National Commission on Terrorist Attacks

Upon the United States 

Monograph on Terrorist Financing 

________________

Staff Report to the Commission 

John Roth 

Douglas Greenburg 

Serena Wille 

Preface

The Commission staff organized its work around specialized studies, or monographs, 

prepared by each of the teams. We used some of the evolving draft material for these 

studies in preparing the seventeen staff statements delivered in conjunction with the 

Commission’s 2004 public hearings. We used more of this material in preparing draft 

sections of the Commission’s final report. Some of the specialized staff work, while not 

appropriate for inclusion in the report, nonetheless offered substantial information or 

analysis that was not well represented in the Commission’s report. In a few cases this 

supplemental work could be prepared to a publishable standard, either in an unclassified 

or classified form, before the Commission expired. 

This study is on terrorist financing. It was prepared principally by John Roth, Douglas 

Greenburg, and Serena Wille, with editing assistance from Alice Falk. As in all staff 

studies, they often relied on work done by their colleagues.

This is a study by Commission staff. While the Commissioners have been briefed on the 

work and have had the opportunity to review earlier drafts of some of this work, they 

have not approved this text and it does not necessarily reflect their views. 

 Philip Zelikow 
Terrorist Financing Staff Monograph 

1

Table of Contents 

INTRODUCTION AND EXECUTIVE SUMMARY................................................................................ 2

AL QAEDA’S MEANS AND METHODS TO RAISE, MOVE, AND USE MONEY.......................... 17

GOVERNMENT EFFORTS BEFORE AND AFTER THE SEPTEMBER 11 ATTACKS................ 30

COMBATING TERRORIST FINANCING IN THE UNITED STATES: THE ROLE OF 

FINANCIAL INSTITUTIONS.................................................................................................................. 52

AL-BARAKAAT CASE STUDY .............................................................................................................. 67

THE ILLINOIS CHARITIES CASE STUDY ......................................................................................... 87

AL HARAMAIN CASE STUDY............................................................................................................. 114

APPENDIX A: THE FINANCING OF THE 9/11 PLOT ..................................................................... 131

APPENDIX B: SECURITIES TRADING.............................................................................................. 145
National Commission on Terrorist Attacks Upon the United States 

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Chapter 1 

Introduction and Executive Summary 

Introduction 

After the September 11 attacks, the highest-level U.S. government officials publicly 

declared that the fight against al Qaeda financing was as critical as the fight against al 

Qaeda itself. It has been presented as one of the keys to success in the fight against 

terrorism: if we choke off the terrorists’ money, we limit their ability to conduct mass 

casualty attacks. In reality, completely choking off the money to al Qaeda and affiliated 

terrorist groups has been essentially impossible. At the same time, tracking al Qaeda 

financing has proven a very effective way to locate terrorist operatives and supporters 

and to disrupt terrorist plots.

As a result, the U.S. terrorist financing strategy has changed from the early post-9/11 

days. Choking off the money remains the most visible aspect of our approach, but it is not 

our only, or even most important, goal. Ultimately, making it harder for terrorists to get 

money is a necessary, but not sufficient, component of our overall strategy. Following the 

money to identify terrorist operatives and sympathizers provides a particularly powerful 

tool in the fight against terrorist groups. Use of this tool almost always remains invisible 

to the general public, but it is a critical part of the overall campaign against al Qaeda. 

Moreover, the U.S. government recognizes—appropriately, in the Commission staff’s 

view—that terrorist-financing measures are simply one of many tools in the fight against 

al Qaeda.

This monograph, together with the relevant parts of the Commission’s final report, 

reflects the staff’s investigation into al Qaeda financing and the U.S. government’s efforts 

to combat it. This monograph represents the collective efforts of a number of members of 

the staff. John Roth, Douglas Greenburg and Serena Wille did the bulk of the work 

reflected in this report. Thanks also go to Dianna Campagna, Marquittia Coleman, 

Melissa Coffey and the entire administrative staff for their excellent support. We were 

fortunate in being able to build upon a great deal of excellent work already done by the 

U.S. intelligence and law enforcement communities. 

The starting point for our inquiry is 1998, when al Qaeda emerged as a primary global 

threat to U.S. interests. Although we address earlier periods as necessary, we have not 

attempted to tell the history of al Qaeda financing from its inception. We have sought to 

understand how al Qaeda raised, moved, and stored money before and after the 

September 11 attacks, and how the U.S. government confronted the problem of al Qaeda 

financing before and after 9/11. We have had significant access to highly classified raw 

and finished intelligence from the intelligence community, have reviewed law 

enforcement, State Department, and Treasury Department files, and have interviewed at 
Terrorist Financing Staff Monograph 

3

length government officials, from street-level agents to cabinet secretaries, as well as 

non-government experts, representatives from the financial services industry, and 

representatives of individuals and entities directly affected by U.S. government action to 

combat al Qaeda financing. 

This monograph does not attempt a comprehensive survey of all known data on al Qaeda 

financing and every government action to combat it. Rather, we have sought to 

understand the issues that make a difference, what the 9/11 disaster should have taught us 

about these issues, and the extent to which the current U.S. strategy reflects these lessons. 

What we have found is instructive in the larger analysis of what the U.S. government can 

do to detect, investigate, deter, and disrupt al Qaeda and affiliated terrorist groups bent on 

mass casualty attacks against the United States.1

Executive Summary 

September 11 financing

The September 11 hijackers used U.S. and foreign financial institutions to hold, move, 

and retrieve their money. The hijackers deposited money into U.S. accounts, primarily by 

wire transfers and deposits of cash or travelers checks brought from overseas. 

Additionally, several of them kept funds in foreign accounts, which they accessed in the 

United States through ATM and credit card transactions. The hijackers received funds 

from facilitators in Germany and the United Arab Emirates or directly from Khalid 

Sheikh Mohamed (KSM) as they transited Pakistan before coming to the United States. 

The plot cost al Qaeda somewhere in the range of $400,000–500,000, of which 

approximately $300,000 passed through the hijackers’ bank accounts in the United 

States. The hijackers returned approximately $26,000 to a facilitator in the UAE in the 

days prior to the attack. While in the United States, the hijackers spent money primarily 

for flight training, travel, and living expenses (such as housing, food, cars, and auto 

insurance). Extensive investigation has revealed no substantial source of domestic 

financial support.

Neither the hijackers nor their financial facilitators were experts in the use of the 

international financial system. They created a paper trail linking them to each other and 

their facilitators. Still, they were easily adept enough to blend into the vast international 

financial system without doing anything to reveal themselves as criminals, let alone 

terrorists bent on mass murder. The money-laundering controls in place at the time were 

largely focused on drug trafficking and large-scale financial fraud and could not have 

detected the hijackers’ transactions. The controls were never intended to, and could not, 

detect or disrupt the routine transactions in which the hijackers engaged.

1

 Our investigation has focused on al Qaeda financing and the country’s response to it. Although much of 

our analysis may apply to the financing of other terrorist groups, we have made no systematic effort to 

investigate any of those groups, and we recognize that the financing of other terrorist groups may present 

the government with problems or opportunities not existing in the context of al Qaeda. 
National Commission on Terrorist Attacks Upon the United States 

4

There is no evidence that any person with advance knowledge of the impending terrorist 

attacks used that information to profit by trading securities. Although there has been 

consistent speculation that massive al Qaeda–related “insider trading” preceded the 

attacks, exhaustive investigation by federal law enforcement and the securities industry 

has determined that unusual spikes in the trading of certain securities were based on 

factors unrelated to terrorism. 

One of the pillars of al Qaeda: Fund-raising 

Al Qaeda and Usama Bin Ladin obtained money from a variety of sources. Contrary to 

common belief, Bin Ladin did not have access to any significant amounts of personal 

wealth (particularly after his move from Sudan to Afghanistan) and did not personally 

fund al Qaeda, either through an inheritance or businesses he was said to have owned in 

Sudan. Rather, al Qaeda was funded, to the tune of approximately $30 million per year, 

by diversions of money from Islamic charities and the use of well-placed financial 

facilitators who gathered money from both witting and unwitting donors, primarily in the 

Gulf region. No persuasive evidence exists that al Qaeda relied on the drug trade as an 

important source of revenue, had any substantial involvement with conflict diamonds, or 

was financially sponsored by any foreign government. The United States is not, and has 

not been, a substantial source of al Qaeda funding, although some funds raised in the 

United States may have made their way to al Qaeda and its affiliated groups. 

After Bin Ladin relocated to Afghanistan in 1996, al Qaeda made less use of formal 

banking channels to transfer money, preferring instead to use an informal system of 

money movers or bulk cash couriers. Supporters and other operatives did use banks, 

particularly in the Gulf region, to move money on behalf of al Qaeda. Prior to 9/11 the 

largest single al Qaeda expense was support for the Taliban, estimated at about $20 

million per year. Bin Ladin also used money to train operatives in camps in Afghanistan, 

create terrorist networks and alliances, and support the jihadists and their families. 

Finally, a relatively small amount of money was used to finance operations, including the 

approximately $400,000–500,000 spent on the September 11 attacks themselves. 

U.S. government efforts before the September 11 attacks 

Terrorist financing was not a priority for either domestic or foreign intelligence 

collection. As a result, intelligence reporting on the issue was episodic, insufficient, and 

often inaccurate. Although the National Security Council considered terrorist financing 

important in its campaign to disrupt al Qaeda, other agencies failed to participate to the 

NSC’s satisfaction, and there was little interagency strategic planning or coordination. 

Without an effective interagency mechanism, responsibility for the problem was 

dispersed among a myriad of agencies, each working independently. 
Terrorist Financing Staff Monograph 

5

The FBI gathered intelligence on a significant number of organizations in the United 

States suspected of raising funds for al Qaeda or other terrorist groups. Highly motivated 

street agents in specific FBI field offices overcame setbacks, bureaucratic inefficiencies, 

and what they believed to be a dysfunctional Foreign Intelligence Surveillance Act 

(FISA) system2

 to gain a basic understanding of some of the largest and most problematic 

terrorist-financing conspiracies since identified. The FBI did not develop an endgame, 

however. The agents continued to gather intelligence with little hope that they would be 

able to make a criminal case or otherwise disrupt the operations. The FBI could not turn 

these investigations into criminal cases because of insufficient international cooperation, 

a perceived inability to mingle criminal and intelligence investigations due to the “wall” 

between intelligence and law enforcement matters, sensitivities to overt investigations of 

Islamic charities and organizations, and the sheer difficulty of prosecuting most terroristfinancing cases. As a result, the FBI rarely sought to involve criminal prosecutors in its 

terrorist-financing investigations. Nonetheless, FBI street agents had gathered significant 

intelligence on specific groups. 

On a national level the FBI did not systematically gather and analyze the information its 

agents developed. It lacked a headquarters unit focusing on terrorist financing, and its 

overworked counterterrorism personnel lacked time and resources to focus specifically on 

financing. The FBI as an organization therefore failed to understand the nature and extent 

of the jihadist3

 fund-raising problem within the United States or to develop a coherent 

strategy for confronting the problem. The FBI did not, nor could it, fulfill its role to 

provide intelligence on domestic terrorist financing to government policymakers and did 

not contribute to national policy coordination. For its part, the Criminal Division of the 

Department of Justice had no national program for prosecuting terrorist-financing cases, 

despite a 1996 statute that gave it much broader legal powers for doing so. The 

Department of Justice could not develop an effective program for prosecuting these cases 

because its prosecutors had no systematic way to learn what evidence of prosecutable 

crimes could be found in the FBI’s intelligence files, to which they did not have access.

The U.S. intelligence community largely failed to comprehend al Qaeda’s methods of 

raising, moving, and storing money, because it devoted relatively few resources to 

collecting the strategic financial intelligence that policymakers were requesting or that 

would have informed the larger counterterrorism strategy. Al Qaeda financing was in 

many respects a hard target for intelligence gathering. But the CIA also arrived belatedly 

2

 This monograph is a survey and analysis of the government’s efforts with regard to terrorist financing 

both before and after 9/11. This necessarily touches on many different aspects of the government’s 

counterterrorism efforts, including the FISA review process and barrier between law enforcement and 

intelligence information. We did not attempt, however, to conduct an exhaustive review of those issues. 

Rather, we refer the reader to the 9/11 Commission Report, pp.78-80. 

3

 We use the term jihadist to include militant Islamist groups other than the Palestinian terrorist groups, 

such as Hamas and Palestinian Islamic Jihad, and Lebanese Hizbollah. The other jihadist groups who have 

raised money in the United States appear to loosely share a common ideology, and many of them have been 

linked directly or indirectly to al Qaeda. These groups raise funds in the United States to support Islamist 

militants around the world; some of these funds may make their way to al Qaeda or affiliated groups. The 

Palestinian groups and Hizbollah, which have raised large amounts of money domestically, present 

different issues that are beyond the scope of our investigation. 
National Commission on Terrorist Attacks Upon the United States 

6

at an understanding of some basic operational facts that were readily available—such as 

the knowledge that al Qaeda relied on fund-raising, not Bin Ladin’s personal fortune. The 

CIA’s inability to grasp the true source of Bin Ladin’s funds and the methods behind 

their movement hampered the U.S. government’s ability to integrate potential covert 

action or overt economic disruption into the counterterrorism effort. The lack of specific 

intelligence about al Qaeda financing frustrated policymakers, and the intelligence 

deficiencies persisted through 9/11. 

Other areas within the U.S. government evinced similar problems. The then-obscure 

Office of Foreign Assets Control (OFAC), the Treasury organization charged by law with 

searching out, designating, and freezing Bin Ladin assets, lacked comprehensive access 

to actionable intelligence and was beset by the indifference of higher-level Treasury 

policymakers. Even if those barriers had been removed, the primary Bin Ladin financial 

flows at the time, from the Gulf to Afghanistan, likely were beyond OFAC’s legal 

powers, which apply only domestically. 

A number of significant legislative and regulatory initiatives designed to close 

vulnerabilities in the U.S. financial system failed to gain traction. Some of these, such as 

a move to control foreign banks with accounts in the United States, died as a result of 

banking industry pressure. Others, such as a move to regulate money remitters, were 

mired in bureaucratic inertia and a general antiregulatory environment. 

The U.S. government had recognized the value of enlisting the international community 

in efforts to stop the flow of money to al Qaeda entities. U.S. diplomatic efforts had 

succeeded in persuading the United Nations to sanction Bin Ladin economically, but such 

sanctions were largely ineffective. Saudi Arabia and the UAE, necessary partners in any 

realistic effort to stem the financing of terror, were ambivalent and selectively 

cooperative in assisting the United States. The U.S. government approached the Saudis 

on some narrow issues, such as locating Bin Ladin’s supposed personal wealth and 

gaining access to a senior al Qaeda financial figure in Saudi custody, with mixed results. 

The Saudis generally resisted cooperating more broadly against al Qaeda financing, 

although the U.S. government did not make this issue a priority in its bilateral relations 

with the Saudis or provide the Saudis with actionable intelligence about al Qaeda fundraising in the Kingdom. Other issues, such as Iraq, the Middle East peace process, 

economic arrangements, the oil supply, and cutting off Saudi support for the Taliban, 

took primacy on the U.S.-Saudi agenda. 

The net result of the government’s efforts, according to CIA analysis at the time, was that 

al Qaeda’s cash flow on the eve of the September 11 attacks was steady and secure. 

Where are we now? 

It is common to say the world has changed since September 11, 2001, and this conclusion 

is particularly apt in describing U.S. counterterrorist efforts regarding financing. The U.S. 

government focused, for the first time, on terrorist financing and devoted considerable 
Terrorist Financing Staff Monograph 

7

energy and resources to the problem. As a result the United States now has a far better 

understanding of the methods by which terrorists raise, move, and use money and has 

employed this knowledge to our advantage. 

With an understanding of the nature of the threat and with a new sense of urgency, the 

intelligence community (including the FBI) created new entities to focus on, and bring 

expertise to, the area of terrorist fund-raising and the clandestine movement of money. 

