Al-Qaeda Masters Terrorism On the Cheap

Cracking Down After the Fact

A few weeks after the Sept. 11 attacks, Gordon Brown, then Britain's chancellor of the exchequer, or finance minister, announced a major effort to "crack the code" of terrorist financing. He said Britain would press the entire European Union to hunt for al-Qaeda by combing through the international banking system.

"If fanaticism is the heart of modern terrorism, then finance is its lifeblood," said Brown, who is now Britain's prime minister.

In response to the July 2005 London transit bombings, Brown said the government would freeze the suspects' bank accounts and place additional controls on international financial transfers, even though there was no evidence the cell had received any money from outside sources. "There will be no hiding place for those who finance terrorism," he promised.

Two months after authorities broke up what they said was the plot to bomb transatlantic airliners in August 2006, Brown reiterated that the key to fighting terrorism was to disrupt al-Qaeda's bank accounts. He said Britain would use classified intelligence to freeze assets of people suspected of having links to terrorist groups and would exercise greater control over Islamic charities.

"We will take any necessary steps and find all necessary resources to ensure whether in Iraq, Afghanistan or anywhere else there is no safe haven for terrorists and no hiding place for terrorist finance," Brown said, echoing his 2005 comments.

Britain has frozen assets belonging to 359 individuals and 126 organizations suspected of assisting al-Qaeda, according to a Treasury report released last year. All told, about $2 million has been seized, the Treasury reported.

But the government's efforts have had little practical effect, several current and former British counterterrorism officials said. For instance, Britain froze the accounts of 19 suspects in the 2006 transatlantic airliner plot -- but only after they were arrested. Officials said most of the accounts contained negligible amounts.

As part of the same investigation, British officials announced an inquiry into the operations of a charity, Crescent Relief, saying that it was suspected of providing money to the cell. Officials with the charity, which was set up to aid earthquake survivors in Pakistan, denied wrongdoing.

Two years later, however, the trial has yielded no public evidence linking the defendants to Crescent Relief. A spokeswoman for Britain's Charity Commission, which regulates nonprofit organizations, said the investigation is continuing but declined to comment further.

Swain, the former Scotland Yard counterterrorism official, said politicians often announce stricter anti-terrorism financing laws after an attack as a public relations measure. But he said they do little good in terms of actually preventing terrorism.

"I think there is a realization that they are not that effective," Swain said. "But they need to be seen as doing something to provide reassurance to the public that they're doing something. We're living in a false paradise if you think these things will stop it."

Needles in Haystacks

Some officials defended the anti-terrorism financing laws passed since 2001, saying that al-Qaeda would have a much easier time raising money if the measures weren't in place.

"We mustn't be wooed into the idea that because attacks are costing less and less, that there isn't a need for money, or that it isn't being provided," said Michael Chandler, who headed a U.N. panel that monitored financial sanctions against al-Qaeda and the Taliban from 2001 to 2004. "It's not just the money they need to make the explosive devices. It's the money they need for other things: to support the network, to recruit and to train."

Chandler also acknowledged that al-Qaeda and its affiliates have adapted and are having little difficulty financing their plots.

"Notwithstanding the successes we've had, groups associated or affiliated with al-Qaeda still appear to be able to carry out an attack, as and when they feel so inclined," said Chandler, a former British Army officer and U.N. diplomat, citing the Taliban and cells in Iraq and North Africa. "Either they had the money already when they needed it, or they have no problem getting it."

Law enforcement officials said terrorism-financing controls also make it easier to investigate cells that are under surveillance or after an attack. By retracing suspected plotters' financial footsteps, no matter how small, investigators can map their movements and develop new leads.

But Cliff Knuckley, a former chief money-laundering investigator for Scotland Yard, said it's difficult to detect potential terrorist plots just by monitoring cash flows or bank transfers -- the basis of many of the anti-terrorism financing laws in place today.

"You're looking for a needle in a haystack, and unfortunately you have a field full of haystacks," Knuckley said.