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Following the money

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Freeze! How the U.S. plans to attack terror by shutting down its financial supply lines

In the 10 days leading up to the Sept. 11 hijackings, ringleader Mohamed Atta received at least two wire transfers of cash from Egypt through a small Florida money-wiring business, sources tell TIME. Investigators are not saying who sent that money, but FBI documents obtained by TIME show that on Sept. 8 and 9, Atta was involved in money transfers with a man investigators believe was suspected Osama bin Laden finance operative Mustafah Ahmed, who usually works out of Egypt or the United Arab Emirates.

These newly uncovered fund transfers may be the latest evidence that Atta was a major recipient of bin Laden's elaborate financial pipeline. U.S. investigators said last week that they suspect Atta was a key conduit between the Sept. 11 hijackers and Mamoun Darkazanli, the Syrian businessman based in Hamburg who reputedly controlled a German bank account held by a man U.S. investigators believe was bin Laden's chief of finance.

The money transfers to Atta may prove critical in tying the World Trade Center attacks to bin Laden. They may also help answer two questions currently at the center of the investigation: How did the terrorists finance the attacks? And how does bin Laden's terrorist network fund itself worldwide?

These new pieces of the financial puzzle are emerging at a time when the Bush Administration has made tracking down and freezing assets a top priority in its war on terrorism. Before the Administration announced a plan for military action, President Bush was in the Rose Garden last week unveiling a list of 27 entities--13 terrorist groups, 11 individuals and three charities--whose assets the U.S. will work to freeze at home and abroad. Some of the organizations were linked to bin Laden, but others were said to be independent of him and active in the Philippines, Kashmir and elsewhere.

The Treasury Department has instructed some 5,000 U.S. banks to start checking their accounts against the list of 27. One New York City bank last week froze $3.8 million in assets linked to the suspected terrorists, an Administration official told TIME last week.

Treasury Secretary Paul O'Neill praised the finance ministers of major industrial nations for pushing their financial institutions to go after the assets on the Administration's list. "They've all said, 'We'll do everything we can to help the U.S.,'" he says. "Serious money is being blocked now." Germany has frozen 13 accounts linked to the Taliban or bin Laden, although Darkazanli is the only one who appears on the Administration's list of 27. Britain has frozen $68 million in accounts of individuals and entities on the Administration's list.

Cooperation is not limited to the big democracies: Pakistan's central bank has ordered private banks to freeze accounts held by Harakat ul-Mujahedin, a group fighting Indian rule in Kashmir that is on the U.S. list. And the financial crackdown has received cooperation from a wide list of nations that includes China, Colombia, Costa Rica and the Czech Republic.

But despite this early progress, terrorism experts warn, it will be difficult to follow the flow of bin Laden's money and harder still to turn off the spigot. His money is believed to be scattered among as many as 55 countries. It appears to move surreptitiously, often through backdoor channels. And much of it is cloaked in the respectability of legitimate-looking businesses and charities. Al-Qaeda appears to move much of its money through bin Laden's extensive portfolio of agriculture, construction and investment businesses. Investigators call it "reverse money laundering," because the funds start out clean and end up being used for criminal schemes.

Bin Laden may even have his own legitimate bank that he uses to bankroll terror. At a Senate Banking Committee hearing last week, Senator Carl Levin, a Michigan Democrat, presented evidence that bin Laden used a Sudanese bank called al Shamal Islamic Bank, of which he may be the largest shareholder, to distribute funds used in the 1998 terrorist bombings of the U.S. embassies in Kenya and Tanzania. (The Sudanese bank denies it has any connection with bin Laden.)

Once bin Laden has money in a bank he controls, it is not hard for him to pass it through mainstream U.S. financial institutions. "By the time money gets here, it could be anyone's," says Alan Cohen, a former federal prosecutor who specialized in financial fraud. And the money can be used for anything. In testimony on the embassy bombings, a bin Laden associate said he received a $250,000 wire transfer from the Shamal bank to his bank in Texas and used the money to buy an airplane for bin Laden.