These entities are led by experienced and committed individuals, who use financial 

information to understand terrorist networks, search them out and disrupt their 

operations, and who integrate terrorist-financing issues into the larger counterterrorism 

efforts at their respective agencies. Equally important, many of the obstacles hampering 

investigations have been stripped away. The current intelligence community approach 

appropriately focuses on using financial information, in close coordination with other 

types of intelligence, to identify and track terrorist groups rather than to starve them of 

funding.

The CIA has devoted considerable resources to the investigation of al Qaeda financing, 

and the effort is led by individuals with extensive expertise in the clandestine movement 

of money. The CIA appears to be developing an institutional and long-term expertise in 

this area, and other intelligence agencies have made similar improvements. Still, al Qaeda 

financing remains a hard target for intelligence gathering. Understanding al Qaeda’s 

money and providing actionable intelligence present ongoing challenges because of the 

speed, diversity, and complexity of the means and methods for raising and moving 

money; the commingling of terrorist money with legitimate funds; the many layers and 

transfers between donors and the ultimate recipients of the money; the existence of 

unwitting participants (including donors who give to generalized jihadist struggles rather 

than specifically to al Qaeda); and the U.S. government’s reliance on foreign government 

reporting for intelligence. 

Since the attacks, the FBI has improved its dissemination of intelligence to policymakers, 

usually in the form of briefings, regular meetings, and status reports. The creation of a 

unit focusing on terrorist financing has provided a vehicle through which the FBI can 

effectively participate in interagency terrorist-financing efforts and ensures that these 

issues receive focused attention rather than being a footnote to the FBI’s overall 

counterterrorism program. Still, the FBI needs to improve the gathering and analyzing of 

the information developed in its investigations. The FBI’s well-documented efforts to 

create an analytical career track and enhance its analytical capabilities are sorely needed 

in this area. 

Bringing jihadist fund-raising prosecutions remains difficult in many cases. The inability 

to get records from other countries, the complexity of directly linking cash flows to 

terrorist operations or groups, and the difficulty of showing what domestic persons knew 

about illicit foreign acts or actors all combine to thwart investigations and prosecutions. 

Still, criminal prosecutors now have regular access to information on relevant 

investigations, and the Department of Justice has created a unit to coordinate an 

aggressive national effort to prosecute terrorist financing.
National Commission on Terrorist Attacks Upon the United States 

8

In light of the difficulties in prosecuting some terrorist fund-raising cases, the 

government has used administrative blocking and freezing orders under the International 

Emergency Economic Powers Act (IEEPA) against U.S. persons (individuals or entities) 

suspected of supporting foreign terrorist organizations. It may well be effective, and 

perhaps necessary, to disrupt fund-raising operations through an administrative blocking 

order when no other good options exist. The use of IEEPA authorities against domestic 

organizations run by U.S. citizens, however, raises significant civil liberty concerns 

because it allows the government to shut down an organization on the basis of classified 

evidence, subject only to a deferential after-the-fact judicial review. The provision of the 

IEEPA that allows the blocking of assets “during the pendency of an investigation” also 

raises particular concern in that it can shut down a U.S. entity indefinitely without the 

more fully developed administrative record necessary for a permanent IEEPA 

designation.

The NSC’s interagency Policy Coordinating Committee (PCC) on terrorist financing has 

been generally successful in its efforts to marshal government resources to address 

terrorist-financing issues in the immediate aftermath of the attacks, although its success 

likely resulted more from the personalities of its members than from its structure. As the 

government’s response to the problem has evolved over time, the NSC is better situated 

than an agency or a stand-alone “czar” to take the lead in forming an interagency 

strategic and operational response to terrorist financing.

The attacks galvanized the international community to set up a near-universal system of 

laws, tied to United Nations Security Council Resolution 1373, to freeze the assets of 

terrorists and their supporters. The United States pursued an ambitious course of highly 

visible asset freezes of terrorists, terrorist supporters, and terrorist-related entities. The 

State Department embarked on a course of intense diplomatic pressure to ensure that the 

asset freezes were truly international. Multilateral institutions, such as the Financial 

Action Task Force, began to develop international antiterrorist finance standards for 

financial institutions. 

Saudi Arabia is a key part of our international efforts to fight terrorist financing. The 

intelligence community identified it as the primary source of money for al Qaeda both 

before and after the September 11 attacks. Fund-raisers and facilitators throughout Saudi 

Arabia and the Gulf raised money for al Qaeda from witting and unwitting donors and 

divert funds from Islamic charities and mosques. The Commission staff found no 

evidence that the Saudi government as an institution or as individual senior officials 

knowingly support or supported al Qaeda; however, a lack of awareness of the problem 

and a failure to conduct oversight over institutions created an environment in which such 

activity has flourished.

From the 9/11 attacks through spring 2003, most U.S. officials viewed Saudi cooperation 

on terrorist financing as ambivalent and selective. U.S. efforts to overcome Saudi 

recalcitrance suffered from our failure to develop a strategy to counter Saudi terrorist 

financing, present our requests through a single high-level interlocutor, and obtain and 
Terrorist Financing Staff Monograph 

9

release to the Saudis actionable intelligence. By spring 2003 the U.S. government had 

corrected these deficiencies. Not just a more effective U.S. message but more especially 

al Qaeda operations within the Kingdom in May and November 2003 focused the Saudi 

government’s attention on its terrorist-financing problem, and dramatically improved 

cooperation with the United States. The Saudi government needs to continue to 

strengthen its capabilities to stem the flow of money from Saudi sources to al Qaeda. A 

critical part of the U.S. strategy to combat terrorist financing must be to monitor, 

encourage, and nurture Saudi cooperation while simultaneously recognizing that terrorist 

financing is only one of a number of crucial issues that the U.S. and Saudi governments 

must address together. Managing this nuanced and complicated relationship will play a 

critical part in determining the success of U.S. counterterrorism policy for the foreseeable 

future.

The domestic financial community and some international financial institutions have 

generally provided law enforcement and intelligence agencies with extraordinary 

cooperation, particularly in providing information to support quickly developing 

investigations, such as the search for terrorist suspects at times of emergency. Much of 

this cooperation, such as providing expedited returns on subpoenas related to terrorism, is 

voluntary and based on personal relationships. It remains to be seen whether such 

cooperation will continue as the memory of 9/11 fades. Efforts within the financial 

industry to create financial profiles of terrorist cells and terrorist fund-raisers have proved 

unsuccessful, and the ability of financial institutions to detect terrorist financing remains 

limited. 

Since the September 11 attacks and the defeat of the Taliban, al Qaeda’s budget has 

decreased significantly. Although the trend line is clear, the U.S government still has not 

determined with any precision how much al Qaeda raises or from whom, or how it spends 

its money. It appears that the al Qaeda attacks within Saudi Arabia in May and November 

of 2003 have reduced—some say drastically—al Qaeda’s ability to raise funds from 

Saudi sources, because of both an increase in Saudi enforcement and a more negative 

perception of al Qaeda by potential donors in the Gulf. However, as al Qaeda’s cash flow 

has decreased, so too have its expenses, generally owing to the defeat of the Taliban and 

the dispersal of al Qaeda. Despite our efforts, it appears that al Qaeda can still find money 

to fund terrorist operations. Al Qaeda now relies on the physical movement of money and 

other informal methods of value transfer, which can pose significant challenges for those 

attempting to detect and disrupt money flows. 

Understanding the difficulties in disrupting terrorist financing, both in the United States 

and abroad, requires understanding the difference between seeing “links” to terrorists and 

proving the funding of terrorists. In many cases, we can plainly see that certain 

nongovernmental organizations (NGOs) or individuals who raise money for Islamic 

causes espouse an extremist ideology and are “linked” to terrorists through common 

acquaintances, group affiliations, historic relationships, phone communications, or other 

such contacts. Although sufficient to whet the appetite for action, these suspicious links 

do not demonstrate that the NGO or individual actually funds terrorists and thus provide 

frail support for disruptive action, either in the United States or abroad. In assessing both 
National Commission on Terrorist Attacks Upon the United States 

10

the domestic efforts of the U.S. government and the overseas efforts of other nations, we 

must keep in mind this fundamental and inherently frustrating challenge of combating 

terrorist financing.

Case studies and common themes

The Commission staff examined three significant terrorist-financing investigations in 

existence prior to September 11 in order to (a) understand U.S. efforts to stem al Qaedarelated terrorist financing before the September 11 attacks, (b) trace the evolution of U.S. 

policy and operations since the attacks, and (c) illustrate the problems and opportunities 

in the area of terrorist financing. These case studies—a Somalia-based worldwide moneyremitting organization with alleged ties to al Qaeda; two Illinois charities that allegedly 

raised money for al Qaeda; and an international Saudi-based private charity, with ties to 

the Saudi government, accused of being a conduit of terrorist money—have given the 

staff insights into the larger problems and recommendations. 

Al-Barakaat: The informal movement of money and its implication for 

counterterrorist financing 

Al-Barakaat (literally, “the blessing”), a money-remitting system centered in Somalia 

with outlets worldwide, took shape after the collapse of the government and the banking 

system in Somalia. The intelligence community developed information that Usama Bin 

Ladin had contributed money to al-Barakaat to start operations, that it was closely 

associated with or controlled by the terrorist group Al-Itihaad Al-Islamiya (AIAI), and 

that some of al-Barakaat’s proceeds went to fund AIAI, which in turn gave a portion to 

Usama Bin Ladin. 

In the United States the FBI developed an intelligence case on the al-Barakaat network in 

early 1999, and had opened a criminal case by 2000. Shortly after 9/11 al-Barakaat’s 

assets were frozen and its books and records were seized in raids around the world, 

including in the United States. Subsequent investigation by the FBI, including financial 

analysis of the books and records of al-Barakaat provided in unprecedented cooperation 

by the UAE, failed to establish the allegations of a link between al-Barakaat and AIAI or 

Bin Ladin. No criminal case was made against al-Barakaat in the United States for these 

activities. Although OFAC claims that it met the evidentiary standard for designations, 

the majority of assets frozen in the United States under executive order (and some assets 

frozen by other countries under UN resolution) were unfrozen and the money returned 

after the U.S.-based al-Barakaat money remitters filed a lawsuit challenging the action. 

The Illinois Charities: Domestic charities used to fund al Qaeda? 

Two Illinois-based charities, the Global Relief Foundation, Inc. (GRF), and the 

Benevolence International Foundation (BIF), have been publicly accused of providing 

financial support to al Qaeda and international terrorism. GRF, a nonprofit organization 
Terrorist Financing Staff Monograph 

11

with operations in 25 countries, ostensibly devoted to providing humanitarian aid to the 

needy, raised millions of dollars in the United States in support of its mission. U.S. 

investigators long believed that GRF devoted a significant percentage of the funds it 

raised to support Islamic extremist causes and jihadists with substantial links to 

international terrorist groups, including al Qaeda, and the FBI had a very active 

investigation under way by the time of 9/11. BIF, a nonprofit organization with offices in 

at least 10 countries, raised millions of dollars in the United States, much of which it 

distributed throughout the world for purposes of humanitarian aid. As in the case of GRF, 

the U.S. government believed BIF had substantial connections to terrorist groups, 

including al Qaeda, and was sending a sizable percentage of its funds to support the 

international jihadist movement. BIF was also the subject of an active investigation 

before 9/11.

After 9/11 OFAC froze both charities’ assets, effectively putting them out of business. 

The FBI opened a criminal investigation of both charities, ultimately resulting in the 

conviction of the leader of BIF for non-terrorism-related charges. The Immigration and 

Naturalization Service detained and ultimately deported a major GRF fund-raiser. No 

criminal charges have been filed against GRF or its personnel. 

The cases of BIF and GRF illustrate the U.S. government’s approach to terrorist fundraising in the United States before 9/11 and how that approach dramatically changed after 

the terrorist attacks: the government moved from a strategy of investigating and 

monitoring terrorist financing to actively disrupting suspect entities through criminal 

prosecution and the use of its IEEPA powers to block their assets in the United States. 

Although effective in shutting down its targets, this aggressive approach raises potential 

civil liberties concerns, as the charities’ supporters insist that they were unfairly targeted, 

denied due process, and closed without any evidence they actually funded al Qaeda or 

any terrorist groups.4

 The BIF and GRF investigations highlight fundamental issues that 

span all aspects of the government efforts to combat al Qaeda financing: the difference 

between seeing links to terrorists and proving funding of terrorists, and the problem of 

defining the threshold of information necessary to take disruptive action. 

Al Haramain: International charities and Saudi Arabia 

Al Haramain Islamic Foundation is a Saudi Arabia–based Islamic foundation. It is a 

quasi-private, charitable, and educational organization dedicated to propagating a very 

conservative form of Islam throughout the world. At its peak, al Haramain had a presence 

in at least 50 countries with estimates of its total annual expenditures ranging from $30 to 

$80 million. The government of Saudi Arabia has provided financial support to al 

4

 Legal actions taken by the aggrieved parties have been largely unsuccessful either because, as in the case 

of al-Barakaat, the government unfroze assets, or because of the highly deferential standard of review 

afforded to the President in the exercise of his Commander in Chief powers under IEEPA. The issue is not 

whether the government had the power to conduct the actions that it did. Rather, the issue is whether, 

based on the nature and quality of the evidence involved, and the threat of likely harm, the government 

appropriately exercised those powers against U.S. persons. 
National Commission on Terrorist Attacks Upon the United States 

12

Haramain in the past, although that has perhaps decreased in recent years. At least two 

Saudi government officials have supervisory roles (nominal or otherwise) over al 

Haramain. 

Since at least 1996 the U.S. intelligence community has developed information that 

various al Haramain branches supported jihadists and terrorists, including al Qaeda. Since 

9/11 high-level U.S. officials have considered their options regarding al Haramain. As of 

January 2003 the U.S. government was concerned that personnel in 20 of al Haramain’s 

offices, including personnel within Saudi Arabia, were aiding and abetting al Qaeda and 

its affiliated terrorist groups.

In March 2002 the U.S. and Saudi governments froze the assets of the Somali and 

Bosnian offices of al Haramain and, simultaneously, submitted these names to the United 

Nations for international listing as terrorist supporters. The United States has raised al 

Haramain’s involvement in terrorist financing with the Saudi government repeatedly, in 

different forms and through different channels, since 1998, but most effectively since 

2003. The Saudi government has made some moves to rein in the charity since May 

2003, including replacing the executive director of al Haramain, announcing the 

shutdown of all overseas branches of al Haramain, and changing its relevant laws and 

regulations. Some of these actions proved to be ineffective and, as a result, the U.S. and 

Saudi governments froze the assets of four additional branch offices of al Haramain in 

January 2004 and five additional branch offices in June 2004. The U.S. government took 

additional action against the U.S. entities in February 2004 and against the former 

executive director in June 2004. It remains to be seen whether the Saudis have the 

political will to develop the necessary capabilities to stem the flow of funds to al Qaeda 

and its related groups and to sustain these efforts over the long haul.

We completed our investigation of al Haramain in early June 2004. Subsequently, the 

Saudi government announced that it would dissolve the al Haramain Islamic Foundation 

and that a new Saudi charity commission would “take over all aspects of private overseas 

aid operations and assume responsibility for the distribution of private charitable 

donations from Saudi Arabia.” We have not assessed the state-of-play or impact of these 

actions. They are moving targets and it is difficult to come to any final conclusions about 

the status of al Haramain. Regardless, we believe the discussion in this chapter tells an 

important story about U.S.-Saudi cooperation on terrorist financing in the post 9/11 

period from which important lessons can be drawn. 
Terrorist Financing Staff Monograph 

13

Findings 

The funding of the hijackers 

x The 9/11 plot cost al Qaeda approximately $400,000–500,000, of which 

approximately $300,000 was deposited into U.S. bank accounts of the 19 

hijackers. Al Qaeda funded the hijackers in the United States by three primary and 

unexceptional means: (1) wire transfers from overseas to the United States, (2) the 

physical transport of cash or traveler’s checks into the United States, and (3) the 

accessing of funds held in foreign financial institutions by debit or credit cards. 

