unable to assist.

"It's not as much that we're not properly executing our strategy," said Robert Grenier, a former senior CIA official. "It's that the strategy is of limited utility in countering terrorism financing given the mechanisms that terrorists use."

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In my mind, tracing terrorism money is less about stopping a specific attack and more about bring to light the terrorist organization as a whole entity.

If we understand their money making techniques, their common money laundering channels, then we can build a much better overall picture of the organizational nature of these groups.

Thus allowing those that fight their organizations to find the weak link in the system.

Following the money trail is a very important piece of the terrorism research puzzle, but it is just that...only a piece.