Even if the U.S. receives broad cooperation in its efforts to freeze assets, bin Laden may find nations that lack the will or the wherewithal to find his assets and freeze them. If Atta received critical wire transfers from Egypt and if bin Laden has banking interests in Sudan, the U.S. will need those nations to be active parts of its campaign.

Even in cooperative countries, bin Laden can use national borders to stay one step ahead of investigators. "It only takes five minutes to deposit 1 million French francs in a Dutch account and another five minutes to transfer that to an account in Britain," warned a French parliamentary report on terrorist funding. But "for the judge investigating the origins and movement of that money, it will take six months to get a court warrant authorizing inspection of the account in the Netherlands, a year to get one in Britain, six months more for clearance in Switzerland--all to discover that the suspicious funds have been withdrawn and the account closed."

Bin Laden boasted last week that his assets are hidden away in "three alternate financial systems which are separate and independent." The money that funds his network is so well guarded by sophisticated managers, he told a pro-Taliban newspaper in Afghanistan, that "if the whole world, including the U.S., tries to remove them, they won't succeed."

The Bush Administration promises it will expand its list of targets to include businesses that investigators believe are operating as terrorist fronts or being used by terrorist groups. That will be a necessary step, but history has demonstrated that showing a terrorist connection in these cases can be exceedingly difficult.

A week before the World Trade Center attack, the North Texas Terrorism Task Force raided the offices of InfoCom, a computer company located outside Dallas, and froze $70,000 in assets. Investigators have been suspicious of InfoCom since they learned of a $250,000 investment from the wife of a reputed activist in Hamas, a violent Palestinian group. The man was on a Treasury Department list of terrorists whose assets are subject to seizure. InfoCom provides computer services for both the Islamic Association for Palestine and for the Holy Land Foundation, two groups that Israel accuses of financially supporting families of Palestinian suicide bombers.

But last week InfoCom called a press conference to demand that the government stop its "witch hunt." As one of its executives looked on with a red-white-and-blue lapel ribbon, InfoCom's lawyer insisted that reports of its links to terrorism were baseless. And he said the company's work for a roster of respectable clients--including the legitimate bin Laden family in Saudi Arabia--is being crippled. He described InfoCom's executives as "struggling businessmen."

Charities may be the most elusive targets of all. Among the three on the Bush Administration list is the al Rashid Trust. Al Rashid is known mainly for its work distributing food to the hungry and prosthetic limbs to amputees in war-ravaged Afghanistan. But it also puts out a newspaper, Dha'rb-i-M'umin, that calls for holy war against the U.S. And its fund-raising materials say it provides money to families of men killed in jihads. Terrorism experts have long maintained that many Islamic charities that fund terrorism mask those activities behind good works.

For more than seven years, prosecutors in the U.S. have tried to prove that various Islamic charities in Illinois, Texas, New York and other states operate as fronts for terrorism. Federal prosecutors in Chicago succeeded in 1998 in confiscating $1.4 million in bank holdings from the Quranic Literacy Institute and from a top employee. Both, the government charged, were funneling money to Hamas. This was, prosecutors say, the first time civil forfeiture laws were used to stop money from flowing through American financial institutions to foreign terrorism. But other attempts to go after charities have largely failed.

Even when law enforcement finds a terrorist-linked charity, locating any assets to seize is difficult. Makhtab al-Khidamat, another charity on the Administration's list, appears to have disap- peared without a trace. Bin Laden established the group in Pakistan in 1987 to raise money and train Muslims for resistance to the Soviet occupation of Afghanistan. According to former bin Laden lieutenants who have cooperated with prosecutors, it had a branch office in Brooklyn, N.Y., where travel documents and arrangements were handled. But the organization's leader disappeared and was later found killed, and the Brooklyn branch appears to be defunct.

The good news is that, if it can be done, cutting off the terrorists' money pipeline will make a difference. Despite early estimates that the Sept. 11 attacks were pulled off for just tens of thousands of dollars, it now appears that bin Laden's organization spent as much as $500,000 on training and logistics.

No amount of asset tracking and freezing can stop terrorists from having enough money to buy box cutters and plane tickets. But in fighting a network of terrorists who operate on the scale al-Qaeda does, the battle to cut off terrorists' access to funding can be an important part of the war.


Cover Date: October 8, 2001


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