Once here, all of the hijackers used the U.S. banking system to store their funds 

and facilitate their transactions. 

x The hijackers and their financial facilitators used the anonymity provided by the 

vast international and domestic financial system to move and store their money 

through a series of unremarkable transactions. The existing mechanisms to 

prevent abuse of the financial system did not fail. They were never designed to 

detect or disrupt transactions of the type that financed 9/11.

x Virtually all of the plot funding was provided by al Qaeda. There is no evidence 

that any person in the United States, or any foreign government, provided any 

substantial funding to the hijackers. 

x Exhaustive investigation by U.S. government agencies and the securities industry 

has revealed no evidence that any person with advance knowledge of the 9/11 

attacks profited from them through securities transactions. 

Raising and moving money for al Qaeda

x Contrary to public opinion, Bin Ladin did not have access to any significant 

amounts of personal wealth (particularly after his move from Sudan to 

Afghanistan) and did not personally fund al Qaeda, either through an inheritance 

or businesses he owned in Sudan. Rather, al Qaeda relied on diversions from 

Islamic charities and on well-placed financial facilitators who gathered money 

from both witting and unwitting donors, primarily in the Gulf region. 

x The nature and extent of al Qaeda fund-raising and money movement make 

intelligence collection exceedingly difficult, and gaps appear to remain in the 

intelligence community’s understanding of the issue. Because of the complexity 

and variety of ways to collect and move small amounts of money in a vast 

worldwide financial system, gathering intelligence on al Qaeda financial flows 

will remain a hard target for the foreseeable future. 
National Commission on Terrorist Attacks Upon the United States 

14

Intelligence gathering on al Qaeda

x Within the United States, although FBI street agents had gathered significant 

intelligence on specific suspected fund-raisers before 9/11, the FBI did not 

systematically gather and analyze the information its agents developed. The FBI 

as an organization failed to understand the nature and extent of the problem or to 

develop a coherent strategy for confronting it. As a result the FBI could not fulfill 

its role to provide intelligence on domestic terrorist financing to government 

policymakers and did not contribute to national policy coordination.

x Outside the United States, the U.S. intelligence community before 9/11 devoted 

relatively few resources to collecting financial intelligence on al Qaeda. This 

limited effort resulted in an incomplete understanding of al Qaeda’s methods to 

raise, move, and store money, and thus hampered the effectiveness of the overall 

counterterrorism strategy. 

x Since 9/11 the intelligence community (including the FBI) has created significant 

specialized entities, led by committed and experienced individuals and supported 

by the leadership of their agencies, focused on both limiting the funds available to 

al Qaeda and using financial information as a powerful investigative tool. The 

FBI and CIA meet regularly to exchange information, and they have crossdetailed their agents into positions of responsibility. 

Economic disruption of al Qaeda 

x Before 9/11 the limited U.S. and UN efforts to freeze assets of and block 

transactions with Bin Ladin were generally ineffective. 

x Before 9/11 the Department of Justice had little success developing criminal cases 

against suspected terrorist fund-raisers, despite a 1996 law that dramatically 

expanded its power to do so. Because of the “wall” between criminal and 

intelligence matters, both real and perceived, the prosecutors lacked access to the 

considerable information about terrorist fund-raising in the United States 

maintained in the FBI’s intelligence files. 

x The United States engaged in a highly visible series of freezes of suspected 

terrorist assets after 9/11. Although few funds have been frozen since the first few 

months after 9/11, asset freezes are useful diplomatic tools in engaging other 

countries in the war on terror and have symbolic and deterrence value. The use of 

administrative freeze orders against U.S. citizens and their organizations may, at 

times, be necessary but raises substantial civil liberties issues. 

x Since 9/11 the FBI has recognized that its investigations of terrorist fund-raising 

within the United States must have an endgame: to stop the funding or otherwise 
Terrorist Financing Staff Monograph 

15

disrupt the terrorist supporters. The Department of Justice has created a unit to 

coordinate an aggressive national effort to prosecute terrorist financing and now 

regularly receives information from the FBI about terrorist fund-raising in the 

United States, which it lacked before 9/11. Still, prosecuting most terroristfinancing cases remains very challenging. 

x The financial provisions enacted after September 11, particularly those contained 

in the USA PATRIOT Act and subsequent regulations, have succeeded in 

addressing obvious vulnerabilities in our financial system. Vigilant enforcement is 

crucial in ensuring that the U.S. financial system is not a vehicle for the funding 

of terrorists. 

x Financial institutions have the information and expertise to detect money 

laundering, but they lack the information and expertise to detect terrorist 

financing. As a result, banks and other financial institutions play their most 

important role by obtaining accurate information about their customers that can be 

provided to government authorities seeking to find a known suspect in an 

emergency or investigating terrorist fund-raisers. 

x Although the government can often show that certain fund-raising groups or 

individuals are “linked” to terrorist groups (through common acquaintances, 

group affiliations, historic relationships, phone communications, or other such 

contacts), it is far more difficult to show that a suspected NGO or individual 

actually funds terrorist groups. In assessing both the domestic efforts of the U.S. 

government and the overseas efforts of other nations, we must keep in mind this 

fundamental and inherently frustrating challenge of combating terrorist financing.

Interagency cooperation and coordination 

x Terrorist financing is, and must continue to be, closely integrated with the broader 

counterterrorism effort. Terrorist-financing measures both rely on and feed the 

broader effort. Terrorist financing is neither intrinsically different from nor more 

complex than other counterterrorism issues. The NSC (as opposed to an agency or 

a terrorist-financing “czar”) is well situated to lead the operational and strategic 

integration of terrorist financing with counterterrorism generally. The 

government should resist the temptation to create a terrorist-financing czar or 

specialized, stand-alone entities focused on terrorist financing, and should support 

the current NSC-led interagency Policy Coordinating Committee. 

Diplomatic efforts and Saudi Arabia 

x Before the September 11 attacks, the Saudi government resisted cooperating with 

the United States on the al Qaeda financing problem, although the U.S. 

government did not make this issue a priority or provide the Saudis with 

actionable intelligence about al Qaeda fund-raising in the Kingdom. 
National Commission on Terrorist Attacks Upon the United States 

16

x Notwithstanding a slow start, since the al Qaeda bombings in Saudi Arabia in 

May and November of 2003 and the delivery of a more consistent and pointed 

U.S. message, it appears that the Saudis have accepted that terrorist financing is a 

serious issue and are making progress in addressing it. It remains to be seen 

whether they will (and are able to) do enough, and whether the U.S. government 

will push them hard enough, to substantially eliminate al Qaeda financing by 

Saudi citizens and institutions. The highest levels of the U.S. government must 

continue to send an unequivocal message to Saudi Arabia that the Saudis must do 

everything within their power to substantially eliminate al Qaeda financing by 

Saudi sources. The U.S. government must assist by continuing to provide 

actionable intelligence and much-needed training to the Saudis. At the same time, 

the Saudis must take the initiative to develop their own intelligence and disrupt 

terrorist financing without U.S. government prompting. 

Overall effectiveness of the U.S. government’s efforts on 

terrorist financing since 9/11 

x All relevant elements of the U.S. government—intelligence, law enforcement, 

diplomatic, and regulatory (often with significant assistance from the U.S. and 

international banking community)—have made considerable efforts to identify, 

track, and disrupt the raising and movement of al Qaeda funds. 

x While definitive intelligence is lacking, these efforts have had a significant impact 

on al Qaeda’s ability to raise and move funds, on the willingness of donors to give 

money indiscriminately, and on the international community’s understanding of 

and sensitivity to the issue. Moreover, the U.S. government has used the 

intelligence revealed through financial information to understand terrorist 

networks, search them out and disrupt their operations. 

x While a perfect end state—the total elimination of money flowing to al Qaeda—is 

virtually impossible, current government efforts to raise the costs and risks of 

gathering and moving money are necessary to limit al Qaeda’s ability to plan and 

mount significant mass casualty attacks. We should understand, however, that 

success in these efforts will not of itself immunize us from future terrorist attacks. 
Terrorist Financing Staff Monograph 

17

Chapter 2

Al Qaeda’s Means and Methods to Raise, Move, and 

Use Money 

There are two things a brother must always have for jihad, the self and money. 

An al Qaeda operative5

Al Qaeda’s methods of raising and moving money have bedeviled the world’s 

intelligence agencies for good reason. Al Qaeda has developed “an elusive network...an 

unconventional web”6

 to support itself, its operations, and its people. Al Qaeda has 

demonstrated the ability, both before and after 9/11,7

 to raise money from many different 

sources, typically using a cadre of financial facilitators, and to move this money through 

its organization by a variety of conduits, including hawaladars (see the discussion of 

halawas, below), couriers, and financial institutions. These sources and conduits are 

resilient, redundant, and difficult to detect.

Contrary to popular myth, Usama Bin Ladin does not support al Qaeda through a 

personal fortune or a network of businesses. Rather, al Qaeda financial facilitators raise 

money from witting and unwitting donors, mosques and sympathetic imams, and 

nongovernment organizations such as charities. The money seems to be distributed as 

quickly as it is raised, and we have found no evidence that there is a central “bank” or 

“war chest” from which al Qaeda draws funds. Before 9/11 al Qaeda’s money was used 

to support its operations, its training and military apparatus, the Taliban, and, 

sporadically, other terrorist organizations. Since 9/11 al Qaeda’s money supports 

operations and operatives and their families. 

Since 9/11 the disruption of al Qaeda’s sources, facilitators, and conduits, primarily 

through deaths and arrests, has made funds less available and their movement more 

difficult. At the same time, al Qaeda’s expenditures have decreased since 9/11 because it 

no longer supports the Taliban, its training camps, or an army. That said, al Qaeda still 

appears to have the ability to fund terrorist operations. 

Intelligence Issues 

There is much that the U.S. government did not know (and still does not know) about Bin 

Ladin’s resources and how al Qaeda raises, moves, and spends its money. The 

combination of Bin Ladin’s move to Afghanistan in 1996 and his censure by the 

5

 Intelligence reporting, Apr. 13, 2004. The discussion of al Qaeda financing in this chapter is derived from 

an extensive review of documents from State, Treasury and the intelligence community, as well as 

interviews of intelligence analysts, law enforcement agents, and other government officials. 6

 Intelligence reporting, Apr. 12, 2001. 7

 Our pre-9/11 analysis focuses on al Qaeda after Bin Ladin arrived in Afghanistan in 1996, and especially 

after he firmly established himself there by 1998. 
National Commission on Terrorist Attacks Upon the United States 

18

international community following the 1998 East Africa bombings contributed to the 

difficulty in tracking this money.8

The CIA expressed the extent of the problem in April 2001: 

Usama Bin Ladin’s financial assets are difficult to track because he uses a 

wide variety of mechanisms to move and raise money[;]...he capitalizes 

on a large, difficult-to-identify network with few long-lasting nodes for 

penetration. It is difficult to determine with any degree of accuracy what 

percentage of each node contributes to his overall financial position. Gaps 

in our understanding contribute to the difficulty we have in pursuing the 

Bin Ladin financial target. We presently do not have the reporting to 

determine how much of Bin Ladin’s personal wealth he has used or 

continues to use in financing his organization; we are unable to estimate 

with confidence the value of his assets and net worth; and we do not know 

the level of financial support he draws from his family and other donors 

sympathetic to his cause.9

Even after the September 11 attacks, the intelligence community could not estimate the 

total income or the relative importance of any source of Bin Ladin’s revenue stream. 

High-level policymakers were frustrated and characterized themselves as “seriously 

challenged...by an inability to obtain on a consistent basis solid and credible background 

information on targets for blocking of assets[.]”10 More than a year after 9/11, the head of 

the government’s terrorist-financing coordination effort described this gap in knowledge:

[S]ometime in the next 3 months a Congressional committee is rightfully going to 

haul us up to the Hill (or the President is going to call us into the Oval office) and 

ask us 4 questions: 

1. Who finances al Qaeda? 

2. How? 

3. Where is it? 

4. Why don’t you have it (and stop it)? 

Paul [O’Neill, secretary of the Treasury] could not [be able to] answer [those 

questions] today.11

8

 Mainstream Gulf area donors and the Bin Ladin family generally turned away from Usama Bin Ladin 

after the East Africa bombings. Additionally, UN Security Council Resolution 1333 in December 2000 

called on all member states to freeze funds in accounts associated with al Qaeda, a point discussed more 

fully later in this monograph. 

9

 Intelligence reporting, Apr. 12, 2001. 10 State Department Memorandum, Dec. 3, 2001. 

11 Treasury Department email, Nov. 14, 2002. The CIA contends it has much better intelligence about al 

Qaeda financing than is indicated by this Department of Treasury document. In the CIA’s view, Treasury 

was unhappy because the CIA’s intelligence was often extremely sensitive, so it could not be released to 

support public designations. 
Terrorist Financing Staff Monograph 

19

The volume and quality of the intelligence appear to have improved since the summer of 

2002, mostly because a flood of information is being derived from custodial interviews of 

captured al Qaeda members. Reliance on this information, of course, has its perils. 

Detainees may provide misinformation and may misrepresent or mischaracterize their 

roles or the roles of others. As a result, corroborating their information, through other 

custodial interviews, documentary evidence, or other intelligence collection, is critical in 

assessing what we know about al Qaeda financing. Even if what detained al Qaeda 

members tell us is accurate, the information can be stale, as it necessarily describes the 

state of affairs before their capture, and it is unlikely to be “actionable”—that is, 

sufficient to create an opportunity for disruption or to enable investigators to follow a 

money trail forward to operational elements or backward to the donors or facilitators. 

Understanding al Qaeda’s money flows and providing actionable intelligence present 

ongoing challenges because of the speed, diversity, and complexity of the means and 

methods for raising and moving money; the commingling of terrorist money with 

legitimate funds; the many layers and transfers between donors and the ultimate 

recipients of the money; the existence of unwitting participants (including donors who 

give to generalized jihadist struggles rather than specifically to al Qaeda); and the U.S. 

government’s reliance on foreign government reporting for intelligence. 

Commission staff evaluated the existing information regarding al Qaeda’s financing, 

before 9/11 and today, in light of these limitations. We describe what we know, 

acknowledge where the information is simply insufficient, and discuss what we are 

reasonably certain did not occur. The list of purported al Qaeda funding sources is 

legion: counterfeit trademarked goods, consumer coupon fraud, drug trafficking, insider 

trading, support from Gulf-area governments, and conflict diamonds are the most 

common. In many cases, one or two threads of information make such theories 

tantalizing; but after careful review of all of the evidence available to us, including some 

of the most sensitive information held by the U.S. government, we have judged that such 

theories cannot be substantiated. 

Al Qaeda’s Financing: Sources, Movement, Uses 

Where did al Qaeda get its money? 

Al Qaeda relied on fund-raising before 9/11 to a greater extent than thought at the time. 

Bin Ladin did not have large sums of inherited money or extensive business resources. 

Rather, it appears that al Qaeda lived essentially hand to mouth. A group of financial 

facilitators generated the funds; they may have received money from a spectrum of 

donors, charities, and mosques, with only some knowing the ultimate destination of their 

money. The CIA estimates that it cost al Qaeda about $30 million per year to sustain its 

activities before 9/11, an amount raised almost entirely through donations. 
National Commission on Terrorist Attacks Upon the United States 

20

Dispelling myths 

For many years, the United States thought Bin Ladin financed al Qaeda’s expenses 

through a vast personal inheritance or through the proceeds of the sale of his Sudanese 

businesses. Neither was true. Bin Ladin was alleged to have inherited approximately 

$300 million when his father died, funds used while in Sudan and Afghanistan. This 

money was thought to have formed the basis of the financing for al Qaeda.12 Only after 

NSC-initiated interagency trips to Saudi Arabia in 1999 and 2000, and after interviews of 

Bin Ladin family members in the United States, was the myth of Bin Ladin’s fortune 

discredited. From about 1970 until 1993 or 1994, Usama Bin Ladin received about a 

million dollars per year—adding up to a significant sum, to be sure, but not a $300 

million fortune. In 1994 the Saudi government forced the Bin Ladin family to find a 

buyer for Usama’s share of the family company and to place the proceeds into a frozen 

account. The Saudi freeze had the effect of divesting Bin Ladin of what would otherwise 

have been a $300 million fortune. Notwithstanding this information, some within the 

government continued to cite the $300 million figure well after 9/11, and the general 

public still gives credence to the notion of a “multimillionaire Bin Ladin.” 

