Al-Qaeda Masters Terrorism On the Cheap

Law enforcement officials in London said al-Qaeda cells are trained to plot and live on the cheap. Operatives lead ascetic lives, often keeping their day jobs or depending on their families to cover expenses. Above all, they are taught to build bombs that are lethal but crude and inexpensive. Almost every terrorist plot in Europe in recent years has followed a simple formula: homemade explosives stuffed into backpacks, shoes, suitcases or car trunks.

Outflanking the Laws

Thirteen days after the Sept. 11 hijackings, President Bush launched what the White House later described as the "first strike in the war on terrorism." He signed an executive order freezing the assets of 27 individuals and groups suspected of terrorism and forbidding anyone from doing business with them.

"Money is the lifeblood of terrorist operations," Bush said in the Rose Garden. "Today we're asking the world to stop payment."

A month later, Congress and Bush went further by adopting the USA Patriot Act, which required banks to report transactions larger than $10,000 to the Treasury and to check if any of their customers were on a database of suspected terrorists.

By December 2001, the government had frozen $33 million in assets and expanded its terrorism-financing blacklist to 153 names. In a report assessing its progress in the fight against al-Qaeda, the White House declared, "The United States and its allies have been winning the war on the financial front."

The measures, however, have failed to dry up the supply of money available to al-Qaeda and have had no discernible effect in preventing the network from carrying out attacks, according to several counterterrorism officials and experts in the United States and Europe.

Before Sept. 11, 2001, al-Qaeda and its affiliates rarely used the banking system in a manner that might arouse suspicion, officials and experts said. In response to the new anti-terrorism financing laws, the network has became even more cautious, relying on couriers to carry money across borders when necessary, authorities said.

Ibrahim Warde, an adjunct professor at Tufts University and an expert on financial systems in Islamic countries, said the Bush administration and its allies falsely assumed that al-Qaeda had stashed large sums in secret bank accounts.

"It got the entire financial bureaucracy started on a wild-goose chase," Warde said. "There's a complete disconnect between this approach and the underlying reality of how terrorism is funded."

Dennis M. Lormel, a former head of the FBI's Terrorist Financing Operations section, said the laws passed since 2001 have closed some gaps and addressed vulnerabilities that made it easy for al-Qaeda to raise and transfer money.

But he said the network has responded quickly. Its cells in Europe and elsewhere now raise money on their own instead of relying on financial transfers from external sources that could be tracked by law enforcement officials.

"Clearly, when you're dealing with groups that are self-funded, you're dealing with a different set of circumstances from when they put these laws in place," said Lormel, now a senior vice president at Corporate Risk International, a Reston-based firm.