Targeting Terrorist Money
The general public sees attacks on terrorist finance as a way to "starve
the terrorists of money." So, initially, did the U.S. government. After
9/11, the United States took aggressive actions to designate terrorist
financiers and freeze their money, in the United States and through resolutions
of the United Nations. These actions appeared to have little effect and, when
confronted by legal challenges, the United States and the United Nations were
often forced to unfreeze assets.
The difficulty, understood later, was that even if the intelligence community
might "link" someone to a terrorist group through acquaintances or
communications, the task of tracing the money from that individual to the
terrorist group, or otherwise showing complicity, was far more difficult. It was
harder still to do so without disclosing secrets.
These early missteps made other countries unwilling to freeze assets or
otherwise act merely on the basis of a U.S. action. Multilateral freezing
mechanisms now require waiting periods before being put into effect, eliminating
the element of surprise and thus virtually ensuring that little money is
actually frozen. Worldwide asset freezes have not been adequately enforced and
have been easily circumvented, often within weeks, by simple methods.
But trying to starve the terrorists of money is like trying to catch one kind
of fish by draining the ocean. A better strategy has evolved since those early
months, as the government learned more about how al Qaeda raises, moves, and
spends money.
Recommendation: Vigorous efforts to track terrorist financing must
remain front and center in U.S. counterterrorism efforts. The government has
recognized that information about terrorist money helps us to understand their
networks, search them out, and disrupt their operations. Intelligence and law
enforcement have targeted the relatively small number of financial
facilitators-individuals al Qaeda relied on for their ability to raise and
deliver money-at the core of al Qaeda's revenue stream. These efforts have
worked. The death or capture of several important facilitators has decreased the
amount of money available to al Qaeda and has increased its costs and difficulty
in raising and moving that money. Captures have additionally provided a windfall
of intelligence that can be used to continue the cycle of disruption.
The U.S. financial community and some international financial institutions
have generally provided law enforcement and intelligence agencies with
extraordinary cooperation, particularly in supplying information to support
quickly developing investigations. Obvious vulnerabilities in the U.S. financial
system have been corrected. The United States has been less successful in
persuading other countries to adopt financial regulations that would permit the
tracing of financial transactions.
Public designation of terrorist financiers and organizations is still part of
the fight, but it is not the primary weapon. Designations are instead a form of
diplomacy, as governments join together to identify named individuals and groups
as terrorists. They also prevent open fundraising. Some charities that have been
identified as likely avenues for terrorist financing have seen their donations
diminish and their activities come under more scrutiny, and others have been put
out of business, although controlling overseas branches of Gulf-area charities
remains a challenge. The Saudi crackdown after the May 2003 terrorist attacks in
Riyadh has apparently reduced the funds available to al Qaeda-per-haps
drastically-but it is too soon to know if this reduction will last.
Though progress apparently has been made, terrorists have shown considerable
creativity in their methods of moving money. If al Qaeda is replaced by smaller,
decentralized terrorist groups, the premise behind the government's efforts-that
terrorists need a financial support network-may become outdated. Moreover, some
terrorist operations do not rely on outside sources of money and may now be
self-funding, either through legitimate employment or low-level criminal
activity.30