Nor were Bin Ladin’s assets in Sudan a source of money for al Qaeda. Bin Ladin was 

reputed to own 35 companies in Sudan when he lived there from 1992 to 1996, but some 

may never have actually been owned by him and others were small or not economically 

viable. Bin Ladin’s investments may well have been designed to gain influence with the 

Sudanese government rather than be a revenue source. When Bin Ladin was pressured to 

leave Sudan in 1996, the Sudanese government apparently expropriated his assets and 

seized his accounts, so that he left Sudan with practically nothing. When Bin Ladin 

moved to Afghanistan in 1996, his financial situation was dire; it took months for him to 

get back on his feet. While relying on the good graces of the Taliban, Bin Ladin 

reinvigorated his fund-raising efforts and drew on the ties to wealthy Saudi nationals that 

he developed during his days fighting the Soviets in Afghanistan. 

Financial facilitators and their donors 

Al Qaeda depended on fund-raising to support itself. It appears that al Qaeda relied 

heavily on a core of financial facilitators who raised money from a variety of donors and 

other fund-raisers. Those donors were primarily in the Gulf countries, especially Saudi 

Arabia. Some individual donors knew of the ultimate destination of their donations, and 

others did not; they were approached by facilitators, fund-raisers, and employees of 

12 Reporting from November 1998 concluded that although the $300 million figure probably originated 

from rumors in the Saudi business community, it was a “reasonable estimate” as of a few years earlier, 

representing what would have been Bin Ladin’s share of his family’s business conglomerate in Saudi 

Arabia. The intelligence community thought it had adequately verified this number by valuing Bin Ladin’s 

investments in Sudan as well as what he could have inherited from his fathers construction empire in Saudi 

Arabia. Finished intelligence supported the notion that Bin Ladin’s “fortune” was still intact by concluding 

that Bin Ladin could only have established al Qaeda so quickly in Afghanistan if he had ready access to 

significant funds. Intelligence reporting, Nov. 17, 1998. 
Terrorist Financing Staff Monograph 

21

corrupted charities, particularly during the Islamic holy month of Ramadan. The financial 

facilitators also appeared to rely heavily on imams at mosques, who diverted zakat 

donations to the facilitators and encouraged support of radical Islamic causes. Al Qaeda 

fund-raising was largely cyclical, with the bulk of the money coming in during the 

Islamic holy month of Ramadan. 

Charities

Al Qaeda’s charities’ strategy before 9/11 had two prongs. In some instances, al Qaeda 

penetrated specific foreign branch offices of large, internationally recognized charities. In 

many cases, lax oversight and the charities’ own ineffective financial controls, 

particularly over transactions in remote regions of the world, made it easy for al Qaeda 

operatives to divert money from charitable uses. These large international Gulf charities 

donated money to end recipients, usually smaller in-country charities, whose employees 

may have siphoned off money for al Qaeda. In the second class of cases, entire charities 

from the top down may have known of and even participated in the funneling of money 

to al Qaeda. In those cases, al Qaeda operatives had control over the entire organization, 

including access to bank accounts. 

Much has been made of the role of charities, particularly Saudi charities, in terrorist 

financing. A little context is necessary here. Charitable giving, known as zakat, is one of 

the five pillars of Islamic faith. It is broader and more pervasive than Western ideas of 

charity, in that it also functions as a form of income tax, educational assistance, foreign 

aid, and political influence. The Western notion of the separation of civic and religious 

duty does not exist in Islamic cultures. The Saudi government has declared that the Koran 

and the Sunna (tradition) of Muhammad are the country’s constitution, and the clergy 

within Saudi Arabia wield enormous influence over the cultural and social life of the 

country.

Funding charitable works is ingrained into Saudi Arabia’s culture, and Saudi zakat has 

long provided much-needed humanitarian relief in the Islamic world. In addition, a major 

goal of Saudi charities is to spread Wahhabi beliefs and culture throughout the world. 

Thus Saudi efforts have funded mosques and schools in other parts of the world, 

including Pakistan, Central Asia, Europe, and even the United States. In some poor areas 

these schools alone provide education; and even in affluent countries, Saudi-funded 

Wahhabi schools are often the only Islamic schools available. 

Since 9/11 

Financial facilitators are still at the core of al Qaeda’s revenue stream, although there is 

little question that the arrests and deaths of several important facilitators have decreased 

the amount of money al Qaeda has raised and have made it more expensive and difficult 

to raise and move that money. The May 2003 terrorist attacks in Riyadh, moreover, seem 

to have reduced al Qaeda’s available funds even more—some say drastically—for a 
National Commission on Terrorist Attacks Upon the United States 

22

number of reasons. First, it appears that enhanced scrutiny of donors by the Saudi 

government after the attacks may be having a deterrent effect. Second, Saudi law 

enforcement efforts have reduced al Qaeda’s cadre of facilitators. Individuals such as 

Riyadh, an al Qaeda facilitator, and “Swift Sword,” known for their ability to raise and 

deliver money for al Qaeda, have been captured or killed. Lastly, the Saudi population 

may feel that the fight has come to their homeland, and that they should be more cautious 

in their giving as a result.

Entirely corrupt charities, such as the Wafa Charitable Foundation, are now out of 

business, with many of their principals killed or captured. Charities that have been 

identified as likely avenues for terrorist financing have seen their donations diminish and 

their activities come under more scrutiny. The challenge is to control overseas branches 

of Gulf-area charities, prevent charities from reopening under different names, and keep 

corrupt employees of nongovernmental organizations from corrupting other NGOs as 

they move from job to job. 

Despite the apparent reduction in its overall funding, al Qaeda continues to fund terrorist 

operations with relative ease. The amounts of money required for most operations are 

small, and al Qaeda can apparently still draw on hard-core donors who knowingly fund it 

and sympathizers who divert charitable donations to it.

The exact extent to which the donors know where their money is going remains 

unknown. Still, substantial evidence indicates that many Gulf donors did know and even 

wanted evidence that the fund-raisers really were connected to al Qaeda. In addition, 

some donations, while not completely sinister, are not completely innocent. For example, 

many donors gave funds to support the families of mujahideen fighters in Afghanistan. 

Such donors may not have intentionally funded terrorism, but they certainly knew they 

were supporting the families of combatants. Moreover, there is evidence that donations 

increased substantially after the United States attacked al Qaeda in Afghanistan, 

suggesting considerable anti-U.S. sentiment among the donors. At the same time, it seems 

very likely that facilitators diverted funds from unwitting donors. To stop such revenue 

from well-intentioned donors, it is necessary to capture or kill the facilitators who raise 

the funds or to remove the corrupt imans, NGO officials, or others who divert them to al 

Qaeda.

Allegations of other sources of revenue 

Allegations that al Qaeda used a variety of illegitimate means to finance itself, both 

before and after 9/11, continue to surface. The most common involve the drug trade, 

conflict diamonds, and state support; none can be confirmed. 

After reviewing the relevant intelligence on al Qaeda’s involvement in drug trafficking 

and interviewing the leading authorities on the subject, we have seen no substantial 

evidence that al Qaeda played a major role in the drug trade or relied on it as an important 

source of revenue either before or after 9/11. While the drug trade was an important 
Terrorist Financing Staff Monograph 

23

source of income for the Taliban before 9/11, it did not serve the same purpose for al 

Qaeda. Although there is some fragmentary reporting alleging that Bin Ladin may have 

been an investor, or even had an operational role, in drug trafficking before 9/11, this 

intelligence cannot be substantiated and the sourcing is probably suspect. One 

intelligence analyst described the reporting as “bizarre.” Bin Ladin may, however, have 

encouraged drug traffickers to sell to Westerners as part of his overall plan to weaken the 

West (though much of that intelligence is also suspect).

It is even less likely that al Qaeda is currently involved in the drug trade. Substantial 

post-9/11 intelligence collection efforts have failed to corroborate rumors of current 

narcotic trafficking. In fact, there is compelling evidence the al Qaeda leadership does not 

like or trust those who today control the drug trade in Southwest Asia, and has 

encouraged its members not to get involved. Although some individuals with some 

connection to al Qaeda may be involved in drug trafficking, there is no convincing 

evidence that al Qaeda plays a major role in it or that it is an important source of 

revenue.13 In addition to the lack of affirmative evidence, there are substantial reasons to 

believe that al Qaeda has no role in drug trafficking: al Qaeda members are 

geographically hemmed in and are unable to travel as the narcotics business demands. 

Trafficking would unnecessarily expose al Qaeda operatives to risks of detection or 

arrest. Moreover, established traffickers have no reason to involve al Qaeda in their 

lucrative businesses; associating with the world’s most hunted men would attract 

unwanted attention to their activities and exponentially increase the resources devoted to 

catching them. Furthermore, Al Qaeda neither controls territory nor brings needed skills 

and therefore has no leverage to break into the sector.

Allegations that al Qaeda has used the trade in conflict diamonds to fund itself similarly 

have not been substantiated. Commission staff has evaluated the sources of information 

for these various public reports raising the diamond allegations. These include reports of 

journalists, the United Nations, and certain nongovernmental organizations investigating 

this issue. The FBI conducted an intensive international investigation of the conflict 

diamond issue, including interviews of key witnesses with direct knowledge of the 

relevant facts, and found no evidence of any substantial al Qaeda involvement; the CIA 

has come to the same judgment. Additionally, detained operatives have since reported 

that al Qaeda was not involved in legal or illegal trading in diamonds or precious stones 

during its Afghan years. We have evaluated the U.S. government investigations in light 

of the public reports to the contrary, the relative veracity of the sources of information, 

and the best available intelligence on the subject, and see no basis to dispute these 

conclusions. There is some evidence that specific al Qaeda operatives may have either 

dabbled in trading precious stones at some point, or expressed an interest in doing so, but 

that evidence cannot be extrapolated to conclude that al Qaeda has funded itself in that 

manner. 

13 We are aware of the December 2003 seizure of two tons of hashish from a ship in the Persian Gulf, and 

of the initial press reports that three individuals on board had purported al Qaeda links. Both the CIA and 

the DEA discount the significance of those links, and neither agency believes that this seizure is evidence 

that al Qaeda is financing itself through narcotics trafficking. We have seen no evidence to the contrary. 
National Commission on Terrorist Attacks Upon the United States 

24

Other than support provided by the Taliban in Afghanistan, there is no persuasive 

evidence of systematic government financial sponsorship of al Qaeda by any country 

either before or after 9/11. While there have been numerous allegations about Saudi 

government complicity in al Qaeda, the Commission staff has found no persuasive 

evidence that the Saudi government as an institution or as individual senior officials 

knowingly support or supported al Qaeda.14

Al Qaeda fund-raising in the United States 

The United States is not, and has not been, a substantial source of al Qaeda funding, but 

some funds raised in the United States may have made their way to al Qaeda and its 

affiliated groups. A murky U.S. network of jihadist supporters has plainly provided funds 

to foreign mujahideen with al Qaeda links. Still, there is little hard evidence of substantial 

funds from the United States actually going to al Qaeda. A CIA expert on al Qaeda 

financing believes that any money coming out of the United States for al Qaeda is 

“minuscule.” Domestic law enforcement officials, acknowledging the possibility of 

schemes that they have not identified, generally state it is impossible to know how much, 

if any, funding al Qaeda receives out of the United States. These officials agree that any 

funds al Qaeda raises in the United States amount to much less than is raised by other 

terrorist groups, such as Hamas and Hezbollah, and that the United States is not a primary 

source of al Qaeda funding.

Finally, contrary to some public reports, we have not seen substantial evidence that al 

Qaeda shares a fund-raising infrastructure in the United States with Hamas, Hezbollah, or 

Palestinian Islamic Jihad. None of the witnesses we interviewed, including the FBI’s 

leading authorities on terrorist financing generally and its expert on Palestinian extremist 

fund-raising specifically, reported evidence of this overlap, although supporters of 

Palestinian extremist groups travel in the same general circles as suspected al Qaeda 

supporters and have some contact with them.15 In fact, there is far more evidence of fundraising collaboration between Hamas and Hezbollah than between either of these groups 

and al Qaeda, according to the FBI official responsible for tracking these groups’ 

funding.

How did al Qaeda move its money? 

14 The Saudi government turned a blind eye to the financing of al Qaeda by prominent religious and 

business leaders and organizations, at least before 9/11, and the Saudis did not begin to crack down hard on 

al Qaeda financing in the Kingdom until after the May 2003 al Qaeda attacks in Riyadh. See chapter 3, 

“Government Efforts Before and After the September 11 Attacks,” and chapter 7 on al Haramain and Saudi 

Arabia. 

15 In addition, individuals may have made donations both to suspected Hamas front groups and to other 

organizations believed to be somehow affiliated with al Qaeda. Such overlap does not establish any 

organizational coordination or cooperation, however. 
Terrorist Financing Staff Monograph 

25

Before 9/11 al Qaeda appears to have relied primarily on hawala16 and couriers to move 

substantial amounts of money for its activities in Afghanistan. Charities were also used as 

conduits to transfer funds from donors to al Qaeda leaders. At times al Qaeda operatives 

and supporters in the West and other banking centers freely used the international 

financing system.

Hawala 

Al Qaeda moved much of its money by hawala before 9/11. In some ways, al Qaeda had 

no choice after its move to Afghanistan in 1996; the banking system there was antiquated 

and undependable. Hawala became particularly important after the August 1998 East 

Africa bombings increased worldwide scrutiny of the formal financial system. Bin Ladin 

turned to an established hawala network operating in Pakistan, in Dubai, and throughout 

the Middle East to transfer funds efficiently. Hawalas were attractive to al Qaeda because 

they, unlike formal financial institutions, were not subject to potential government 

oversight and did not keep detailed records in standard form. Although hawaladars do 

keep ledgers, their records are often written in idiosyncratic shorthand and maintained 

only briefly. Al Qaeda used about a dozen trusted hawaladars, who almost certainly knew 

of the source and purpose of the money. Al Qaeda also used both unwitting hawaladars 

and hawaladars who probably strongly suspected that they were dealing with al Qaeda 

but were nevertheless willing to deal with anyone. 

Financial institutions 

Al Qaeda itself probably did not use the formal financial system to store or transfer funds 

internally after Bin Ladin moved to Afghanistan. Bin Ladin’s finances were initially in 

dire straits; al Qaeda was living hand to mouth and did not have any funds to store. 

Additionally, the Afghan banking system was rudimentary at best, and the increased 

scrutiny after the East Africa bombings and the UN resolutions against Bin Ladin and the 

Taliban made the use of such institutions problematic. 

Al Qaeda’s extended network of supporters and operatives did use the formal financial 

system before 9/11. Hawaladars associated with al Qaeda (like hawaladars generally) 

relied on banks as part of their hawala operations. One bank, for example, had 1,800 to 

2,000 branches in Pakistan, making it relatively easy for a hawaladar to use the bank to 

move funds.17 In addition to hawaladars, charities such as Wafa Humanitarian 

16 A definition of hawala is contained in the case study of the al-Barakaat network. Additionally, a good 

discussion of hawala is found in U.S. Department of Treasury, A Report to Congress in Accordance with 

Section 359 of the USA PATRIOT Act, November 2002 (online at 

www.fincen.gov.hawalarptfinal11222002.pdf). 

17 Hawala was frequently combined with other means of moving money. For a single transaction, the 

hawaladars sometimes used both hawala and the formal banking system or money remitters; the senders 

and receivers of the funds also often used couriers to transfer the funds to and from their respective 

hawaladars. Hawala also enabled operatives to access the banking system without having to open an 

account.
National Commission on Terrorist Attacks Upon the United States 

26

Organization had accounts at banks, which served as a means to move money for 

terrorists. 

Fund-raisers for al Qaeda also used banks to store and move their money. Most banks 

probably did not know their institutions were being used to facilitate the flow of funds to 

al Qaeda, although some may have. Corrupt individuals on the inside of these banks may 

have facilitated the transactions. There is little question that the near-total lack of 

regulation and oversight of the financial industry in the UAE and Pakistan before 9/11 

allowed these activities to flourish. 

Al Qaeda operational cells outside Afghanistan made extensive use of the formal 

financial system. As discussed in appendix A, the September 11 hijackers and their coconspirators had bank accounts and credit cards, made extensive use of ATM cards, and 

sent and received international wire and bank-to-bank transfers. Those al Qaeda 

operatives and supporters who were relatively anonymous could more easily risk using 

the formal financial system than could al Qaeda’s core leadership.

Couriers

Al Qaeda used couriers because they provided a secure way to move funds. Couriers 

were typically recruited from within al Qaeda and could maintain a low profile—perhaps 

because of their background, language skills, ethnicity, or documentation—and so, 

ideally, no outsiders were involved or had knowledge of the transaction. They usually did 

not know the exact purpose of the funds. A single courier or several couriers might be 

used, depending on the route and the amount of money involved. They picked up money 

from a hawaladar, financial facilitator, or donor, and took it to its destination. For 

example, al Qaeda reportedly used a Pakistani-based money changer to move $1 million 

from the UAE to Pakistan, at which point the money was couriered across the border into 

Afghanistan. The 9/11 transaction provides a good example of al Qaeda’s use of couriers. 

As discussed in appendix A, the plot leader Khalid Sheikh Mohammad delivered a large 

amount of cash, perhaps $120,000, to the plot facilitator Abdul Aziz Ali in Dubai; Ali 

then used the cash to wire funds to the hijackers in the United States. 

Since 9/11 

Since 9/11 the core al Qaeda operatives have relied on cash transactions involving trusted 

hawaladars and couriers. The hawala network that existed prior to 9/11 seems to have 

been largely destroyed. Several of the main hawaladars who were moving money for al 

Qaeda before 9/11 have been detained, and the identities of others have been revealed in 

seized records. Al Qaeda may have developed relationships with other hawaladars, and it 

most likely uses them to move some of its money. However, major cash transfers 

apparently are done by trusted couriers or, for added security, by the main operatives 

themselves. Some couriers may be carrying information (although not specific 

operational details) as well as cash.
Terrorist Financing Staff Monograph 

27

Using couriers has slowed down al Qaeda’s movement of money, as physically 

transporting money over large distances necessarily takes much longer than using 

electronic means such as wire transfer. In addition, there is evidence that significant 

delays in moving money, especially to al Qaeda operatives in far-flung parts of the world, 

have been caused by the limited supply of trusted couriers. Moreover, transferring funds 

by courier requires planning, coordination, and communication, all of which take time. 

Al Qaeda’s use of couriers presents challenges and opportunities for the intelligence and 

law enforcement communities. Couriers can be vulnerable to certain forms of 

enforcement, however. 

How did al Qaeda spend its money? 

Before 9/11 al Qaeda’s expenses included funding operations, maintaining its training 

and military apparatus, contributing to the Taliban and their high-level officials, and 

sporadically contributing to related terrorist organizations. The CIA estimates that prior 

to 9/11 it cost al Qaeda about $30 million per year to sustain these activities. 

Al Qaeda’s expenses 

Once in Afghanistan, Bin Ladin focused on building al Qaeda into a fully operating 

organization. Al Qaeda spent money on military training and support, including salaries 

for jihadists, training camps, and related expenses. Reportedly there were also 

propaganda and proselytizing-related expenses and costs to support al Qaeda outside 

Afghanistan.

Before 9/11 al Qaeda was reportedly highly organized, with a committee structure that 

included the Finance Committee. Credible evidence indicates that Bin Ladin played a 

significant role in planning each operation and was very attentive to financial matters. 

Other than Bin Ladin, the person with the most important role in al Qaeda financing was 

reportedly Sheikh Qari Sa’id. Sa’id, a trained accountant, had worked with Bin Ladin in 

the late 1980s when they fought together in Afghanistan and then for one of Bin Ladin’s 

companies in Sudan in the early to mid-1990s. Sa’id was apparently notoriously 

tightfisted with al Qaeda’s money.18 Operational leaders may have occasionally bypassed 

Sa’id and the Finance Committee and requested funds directly from Bin Ladin. Al Qaeda 

members apparently financed themselves for day-to-day expenses and relied on the 

central organization only for operational expenses.

Al Qaeda funded a number of terrorist operations, including the 1998 U.S. embassy 

bombings in East Africa (which cost approximately $10,000), the 9/11 attacks 

(approximately $400,000–500,000), the October 18, 2002, Bali bombings (approximately 

18 Sa’id reportedly vetoed a $1500 expense for travel to Saudi Arabia to get visas for the 9/11 attacks until 

Bin Ladin overruled him (although there is no reason to believe that Sa’id knew the reason for the travel at 

that time). 
National Commission on Terrorist Attacks Upon the United States 

28

$20,000), and potential maritime operations against oil tankers in the Strait of Hormuz 

(approximately $130,000). The actual operations themselves were relatively cheap, 

although these figures do not include such “overhead” as training at camps, evaluation of 

trainees, and recruitment. Although the cyclical nature of fund-raising may have created 

periodic cash shortfalls, we are not aware of any evidence indicating that terrorist acts 

were interrupted as a result.

Money for the Taliban 

Once Bin Ladin revitalized his fund-raising after moving to Afghanistan, he provided 

funds to the Taliban in return for safe haven. Al Qaeda probably paid between $10 to 20 

million per year to the Taliban. As time passed, it appeared that the Taliban relied on al 

Qaeda for an ever-greater share of their needs, such as arms, goods, and vehicles, and 

even social projects. In return, the Taliban resisted international pressure to expel Bin 

Ladin or turn him over to a third country. 

Money to other terrorist groups 

Before 9/11 Bin Ladin appears to have used money to create alliances with other Islamic 

terrorist organizations. Al Qaeda’s cash contributions helped establish connections with 

these groups and encouraged them to share members, contacts, and facilities. It appears 

that al Qaeda was not funding an overall jihad program but was selectively providing 

start-up funds to new groups or money for specific operations. Generally, however, al 

Qaeda was more likely to provide logistical support and cover and to assist with terrorist 

operations than to provide money. 

Since 9/11 

Al Qaeda’s expenditures have decreased significantly since the 9/11 attacks and the 

defeat of the Taliban, although it is impossible to determine to what extent. Al Qaeda has 

become decentralized and it is unlikely that the Finance Committee still exists. Sa’id 

continues to operate, but given the difficulties of communication, it is doubtful that he 

exerts much control. The direction and financing of operations are now based more on 

personal relationships with operatives than on a management structure. 

Al Qaeda no longer pays money to the Taliban (for safe haven or otherwise) and no 

longer operates extensive training camps in Afghanistan or elsewhere. It still provides 

operatives and their families with modest support. Al Qaeda occasionally provides funds 

to other terrorist organizations, especially those in Southeast Asia. Intelligence analysts 

estimate that al Qaeda’s operating budget may be only a few million dollars per year, 

although such estimates are only tentative. 
Terrorist Financing Staff Monograph 

29

We have learned much since 9/11 about how al Qaeda raises, moves, and stores money, 

but our understanding is still somewhat speculative. The U.S. intelligence community is 

forced to extrapolate from current information to fill in the gaps in our knowledge. 

Detainees have confirmed the basic sources of al Qaeda funding and methods of moving 

money, and have provided insights into changes in al Qaeda’s financing since 9/11. 

Moreover, al Qaeda adapts quickly and effectively, creating new difficulties in 

understanding its financial picture. Intelligence challenges remain and are likely to 

continue, although the picture is clearer today than ever before. As al Qaeda becomes 

more diffuse—or becomes essentially indistinguishable from a larger global jihadist 

movement—the very concept of al Qaeda financing may have to be reconsidered. Rather 

than the al Qaeda model of a single organization raising money that is then funneled 

through a central source, we may find we are contending with an array of loosely 

affiliated groups, each raising funds on its own initiative. 
National Commission on Terrorist Attacks Upon the United States 

30

Chapter 3

Government Efforts Before and After the September 

11 Attacks 

This chapter discusses the U.S. government terrorist financing efforts before September 

11, and describes and assesses our current efforts. As in other areas of counterterrorism, 

the government has poured vastly more resources and attention to combating terrorist 

financing since the attacks, and has made great strides in a difficult area. 

Before the September 11 Attacks 

Notwithstanding the government’s efforts to choke off Bin Ladin’s finances before 9/11, 

on the eve of the September 11 attacks the CIA judged that Bin Ladin’s cash flow was 

“steady and secure.”19 Although fund-raising was somewhat cyclical, al Qaeda had 

enough money to operate its network of Afghan training camps, support the families of 

its members, pay an estimated $10–20 million to the Taliban and its officials, and fund 

terrorist operations.20

Domestic intelligence and law enforcement 

Before September 11, FBI street agents in a number of field offices gathered intelligence 

on a significant number of suspect terrorist-financing organizations. These FBI offices, 

despite setbacks and bureaucratic inefficiencies, had been able to gain a basic 

understanding of some of the largest and most problematic terrorist-financing 

conspiracies that have since been identified. The agents understood that there were 

extremist organizations operating within the United States supporting a global Islamic 

jihad movement. They did not know the degree to which these extremist groups were 

associated with al Qaeda, and it was unclear whether any of these groups were sending 

money to al Qaeda. The FBI operated a web of informants, conducted electronic 

surveillance, and engaged in other investigative activities. Numerous field offices, 

including New York, Chicago, Detroit, San Diego, and Minneapolis, had significant 

intelligence investigations into groups that appeared to be raising money for foreign 

jihadists or other radical Islamist groups. Many of these groups appeared to the FBI to 

have had some connections either to al Qaeda or to Usama Bin Ladin. 

The FBI was hampered by an inability to develop an endgame; its agents continued to 

gather intelligence with little hope that they would be able to make a criminal case or 

otherwise disrupt an operation. Making a case in terrorist financing was certainly as if not 

19 Intelligence report, 29 August 2001. Commission staff has seen no evidence that would contradict the 

CIA’s assessment. 

20 Commission staff, in researching this chapter, conducted a comprehensive review of government 

materials on terrorist financing from essentially every law enforcement, intelligence and policy agency 

involved in the effort. This review included interviews of current and former government personnel, from 

intelligence analysts and street agents, up to and including members of the cabinet. 
Terrorist Financing Staff Monograph 

31

more difficult than in other similarly complex international financial criminal 

investigations. The money inevitably moved overseas—and once that occurred, the 

agents were at a dead end. Financial investigations depend on access to financial records. 

This usually requires a formal legal request, typically through a previously negotiated 

mutual legal assistance treaty (MLAT), or an informal request to a foreign government 

security service through the FBI’s legal attaché (Legat) responsible for the relevant 

country. The United States rarely had mutual legal assistance treaties with the countries 

holding the most important evidence; and when agents could make an MLAT request, the 

process was slow and sometimes took years to get results. In addition, an MLAT request 

required the existence of a criminal investigation. Because the vast majority of FBI 

terrorist-financing investigations involved intelligence, not crimes, agents could not avail 

themselves of even this imperfect vehicle for accessing critical foreign information. 

Informal requests were frequently ignored, even when made of U.S. allies in important 

cases. Moreover, simply to make a request required that the agents disclose the target and 

the nature of the evidence. The risk of potential compromise was great, and most agents 

were not willing to take the risk against such a speculative outcome. Obtaining foreign 

financial records thus was often a practical impossibility. 

As was true in other areas of counterterrorism, agents perceived themselves as being 

stymied by rules regarding the commingling of intelligence and criminal cases. Chicago 

intelligence investigators looking at a Hamas subject thought, for example, that opening a 

criminal case precluded their ability to obtain approvals from the Justice Department for 

a FISA (Foreign Intelligence Surveillance Act) warrant to tap telephones. The agents 

believed that the Justice Department would think that the request under FISA would 

appear to be simply a pretext to further the criminal case.21 No agents wanted to block 

themselves from using what could be the most productive investigative tool they had—

FISA—so criminal investigations were not opened and potential criminal charges were 

not seriously contemplated. 

Some agents also hesitated because of the nature of the cases. Indicting or even 

investigating an Islamic charity or group of high-profile Middle Easterners required 

special sensitivity. Fears of selective prosecution or inappropriate ethnic profiling were 

always a consideration in going after a high-profile and sensitive target. Certainly, the 

evidence had to be strong before a prosecution would be considered. As one highly 

experienced prosecutor told the Commission staff, if the FBI had aggressively targeted 

religious charities before 9/11, it would have ultimately had to explain its actions before a 

Senate committee. 

Lastly, the legal tools in terrorist financing were largely new, untested, and unfamiliar to 

field agents and prosecutors in U.S. Attorney’s offices. Congress in 1996 had made it a 

crime to provide “material support” to foreign terrorist organizations.22 Before the 

21 The actual procedures were somewhat different that the agent’s perceptions, however. See the 9/11 

Commission, Final Report, at 78 to 80, and accompanying footnotes, for a discussion of the issue. 22 18 U.S.C. Section 2339B makes it a crime to provide “material support or resources to a foreign terrorist 

organization.” The secretary of state designates foreign terrorist organizations in consultation with the 

secretary of the treasury and the attorney general. 
National Commission on Terrorist Attacks Upon the United States 

32

enactment of this statute, prosecuting a financial supporter of terrorism required tracing 

donor funds to a particular act of terrorism—a practical impossibility. Under the 1996 

law, the prosecutor had only to prove that the defendant had contributed something of 

value to an organization that had been named by the secretary of state, after a formal 

process, as a foreign terrorist organization (FTO). Unfortunately, al Qaeda was not 

named an FTO until 1999, so criminal prosecution could not be considered earlier. Even 

then, there was little impetus to focus on prosecuting material support cases or 

committing resources to train prosecutors and agents to use the new statutory powers. As 

a result, the prospect of bringing a criminal case charging terrorist financing seemed 

unrealistic to field agents. 

It was far easier for agents to find a minor charge on which to convict a suspect, thereby 

ultimately immobilizing and disrupting the operation. This strategy was used in San 

Diego in 1999, for example; knowing that individuals may have been supporting a 

specific terrorist group, the FBI and the U.S. Attorney’s Office for the Southern District 

of California developed a case charging the individuals with relatively low-level fraud. 

This prosecution effectively disrupted the operation. More often, however, agents knew 

that it would have been hard to persuade a busy prosecutor to bring a case on low-level 

fraud or minor money-laundering crimes. If the prosecutors knew the classified 

intelligence underlying the case, the agents might have had a better shot at convincing 

them. But sharing that intelligence was difficult, and required approval from FBI 

headquarters and notice to OIPR. Additionally, some of these low-level crimes carried 

no jail time, and most agents did not think prosecution for a crime ultimately ending in a 

probationary sentence would have been sufficient to disrupt an ongoing funding 

operation.

On a national level, the FBI never gained a systematic or strategic understanding of the 

nature and extent of the jihadist or al Qaeda fund-raising problem within the United 

States. The FBI did not understand its role in assisting national policy coordination and 

failed to provide intelligence to government policymakers. For example, shortly after the 

East Africa embassy bombings in 1998, a staff member of the National Security Council 

was assigned the task of coordinating government resources in the hunt for Bin Ladin’s 

finances and ensuring effective interagency coordination of the issue. The NSC wanted 

the FBI to produce an assessment of possible al Qaeda fund-raising in the United States 

by al Qaeda supporters, but the FBI shared little information regarding Usama Bin Ladin 

or al Qaeda. The NSC therefore concluded that the FBI did not have relevant information. 

The problem stemmed in part from the FBI’s failure to create high-quality analytic 

products on al Qaeda financing or an effective system for storing, searching, or retrieving 

information of intelligence value contained in the investigative files of various field 

offices.23 There was very little finished intelligence that FBI program managers could use 

to show trends, estimate the extent of the problem, or distribute to policymakers or other 

agencies.

23 The Commission staff, in interviews with field agents and in searching the FBI’s automated case-tracking 

system, found a treasure trove of information regarding suspected terrorist fund-raising organizations in the 

United States, yet none of this information was readily accessible. 
Terrorist Financing Staff Monograph 

33

The FBI lacked a headquarters unit focused on terrorist financing. According to the thenhead of its Counterterrorism Division, the FBI considered setting up such a unit prior to 

9/11. However, the FBI viewed terrorist-financing cases as too difficult to make. It also 

believed that fighting terrorist financing would have little impact, since most terrorist acts 

were cheap. As a result, the issue was left to the FBI’s general counterterrorism program 

office. Those agents, overworked and focusing on the day-to-day approvals and oversight 

of the entire FBI counterterrorism program, had neither the time nor the expertise to wade 

through reports, talk to case agents, or focus on the terrorist-financing problem. 

For its part, the Criminal Division of the Department of Justice also lacked a national 

program for prosecuting terrorist-financing cases, under the 1996 “material support” 

statute or otherwise. The DOJ’s Terrorism and Violent Crime Section (TVCS) had played 

a role in drafting the material support statute and took the lead in developing the 

administrative record to support the first round of FTO designations in 1997. After such 

designations began to be made, TVCS worked on developing a program to use the 1996 

statute, but it had little practical success before 9/11. 

The fundamental problem that doomed efforts to develop a program to prosecute terrorist 

fund-raising cases was that DOJ prosecutors lacked a systematic way to learn of evidence 

of prosecutable crimes in the FBI’s intelligence files. The prosecutors simply did not 

have access to these files because of “the wall.” Although the attorney general’s 1995 

guidelines required the FBI to pass to the Criminal Division intelligence information 

indicating potential past, current, or future violations of federal law, the FBI almost never 

did so with respect to terrorist fund-raising matters. Lacking access to the relevant FBI 

investigations, the TVCS made some efforts to investigate cases on its own, including a 

cooperative effort with a foreign service to probe potential Hamas fund-raising in the 

United States. These initiatives took a great deal of time and effort and did not produce 

any solid criminal leads. As a small section with many responsibilities, the TVCS had 

insufficient personnel for the resource-intensive task of investigating terrorist financing. 

The wall may, in fact, have created a disincentive for FBI intelligence agents to share 

evidence of prosecutable crimes with criminal prosecutors. One experienced prosecutor 

believed that it would have violated every bone in their bodies for these agents—who 

were evaluated in large part on the number and quality of their FISA investigations—to 

share information with the Criminal Division and thereby jeopardize the continuing 

viability of a successful intelligence investigation. Another experienced prosecutor 

expressed the view that FBI agents were focused on potential violent threats and did not 

think the uncertain prospect of bringing a fund-raising case justified the risk of losing a 

FISA investigation that might locate terrorist operatives. In any event, the FBI and DOJ’s 

relationship regarding terrorist financing was dysfunctional; FBI agents rarely shared 

information of potentially prosecutable crimes with DOJ prosecutors, who, therefore, 

could play no role in trying to develop a strategy to disrupt the fund-raising operations.24

24 Richard Clarke of the NSC, who was interested in terrorist fund-raising in the United States, expressed 

concern about the lack of terrorist fund-raising prosecutions to the chief of the TVCS. Clarke actually 

brought to a meeting material he had printed off the Internet indicating extremists were soliciting support in 
National Commission on Terrorist Attacks Upon the United States 

34

In early May 2000, in response to an inquiry from the NSC’s Richard Clarke, a TVCS 

attorney drew up a detailed proposal for developing a program to prosecute terroristfinancing cases, providing a sophisticated analysis of the relevant legal and practical 

considerations. The memorandum pointed out that the “vast majority” of the FBI’s 

terrorist-financing investigations were being run as intelligence investigations, and 

contended that the FBI gave preference to intelligence equities at the expense of the 

criminal when the two overlapped. To circumvent this problem, the memo proposed the 

creation of a unit to identify and pursue potential fund-raising matters as criminal rather 

than intelligence investigations, and described a systematic methodology to investigate 

and prosecute domestic fund-raisers for foreign terrorist organizations.

The memorandum had no effect; no resources were allocated to pursue the proposal, and 

it was not implemented. The FBI continued its intelligence investigations, and the 

criminal prosecutors largely sat on the sidelines. 

Most fundamentally, the domestic strategy for combating terrorist financing within the 

United States never had any sense of urgency. The FBI investigations lacked an 

endgame. FBI agents in the field had no strategic intelligence that would have led them to 

believe that any of the fund-raising groups posed a direct domestic threat, so there was no 

push to disrupt their activities. Without access to the intelligence files, prosecutors had no 

ability to build criminal cases, and the DOJ was doing little on a practical level to change 

the situation. As a result, FBI intelligence agents merely kept tabs on the activities of 

suspected jihadist fund-raisers, even as millions of dollars flowed overseas. 

U.S. foreign intelligence collection and analysis 

As we note in chapter 2, the CIA’s understanding of Usama Bin Ladin and al Qaeda 

before the September 11 attacks was incomplete. The intelligence reporting on the nature 

of his wealth was largely speculative, and sourced to general opinion in the Saudi 

business community.25

The intelligence community learned the reality only after White House–level prodding. In 

1999 Vice President Al Gore spoke to Saudi Crown Prince Abdullah during a visit to 

Washington, DC about isolating and disrupting Bin Ladin’s financial network. The two 

leaders agreed to set up a meeting on this issue between U.S. counterterrorism experts 

and high-ranking Saudi officials. As a result there were two NSC-initiated trips to Saudi 

Arabia, in 1999 and 2000. During these trips NSC, Treasury, and intelligence 

representatives spoke with Saudi officials, and later interviewed members of the Bin 

Ladin family, about Usama’s inheritance. They learned that the Bin Ladin family had 

sold Usama’s share of the inheritance and, at the direction of the Saudi government, 

placed the money into a specified account, which was then frozen by the Saudi 

the United States and asked the TVCS chief what the DOJ was doing about the problem. The answer was, 

unfortunately, not much. 

25 For example, a 1998 intelligence report acknowledges that the CIA did not know the exact state of Bin 

Ladin’s personal wealth, although it cited his inheritance as $300 million. 
Terrorist Financing Staff Monograph 

35

government in 1994. The urban legend that Bin Ladin was a financier with a fortune of 

several hundred million dollars was nevertheless hard to shake, and U.S. government 

intelligence documents even after the September 11 attacks sometimes referred to him as 

such.

The lack of specific intelligence was a source of frustration to policymakers. As the 

NSC’s Richard Clarke testified to the Senate Banking Committee in 2003: 

The questions we asked then [in 1995] of the CIA were never answered—

and we asked them for six years: how much money does it cost to be al 

Qaeda? What’s their annual operating budget? Where do they get their 

money? Where do they stash their money? Where do they move their 

money? How? Those questions we asked from the White House at high 

levels for five or six years were never answered because, according to the 

intelligence community, it was too hard.26

The CIA’s response to Clarke’s criticism was that terrorist financing was an 

extraordinarily hard target and that, given the legal and policy limitations on covert action 

against banks during this period, there was little utility in simply collecting intelligence 

on terrorist financing.

The CIA obtained a very general understanding of how al Qaeda raised money. It knew 

relatively early on, for example, about the loose affiliation of financial institutions, 

businesses, and wealthy individuals who supported extremist Islamic activities. It also 

understood that nongovernmental agencies (NGOs) and Saudi-based charities played a 

role in funding al Qaeda and moving terrorist-related money. The problem, however, 

was that the government could not disrupt funding flows, through either covert action or 

economic sanctions, because the information was not specific enough. The CIA had 

intelligence reporting on Sudan and the purported businesses Bin Ladin owned there, but 

by the time of the East Africa embassy bombings this information was dated and not 

useful. Much of the early reporting on al Qaeda’s financial situation and structure came 

from a single source, a former al Qaeda operative, who walked into the U.S. Embassy in 

Eritrea in 1996. 

CIA devoted few resources to collecting the types of strategic financial intelligence that 

policymakers were looking for, or that would have informed the larger counterterrorism 

strategy. The CIA’s virtual station—ALEC station—was originally named CTC-TFL 

(Counter Terrorism Center - Terrorist Financial Links), reflecting the CIA’s early belief 

that Bin Ladin was simply a terrorist financier, as opposed to someone who actually 

planned and conducted operations. However, the intelligence reporting was so limited 

that one CIA intelligence analyst told Commission staff that, unassisted, he could read 

26 Clarke testimony before the Senate Banking Committee, Oct. 22, 2003; see also Clarke testimony to the 

Congressional Joint Inquiry. Contemporaneous documents support Clarke’s recollection concerning his 

frustration. For example in November 1998, Clark wrote that four years after the NSC first asked the CIA 

to track down UBL’s finances, the CIA can only guess at the main sources of Bin Ladin’s budget, where he 

parks his money, and how he moves it. 
National Commission on Terrorist Attacks Upon the United States 

36

and digest the universe of intelligence reporting on al Qaeda financial issues in the three 

years prior to the September 11 attacks. Another person assigned to ALEC station told 

the Commission staff that while its original name may have been Terrorist Financial 

Links, the station appeared to him to do everything but terrorist financing. Any 

intelligence it had on terrorist financing appeared to have been collected collaterally, as a 

consequence of gathering other intelligence. According to one witness, this approach 

stemmed in large part from the chief of ALEC station, who did not believe that simply 

following the money from point A to point B revealed much about the terrorists’ plans 

and intentions. As a result, terrorist financing received very little emphasis. Another 

witness recalled that ALEC station made some effort to gather intelligence on al Qaeda 

financing, but it proved to be too hard a target, the CIA had too few sources, and, as a 

result, little quality intelligence was produced. 

Some attributed the problem to the CIA’s separation of terrorist-financing analysis from 

other counterterrorism activities. Within the Directorate of Intelligence, a group was 

devoted to the analysis of all financial issues, including terrorist financing. Called the 

Office of Transnational Issues (OTI), Illicit Transaction Groups (ITG), it dealt with an 

array of issues besides terrorist financing, including drug trafficking, drug money 

laundering, alien smuggling, sanctions, and corruption. The ITG was not part of the CTC, 

and rotated only a single analyst to the CTC. Moreover, ITG analysts were separated 

from the operational side of terrorist financing at the CTC, which planned operations 

against banks and financial facilitators. Members of the NSC staff stressed that this 

structure was defective because there was almost no intersection between those who 

understood financial issues and those who understood terrorism. As a result, the NSC was 

forced to try to educate two different groups on the issues. Inevitable turf wars also 

resulted.

Before 9/11, the National Security Agency had a handful of people working on terroristfinancing issues. The terrorist-financing group had no foreign-language capability. As a 

result, its collection had to focus on targets most likely to use the English language. The 

NSA’s effectiveness was limited by sparse lead information from other elements of the 

intelligence community on financing and, like the rest of the intelligence community, by 

the wall between intelligence and law enforcement that gave it only limited access to law 

enforcement information. 

One possible solution to these weaknesses in the intelligence community was the 

proposed all-source terrorist financing intelligence analysis center at Treasury’s Office of 

Foreign Assets Control (OFAC), called the Foreign Terrorist Asset Tracking Center 

(FTATC), which had been recommended in 2000 by the National Commission on 

Terrorism (the so-called Bremer Commission). The NSC spearheaded efforts to create the 

FTATC, but bureaucratic delays and resistance by Treasury and CIA officials delayed its 

implementation until after the September 11 attacks. The delays resulted from the CIA’s 

belief that the FTATC would duplicate some of its functions, the CIA’s unwillingness to 

host the center temporarily until OFAC could accommodate it, and Treasury’s reluctance 

to create a secure facility to host the center and allow OFAC direct access to intelligence. 
Terrorist Financing Staff Monograph 

37

The government also considered possible economic disruption, to be effected by targeting 

Bin Ladin’s financial resources or by intercepting money couriers or hawaladars who 

handled Bin Ladin’s money. 

There is little doubt that the CIA had the authority to use methods of covert disruption to 

go after cash couriers or hawaladars. Ultimately it was unsuccessful in doing so, either 

because it was unable to identify specific useful targets or because such disruption was 

judged to be too dangerous.

Economic and diplomatic efforts 

Treasury’s Office of Foreign Assets Control had an early interest in searching out and 

freezing Bin Ladin assets. Its primary tool, the International Emergency Economic 

Powers Act (IEEPA), allows the president to designate individuals and entities as a threat 

to the United States and thereby freeze their assets and block their transactions. OFAC, 

for example, had long experience in freezing assets associated with Libya and Cuba. In 

the 1990s the government began to use these powers in a different, more innovative way, 

to go after nonstate actors. It first imposed sanctions against persons and entities 

interfering with the Middle East peace process (MEPP) and then against other nonstate 

threats, such as the Cali, Colombia, narcotics-trafficking cartel. OFAC personnel were 

interested in trying to find and freeze Bin Ladin’s assets, but to do so required either a 

presidential designation of Bin Ladin or the discovery of a link between Bin Ladin and 

someone named for disrupting the MEPP. Efforts were made before the East Africa 

bombings to link Bin Ladin to the names on the MEPP list, but their lack of usable 

intelligence on the issue hampered OFAC analysts. OFAC did not collect its own 

intelligence; rather, it relied on the intelligence community to collect and often analyze 

the evidence, which it then used to make designations. 

After the East Africa bombings in August 1998, President Clinton formally designated 

Usama Bin Ladin and al Qaeda as subject to the sanctions available under the IEEPA 

program, giving OFAC the ability to search for and freeze any of their assets within the 

U.S. or in the possession or control of U.S. persons. OFAC had little specific information 

to go on, however, and few funds were frozen.27 The futility of this effort is attributed to 

the lack of usable intelligence, OFAC’s reluctance to rely on what classified information 

there was, and Bin Ladin’s transfer of most of his assets out of the formal financial 

system by that time. Even if OFAC had received better intelligence from the intelligence 

community, it could have taken little effective action. OFAC has authority over only U.S. 

persons (individuals and entities), wherever located. Because Al Qaeda money flows 

depended on an informal network of hawalas and Islamic institutions moving money 

from Gulf supporters to Afghanistan, these funds would stayed outside the U.S. formal 

financial system. 

27 OFAC did freeze accounts belonging to Salah Idris, the owner of the Al-Shifa facility bombed in 

response to the East Africa embassy bombings. Idris filed suit against his bank and OFAC, and OFAC 

subsequently authorized the unfreezing of those accounts. 
National Commission on Terrorist Attacks Upon the United States 

38

The Taliban was designated by the president under the IEEPA in July 1999 for harboring 

Usama Bin Ladin and al Qaeda. Here, OFAC experienced better success against a more 

stationary target: it blocked more than $34 million in Taliban assets held in U.S. banks, 

mostly consisting of assets of Afghanistan’s central bank and national airline. The 

Federal Reserve Bank of New York’s holdings of more than $215 million in gold and $2 

million in demand deposits from the Afghan central bank were also blocked. 

With the exception of some limited attempts by Treasury’s Financial Crimes 

Enforcement Network (FinCEN) to match classified information with reports filed by 

banks, U.S. financial institutions and Treasury regulators focused on finding and 

deterring or disrupting the vast flows of U.S. currency generated by drug trafficking and 

by high-level international fraud. Large-scale scandals, such the use of the Bank of New 

York by Russian money launderers to move millions of dollars out of Russia, captured 

the attention of the Department of the Treasury and Congress. As a result, little attention 

was paid to terrorist financing.28

A number of significant anti-money-laundering initiatives failed to gain traction during 

this time. One, the Money Laundering Control Act of 2000, championed by Treasury at 

the close of the Clinton administration, proposed controls on foreign banks with accounts 

in the United States. These accounts had been shown to be significant unregulated 

gateways into the U.S. financial system. The legislation had broad bipartisan support in 

the House of Representatives but foundered in the Senate Banking Committee, whose 

chair opposed further regulation of banks. 

Additionally, the Treasury Department and the financial regulators had proposed draft 

regulations in 1999, under the rubric of “know your customer” requirements. Broadly, 

these regulations required a bank to know the beneficial owner of the money and the 

sources of the money flowing through the owner’s accounts, and to take reasonable steps 

to determine this information. This proposal caused such a storm of controversy—

Treasury received more than 200,000 negative comments and fierce resistance from the 

financial services industry—that it was abandoned. Congress even considered rolling 

back the money-laundering controls then in place. As a result, Treasury regulators 

hesitated to move forward with future directives. 

Another foundering financial regulation involved “money services businesses” (MSBs) 

loosely defined as check cashers, businesses involved in wiring money, and those selling 

money orders and traveler’s checks. It would also have covered informal movers of 

money, such as hawaladars and other neighborhood shops that could wire money to a 

foreign country for a fee. These businesses were unregulated for money laundering and 

posed a huge vulnerability: criminals shut out of the banking system by regulatory 

controls could easily turn to these industries to move and launder criminal proceeds. 

Investigators had seen a significant increase in the use of these casual money remitters. 

Drug traffickers in particular took advantage of this relatively inexpensive and risk-free 

method of moving money. A study commissioned by FinCEN in 1997 recognized the 

28 The 2001 National Money Laundering Strategy, for example, issued by Treasury in September 2001, 

does not discuss terrorist financing in any of its 50 pages. 
Terrorist Financing Staff Monograph 

39

vulnerability of MSBs to money laundering. In 1994 Congress directed Treasury to 

regulate these businesses to discourage money laundering, but Treasury failed until after 

9/11 to implement regulations that would have required the businesses to register with the 

government and report activity judged to be suspicious.29

On the diplomatic front, the State Department formally designated al Qaeda in October 

1999 as a “foreign terrorist organization.” This designation allowed the criminal 

prosecution of any U.S. person proven to be materially supporting the organization, 

required U.S. banks to block its funds, and denied U.S. visas to aliens associated with it. 

Additionally, the United Nations Security Council passed UNSCR 1267 on October 15, 

1999, calling for the Taliban to surrender Bin Ladin or face a U.S.-style international 

freeze of assets and transactions. The resolution provided a 30-day period before 

sanctions would take effect, however, allowing al Qaeda operatives to repatriate funds 

from banks in the United Kingdom and Germany to Afghanistan. The United Nations 

adopted a second resolution, UNSCR 1333, against the Taliban and Usama Bin Ladin on 

December 19, 2000. These sanctions brought official international censure, but were 

easily circumvented. Other than this UN action, there was no multilateral mechanism to 

encourage countries to outlaw terrorist financing or ensure that their financial systems 

were not being used as conduits for terrorists.30 The effect, according to a State 

Department assessment, was to leave the Middle East vulnerable to the exploitation of its 

financial systems because of generally weak or nonexistent financial controls.

Before the September 11 attacks, the Saudi government resisted cooperating with the 

United States on the al Qaeda financing problem, although the U.S. government did not 

make this issue a priority or provide the Saudis with actionable intelligence about al 

Qaeda fund-raising in the Kingdom. Despite high-level intervention by the U.S. 

government in early 1997, the Saudis universally refused to allow U.S. personnel access 

to al Qaeda’s senior financial figure, al-Ghazi Madani al Tayyib, who had turned himself 

in to Saudi authorities. Two NSC-led trips to Saudi Arabia, while producing useful 

intelligence about Bin Ladin’s personal finances, failed to gain any traction on the larger 

question of al Qaeda’s fund-raising or any commitment to cooperate on terrorist 

financing. However, the United States did little to prod the Saudis into action; the 

generalized and nonactionable nature of the existing intelligence made a confrontation 

29 Draft regulations did not come out until 1997; a final rule was not issued until 1999, setting the 

implementation date for December 31, 2001. In the summer of 2001, Treasury announced that it would 

push back the requirement for registration an additional six months and the requirement for reporting nine 

months. After the September 11 attacks, Treasury decided to maintain the earlier implementation date. 30 The Financial Action Task Force (FATF), a multilateral government organization dedicated to setting 

standards, focused on money laundering, particularly as it related to crimes involving vast amounts of 

illegally gotten money, such as drug trafficking and large-scale fraud. As part of the setting of standards, 

FATF engaged in a concentrated effort to assess the world’s anti-money-laundering efforts and “named and 

shamed” jurisdictions that failed to establish minimum safeguards by publicly listing them and instituting 

economic sanctions against them. Although in December 1999 the United Nations General Assembly 

adopted the International Convention for the Suppression of Financing Terrorism, which had been 

proposed by the French and drafted by the G-8 members, the convention did not enter into force until April 

2002. 
National Commission on Terrorist Attacks Upon the United States 

40

difficult.31 Moreover, other issues, such as supporting the Middle East peace process, 

ensuring the steady flow of oil, cutting off support to the Taliban, and assisting in the 

containment of Iraq, took primacy on the U.S.-Saudi bilateral agenda. 

Saudi Arabia had not enforced its professed money-laundering regulations and, like most 

of the countries in the Middle East, it had enacted no other controls on the movement of 

money. Moreover, it had delegated the regulation of charities to the government’s 

religious establishment and did little to address the problem of al Qaeda fund-raising in 

the Kingdom.

The United Arab Emirates, the financial center for the Gulf area, also had a reputation for 

being “wide open,” with few regulations on the control of money and a woefully 

inadequate anti-money-laundering program.32 The UAE system had been a concern of 

U.S. policymakers long before the 9/11 attacks, and they directly raised their concerns 

with UAE officials. The UAE had no money-laundering law, although at U.S. urging in 

1999 it started drafting one, which was not finalized until after 9/11. Although the UAE 

was aware that terrorists and other international criminals had laundered money through 

the UAE, and that it was the center for hawala and courier operations, it did little to 

address the problem. Additionally, the United States expressed its concern about UAE 

support for Ariana Airlines and the movement of Bin Ladin funds through Dubai. Shortly 

before the September 11 attacks, the departing U.S. ambassador to the UAE warned 

senior officials in the Emirates that they needed to move forward on money-laundering 

legislation, so as not to be placed on the Financial Action Task Force (FATF) “blacklist” 

of countries not fully complying with international standards in this area. These warnings 

had no discernible effect. 

Intergovernmental coordination and policy development 

NSC Senior Director Richard Clarke considered terrorist financing important, and he 

established an NSC-led interagency group on terrorist financing after the East Africa 

embassy bombings. This group consisted of representatives from the NSC, Treasury, the 

CIA, the FBI, and State and was initially focused on determining and locating Bin 

Ladin’s purported wealth. After interagency visits to Saudi Arabia in 1999 and 2000, the 

group succeeded in dispelling the myth that Bin Ladin was funding al Qaeda from his 

personal fortune. The group also focused on trying to figure out how to stop the flow of 

funds to Bin Ladin and was concerned about Bin Ladin’s apparent ability to raise funds 

from charities. While the CIA paid more attention to terrorist financing during the 

interagency group’s life span, Clarke was unable to get the FBI to participate 

31 State Department memorandum, Nov. 24, 1998 (“We are still far, however, from possessing detailed 

information that would enable us to approach key Middle Eastern and European government with specific 

action requests concerning Bin Ladin’s financial network”). 32 The vast majority of the money funding the September 11 attacks flowed through the UAE. The fact that 

Ali Abdul Aziz Ali was able to use an alias or partial name, and show no identification, for five of the six 

wire transfers from the UAE should come as a surprise to no one. 
Terrorist Financing Staff Monograph 

41

meaningfully in the interagency process. Responsibility for the problem was dispersed 

among a myriad of agencies, each working independently and cooperating, if at all, on an 

ad hoc and episodic basis.

Where Are We Now? 

Since September 11 the world has indeed changed, and nowhere more than in the area of 

countering terrorist financing. The attacks galvanized the world community and an 

international sanctions regime against terrorists and their supporters was established, with 

the United States leading the way with a vigorous effort to freeze their assets. With an 

understanding of the nature of the threat, both the intelligence and law enforcement 

communities established significant entities to focus on and bring expertise to this area. 

These new entities are led by experienced individuals committed to the issue who know 

how to use money flows to identify and locate unknown associates of known terrorists. 

They are supported by the leadership within their respective agencies, who have provided 

them significant resources and authority to do the job. A broad and active interagency 

mechanism was established and new legal provisions against terrorist financing were 

enacted, while many of the legal obstacles hampering terrorist-financing investigations 

were stripped away. 

Domestic intelligence and law enforcement 

In the days after the September 11 attacks, the FBI set up the Financial Review Group 

(FRG) to bring order to a chaotic financial analysis of the attacks, in which every FBI 

field office conducted its own investigation as though it were the originating office. The 

initial goals of the FRG were to investigate the September 11 plot and look for an al 

Qaeda support mechanism that could sustain a second attack. All relevant federal 

agencies, including Customs, the Internal Revenue Service, the banking regulators, 

FinCEN, and OFAC, agreed to staff the FRG and work together. The FRG brought in 

agents with financial investigative expertise from around the country. The local field 

offices continued their investigations, but provided everything they learned to the FRG 

for coordination.

The FRG, ultimately renamed the Terrorist Financing Operations Section (TFOS) and 

located in the FBI’s counterterrorism division, is the FBI’s national program office for 

terrorist financing. The FBI believes that TFOS allows for (1) consistency of financial 

investigations and the assurance that every major terrorism case will have a financial 

investigative component; (2) the establishment of effective working relationships with 

international banking, law enforcement, and intelligence communities;33 (3) the 

development of a real-time financial tracking capability, resting in large part on the FBI’s 

extensive relationships with the financial community, which has transformed financial 

investigations from the traditional, methodical, slow-paced analysis to a tool that can 

33 In this regard, one experienced criminal prosecutor said TFOS does a very good job at outreach to the 

financial community because its agents “speak the language” of accountants and auditors. 
National Commission on Terrorist Attacks Upon the United States 

42

provide near real-time information in urgent situations;34 and (4) the formation of teams 

that can be sent to field offices to bolster document-intensive financial investigations and 

provide guidance and leadership on conducting financial investigations. Significantly, it 

is the first time a single office has been given responsibility for coordinating the FBI’s 

terrorist-financing efforts. 

TFOS and the FBI still need to improve their abilities to systematically gather and 

analyze the information developed in their investigations and create high-quality analytic 

products and finished intelligence. As of spring 2004, the FBI has generated very little 

quality finished intelligence in the area of al Qaeda financing. The FBI’s welldocumented efforts to create an analytical career track and enhance its analytical 

capabilities are sorely needed in this area.35 TFOS must also establish its own formal 

system for tracking and evaluating the extent of terrorist fund-raising by various groups 

in the United States. TFOS has created a program management unit responsible for, 

among other things, evaluating the extent and scope of the terrorist-financing problem in 

the United States. Such an effort is plainly needed to help guide the allocation of law 

enforcement resources and to help inform policymakers. 

The individual FBI field offices retain primary responsibility for conducting terroristfinancing investigations, but TFOS provides field agents with resources not previously 

available as well as coherent programmatic leadership. To help integrate the field offices’ 

efforts with TFOS, each field office has a terrorist-financing coordinator who serves as a 

liaison with headquarters and a resource to fellow field agents. As of spring 2004, this 

program is in its early stages, but it is a positive step toward a truly national effort. 

The Department of Justice also has dramatically increased its focused efforts to 

investigate and disrupt terrorist financing in the United States. The Terrorism and Violent 

Crimes Section, using resources from various parts of the DOJ (including prosecutors 

from U.S. Attorney’s offices, the Criminal Tax Section, and other sections of the 

Criminal Division), formed a unit to implement an aggressive program of prosecuting 

terrorist-financing cases. That unit ultimately evolved into a distinct Terrorist Financing 

Unit within the DOJ’s Counterterrorism Section (CTS). The Terrorist Financing Unit 

coordinates and pursues terrorist-financing criminal investigations around the country 

and provides support and guidance to U.S. Attorney’s offices on terrorist-financing 

issues.

34 TFOS has made extraordinary strides in this area, including a great leap forward in the use of 

sophisticated software to help locate terrorist suspects in urgent situations. 35 Some of the FBI’s post-9/11 efforts in this area have been disappointing, in part because of a disconnect 

between the FBI’s new analytical operation and TFOS. For example, a December 2002 analytical 

document titled “Al-Qaida’s US Financial Network Broad and Adaptable” was distributed to FBI field 

offices and Legats worldwide. The then-head of TFOS told Commission staff that this piece was prepared 

by FBI analysts entirely without any involvement of TFOS and that its conclusion, as reflected in the title, 

was dramatically overstated and did not reflect a law enforcement judgment about what the evidence 

actually showed concerning any Al Qaeda financing network in the United States. Since December 2002, 

the FBI has taken steps to ensure analytical product about terrorist financing not be distributed without 

TFOS involvement. 
Terrorist Financing Staff Monograph 

43

In stark contrast to the dysfunctional relationship between the FBI and DOJ that plagued 

them before 9/11, the two entities now seem to be working cooperatively. The leadership 

of TFOS praises the CTS Terrorist Financing Unit for its unwavering support. TFOS 

leadership also believes that the U.S. Attorney’s offices have been supportive and that the 

CTS Terrorist Financing Unit has been helpful in resolving any issues that have arisen 

between FBI field offices and U.S. Attorney’s offices. The head of the CTS Terrorist 

Financing Unit identifies TFOS, as well as the FBI’s post-9/11 International Terrorism 

Operating Section, as valuable allies, and describes the enthusiasm of these sections for 

criminal prosecutions as a “sea change” from the FBI’s recalcitrance before 9/11. 

Fundamentally, the FBI now understands that its terrorist fund-raising investigations 

must have an endgame. TFOS, in particular, with its financial investigative skills and 

prosecutorial mind-set, is a strong ally of the DOJ’s terrorist-financing prosecutors. 

Generally, the demise of “the wall” has facilitated the flow of terrorist-financing 

information between the FBI and the DOJ’s criminal prosecutors. This sharing of 

information has addressed the problems that stymied the DOJ before 9/11. Still, 

information-sharing problems arise in the field, and the DOJ must at times encourage its 

prosecutors to fight for access to classified FBI information. 

Despite these improvements, prosecuting terrorist-financing cases continues to present 

vexing problems for prosecutors and agents. Although some within the DOJ argue that 

the average terrorist fund-raising case is no harder to investigate and prosecute than any 

complex white-collar criminal case,36 sophisticated jihadist fund-raising operations, 

especially those involving international NGOs that support both humanitarian and 

militant causes, are generally very difficult to penetrate and prosecute. Investigating a 

material support case usually requires obtaining records from another country to show the 

destination of the money, which itself is often very difficult, as discussed above. Even 

with access to the relevant records, tying the funds to a specific criminal act or a 

designated terrorist group is extraordinarily difficult. Funds are often dispersed overseas 

in cash, making them virtually impossible to trace. 

Unraveling terrorist-financing schemes can be even more complicated because the same 

groups that finance terror and jihad often provide real humanitarian relief as well. The 

people running these groups believe in charity, practice it, and keep voluminous records 

of it, thereby serving to conceal their illicit fund-raising activities more effectively. 

Prosecutors who fail to acknowledge that the corrupt NGOs do provide charity will likely 

be confronted with the beneficiaries of the charity lining up in the courtroom to testify for 

the defendant.

Even if money can be traced to an illicit activity or a designated group, proving the U.S. 

donors or NGOs knew where the money was going can also be extraordinarily difficult. 

36 It may well be that cases involving Hamas or certain other terrorist groups are easier to prosecute because 

the fund-raisers are more open about supporting causes that have legitimacy in certain circles and, 

therefore, are more likely to make incriminating comments on wiretaps or to informants. Anyone raising 

money in the United States for al Qaeda or groups affiliated with al Qaeda is likely to be extremely 

secretive and do everything possible to ensure the funds cannot be traced back to him or her. 
National Commission on Terrorist Attacks Upon the United States 

44

Although there may be substantial grounds for suspicion, proving the level of knowledge 

required in a criminal case poses significant problems. Notwithstanding this difficulty, 

the DOJ appears to be committed to aggressive prosecution of terrorist fund-raisers in the 

United States, believing that such prosecutions can deter more fund-raising and disrupt 

ongoing fund-raising operations. The best cases may well require luck, fruitful electronic 

surveillance or a well-placed informant, or even the prosecution of the suspect 

organization for a non-terrorism-related charge such as fraud or tax evasion. This strategy 

can be effective in disrupting suspected terrorist fund-raisers, but can also lead to 

accusations of selective prosecution and oppression of Muslim charities.37

In addition to the FBI, other agencies, including the Department of Homeland Security’s 

Immigration and Customs Enforcement (ICE) and the IRS’s Criminal Investigative 

Division, play a role in investigating terrorist financing through their participation in the 

Joint Terrorism Task Force (JTTF). The FBI is the lead agency on terrorist-financing 

investigations through the FBI-led JTTF structure.38 Commission staff believes this is 

appropriate. Terrorist-financing investigations are inextricably intertwined with overall 

terrorism enforcement; a fund-raising investigation may give rise to evidence of a group 

poised to commit a terrorist act, or the investigation of a terrorist group will necessarily 

use financial leads to further its investigation. One agency needs to be in charge of the 

entire counterterrorism effort and other agencies can still contribute expertise in 

particular cases through the JTTF. Of course, giving the FBI the lead requires continuing 

vigilance to ensure that the FBI properly shares information and willingly coordinates 

with its JTTF partners. 

U.S. foreign intelligence collection and analysis 

The day after the September 11 attacks, the CIA began beefing up its effort on terrorist 

financing and by mid-month had created a new section dedicated to terrorist financing, 

whose purpose was to create long-term intelligence capacity in this area. It is staffed with 

personnel from the FBI, NSA, and DoD and it absorbed the CIA intelligence analysts 

working on terrorist-financing issues in the Office of Transnational Issues, thereby 

correcting the perceived structural defect previously identified. This new section’s 

mission is to use information about terrorist money to understand their networks, search 

them out, and disrupt their operations. The CIA has devoted considerable resources to 

the task, and the effort is led by individuals with extensive expertise in the clandestine 

movement of money. It appears that the CIA is devoted to developing an institutional and 

long-term expertise in this area. 

37 See chapter 6 (discussing reaction to non-terrorism conviction of the executive director of the 

Benevolence International Foundation). 38 This designation occurred in a May 2003 memorandum of understanding (MOU) between the secretary 

of the DHS and the attorney general. The MOU became necessary to resolve turf battles between the FBI 

and ICE, largely resulting from Operation Green Quest, which began as a U.S. Customs–led initiative to 

investigate terrorist financing after 9/11 and followed Customs when it moved from Treasury to become 

part of DHS/ICE. For a report on the success of the MOU, see GAO Report 04-464R, Investigations of 

Terrorist Financing, Money Laundering and Other Financial Crimes (Feb. 20, 2004). 
Terrorist Financing Staff Monograph 

45

The FBI and CIA report that the information sharing between the FBI and the CIA is 

excellent, and that FBI personnel assigned to the CTC’s new unit have duties 

indistinguishable from those of the CIA personnel and have complete access to all CIA 

data systems, subject to a need-to-know requirement. The CIA has access to FBI data as 

well. The CIA distributes its information to the FBI through criminal information 

referrals, liaisons at the field-level JTTFs, and interactions between their respective 

headquarters units.

Economic and diplomatic efforts 

On September 23, 2001, President Bush signed Executive Order 13224 against al Qaeda, 

Bin Ladin, and associated terrorist groups, freezing any assets belonging to the listed 

terrorists or their supporters and blocking any economic transactions with them. 

Thereafter, the U.S. government embarked on a public course of issuing additional lists 

of designated terrorist supporters—a pattern that continued into the winter of 2002. The 

goal was to try to deprive the terrorists of money, but this approach also served to assure 

the general public that action was being taken in the area of terrorist financing and to 

keep the intelligence and world communities focused on identifying terrorist financiers. 

The United States, understanding that an executive order covered only U.S. persons and 

transactions, pushed at the United Nations for a near-universal system of laws to freeze 

terrorist assets worldwide. The United Nations Security Council, galvanized into action 

as a result of the attacks, passed Resolution 1373 on September 28, mandating member 

nations formulate laws to designate individuals and entities as supporters of terrorism and 

freeze their assets. In the weeks after 9/11, in an intense effort around the world, more 

than 100 nations drafted and passed laws addressing terrorist financing or money 

laundering. Worldwide, more than $136 million, including $36 million in the United 

States, has been frozen. Currently, approximately 170 nations have the legal ability to 

freeze terrorist assets. Moreover, the United States engaged in a broad diplomatic and 

educational offensive to make other countries aware of some of the basic methods of 

raising and moving money in support of terrorist activities.

There are significant multilateral norms now in place to set standards for ensuring that 

terrorists do not use the formal financial system. Chief among these are the efforts of the 

Financial Action Task Force (FATF), which, prior to 9/11, had been the multilateral body 

responsible for setting international standards for the detection and prosecution of money 

laundering. In the months after 9/11, the FATF expanded its remit to include setting 

standards for terrorist financing, and made eight recommendations to prevent terrorist 

financing. These recommendations included, for example, creating the ability to freeze 

terrorist assets, licensing informal money remitters, and regulating nongovernmental 

organizations.39 While setting standards is a necessary exercise, far more will depend on 

each country’s diligently implementing and enforcing these standards. 

39 FATF, “Special Recommendations on Terrorist Financing,” Oct. 31, 2001 (online at 

http://www1.oecd.org/fatf/pdf/SRecTF_en/pdf); FATF, “Guidance for Financial Institutions in Detecting 
National Commission on Terrorist Attacks Upon the United States 

46

As part of the USA PATRIOT Act, Congress enacted financial institution regulations that 

had been largely rejected before the attacks; many were only tangentially related to 

terrorist financing. In part, they give the Secretary of the Treasury the power to name 

countries, institutions, or transactions found to be of primary money-laundering or 

terrorist-financing concern and implement new requirements that banks more closely 

scrutinize their relationships with foreign persons and banks. A broader range of 

industries—insurance companies, money services businesses, broker-dealers, and credit 

card companies, for example—were potentially subject to a host of new requirements, 

including reporting suspicious financial activity on the part of their customers to the 

Treasury Department. Federal Reserve examiners now inspect banks for compliance with 

antiterrorism directives. As noted in chapter 4, private financial institutions provided, and 

continue to provide, significant assistance in investigating terrorist groups. 

Although Saudi Arabia’s cooperation on al Qaeda financing was limited and inconsistent 

in the first year and a half after the September 11 attacks, the situation changed 

dramatically after the May 12, 2003, al Qaeda attacks in Riyadh. Saudi leadership, now 

finally understanding the al Qaeda threat, is by all accounts providing significantly higher 

levels of cooperation. Much of the Saudi government’s efforts understandably focus on 

killing or capturing terrorist operatives, but the Saudis also have moved against fundraisers and facilitators, shared intelligence, and enacted financial controls, such as 

requiring that all charitable donations destined for overseas be administered by the 

government and banning cash donations in mosques. They have taken significant action 

against al Haramain, for example, a charity suspected of funneling money to terrorist 

organizations, and seem prepared to go further. In addition, the Saudis are participating in 

a joint task force on terrorist financing with the United States, in which U.S. law 

enforcement agents are working side by side with Saudi security personnel to combat 

terrorist financing. To further this effort, the Saudis have accepted substantial—and much 

needed—U.S. training in conducting financial investigations and identifying suspicious 

financial transactions, help that the Saudis had long refused. Although Saudi Arabia 

likely remains the best and easiest place for al Qaeda to raise money, the Saudi 

crackdown appears to have had a real impact in reducing its funding. In addition, the 

Saudi population may feel that as a result of the attacks against their own people, they 

should be more cautious in their giving.40

The Saudis have demonstrated they can and will act against Saudi financiers of al Qaeda 

when the United States provides them with actionable intelligence and consistently 

applies high-level pressure on them to take action. At least until recently, as noted in 

chapter 7, the Saudis have generally moved slowly, and only after considerable U.S. 

prodding. Because Saudi Arabia remains the primary source for al Qaeda fund-raising, it 

is in a better position than the United States to identify the fund-raisers and collect 

intelligence about their activities. Apparently the Saudis may now be willing to take the 

Terrorist Financing,” Apr. 24, 2002 (online at http://www1.oecd.org/fatf/pdf/GuidFIT01_en/pdf); Jaime 

Caruana and Claes Norgren, “Wipe Out the Treasuries of Terror,” Financial Times, Apr. 7, 2004, p.17. 40 See chapter 7, the case study on al Haramain, and chapter 2, on al Qaeda financing, for more on these 

issues.
Terrorist Financing Staff Monograph 

47

initiative. Certainly, the joint task force, their willingness to accept U.S. training in 

conducting financial investigations, and their recent successful actions against key 

facilitators are significant steps in the right direction. Time will tell whether the Saudis 

follow through on these efforts and accept their responsibility to lead the fight against al 

Qaeda fund-raising by Saudi sources. 

Intergovernmental coordination and policy development 

Terrorist financing is now, and has been since the attacks, the subject of extensive 

interagency coordination mechanisms involving the intelligence community, law 

enforcement, Treasury, and State. An NSC-level Policy Coordinating Committee (PCC) 

on Terrorist Financing was established in March 2002 to replace the ad hoc structure that 

had arisen in the immediate aftermath of the attacks. The PCC was chaired by the 

General Counsel of the Department of the Treasury until he left government service in 

November 2003. The process, often driven by force of personality rather than by any 

structural mechanism, appears to have worked well in resolving differing points of view 

on terrorist-financing policy and operational differences. The key participants in the 

interagency process, especially the leaders of the CIA and FBI terrorist-financing units, 

have lavishly praised each other’s commitment to cooperation and information sharing. 

The PCC often was not fully integrated into the United States’ broader counterterrorism 

policy and Saudi relations, however. 

An Assessment 

After 9/11, the government, in an attempt to “starve the terrorists of money,” engaged in 

a series of aggressive and high-profile actions to designate terrorist financiers and freeze 

their money, both in the United States and through the United Nations. Donors and al 

Qaeda sympathizers, wary of being publicly named and having their assets frozen, may 

have become more reluctant to provide overt support. The overall or long-term effect of 

these actions, however, is not clear.

Moreover, these initial designations were undertaken with limited evidence, and some 

were overbroad, resulting in legal challenges. Faced with having to defend actions in 

courts that required a higher standard of evidence than was provided by the intelligence 

that supported the designations in the first place, the United States and the United Nations 

were forced to “unfreeze” assets (see, generally, chapter 5).

The difficulty, not completely understood by the policymakers when they instituted the 

freezes, was that the intelligence community “linked” certain entities or individuals to 

known terrorist groups primarily through common acquaintances, group affiliations, 

historic relationships, phone communications, and other such contacts. It proved far more 

difficult to actually trace the money from a suspected entity or individual to the terrorist 

group, or to otherwise show complicity, as required in defending the designations in 

court. Intelligence agents, long accustomed to the Cold War reality of collecting 

intelligence for extended periods of time before public action was necessary, were now 
National Commission on Terrorist Attacks Upon the United States 

48

faced with a new demand for intelligence that needed not only to be immediately and 

publicly acted on but to be defended in court as well. Policymakers, many newly thrust 

into the world of intelligence, were sometimes surprised to find that intelligence 

assessments were often supported by information far less reliable than they had 

presumed.41

These early missteps have 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 money can be frozen, a change that has eliminated the element of 

surprise and virtually ensured that little money is actually frozen. The worldwide asset 

freezes have not been adequately enforced and have been easily circumvented, often 

within weeks, by simple methods. 

Treasury officials were forthright in recognizing the difficulty in stopping enough of the 

money flow to stop terrorist attacks, but argue that such freezes and the prohibition of 

transactions have other benefits. Designations prevent open fund-raising and assist, for 

example, in preventing al Qaeda from raising the amounts of money necessary to create 

the kind of refuge it had in Afghanistan, or from expending the sums necessary to buy or 

develop a weapon of mass destruction. Moreover, freezing groups or individuals out of 

the world’s financial systems forces them into slow, expensive, and less reliable methods 

of storing and moving money. Additionally, there is significant diplomatic utility in 

having the world governments join together to condemn named individuals and groups as 

terrorists. 

A far more nuanced and integrated strategy has since evolved. As the government’s 

understanding of the methods al Qaeda uses to raise, move, and spend money has 

sharpened, the United States has recognized that measures to counter terrorist financing 

are among the many tools for understanding terrorist networks, to be used in conjunction 

with and in close proximity to other types of intelligence. Moreover, these measures, 

again when closely coordinated with the overall counterterrorism effort, can be used to 

disrupt terrorist operations and support systems. Intelligence and law enforcement 

agencies 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 (see chapter 2), and appear to have reaped benefits as a result. The death 

and capture of several important facilitators have decreased the amount of money al 

Qaeda has raised and have increased the costs and difficulty of raising and moving that 

money. These captures have additionally provided a windfall of intelligence, which can 

then be used to continue the disruption.

Some entirely corrupt charities are now completely out of business, with many of their 

principals killed or captured. Charities that have been identified as likely avenues for 

41 Compare Tenet’s speech at Georgetown University, Feb. 5, 2004 (“In the intelligence business, you are 

almost never completely wrong or completely right”) with Mueller’s testimony to the 9/11 Commission, 

April 14, 2004, p. 126 (“If there’s one concern I have about intelligence, it is that often there are statements 

made about an uncorroborated source with indirect access and then there is a stating of a particular fact....I 

think there has to be a balance between the information we get and the foundation of that information”). 
Terrorist Financing Staff Monograph 

49

terrorist financing have seen their donations diminish and their activities come under 

more scrutiny. Controlling overseas branches of Gulf-area charities remains a complex 

task, however. The sheer volume of charitable dollars originating in the Gulf region, the 

nature of charitable giving in the Islamic world, and the austere and uncompromising 

version of Islam practiced by many Saudis pose a daunting challenge.42 U.S. efforts have 

shown that detecting and disrupting the terrorist money among the billions is extremely 

difficult, even with the best capabilities and intentions.43

The May 2003 terrorist attacks in Riyadh, moreover, apparently have contributed to a 

reduction of funds available to al Qaeda. Increased public scrutiny and public 

designations of high-profile Gulf-area donors have made other donors cautious. The fight 

has come to the Saudi homeland, and Saudis and their government (as well as other Gulfarea governments) have come to realize the problems that unfettered financial flows may 

bring.44 Although Saudi Arabia has by most accounts become more fully engaged in 

stopping al Qaeda financial flows, the Kingdom requires considerable technical 

assistance and must take the initiative in combating terrorist financing, as opposed to 

merely responding to U.S. requests. The Saudi regime must balance its terrorist-financing 

efforts, the legitimate charitable relief Saudi charities provide, and the need to maintain 

its own stability. A critical part of the U.S. strategy to combat terrorist financing must be 

to monitor, encourage, and nurture Saudi cooperation while simultaneously recognizing 

that terrorist financing is only one of a number of crucial issues that the U.S. and Saudi 

governments must address together. Managing this nuanced and complicated relationship 

will play a critical part in determining the success of U.S. counterterrorism policy for the 

foreseeable future. 

While overall al Qaeda funding has apparently been reduced, it is nevertheless relatively 

easy to fund terrorist operations. When investigators do not know where to look, the tiny 

amounts of money needed for deadly operations are impossible to find and stop in a 

multi-trillion-dollar global economy. The U.S. intelligence community has attacked the 

problem with imagination and vigor, and cooperation among the world’s security services 

seems to be at unprecedented levels, but terrorist financing remains a notoriously hard 

target. The small sums involved, al Qaeda’s use of decentralized and informal methods of 

moving funds (including trusted hawaladars and relatively anonymous couriers), and the 

existence of a cadre of dedicated financial facilitators who raise money from potentially 

unwitting sources all contribute to a significant and ongoing challenge for the intelligence 

community for the foreseeable future. 

42 See chapters 2 and 7 for a discussion of the role of charities in Saudi Arabia. 43 The United States perhaps leads the world in its ability to conduct financial investigations, yet often finds 

itself stymied in doing the financial tracing and analysis necessary to detect terrorist money flows. See 

generally chapter 6. 

44 As noted in chapter 2, despite numerous allegations about Saudi government complicity in al Qaeda, the 

Commission has found no persuasive evidence that the Saudi government as an institution or senior 

officials within the Saudi government knowingly support or supported al Qaeda. A lack of awareness of the 

problem and failure to conduct oversight over institutions, however, probably created an environment in 

which such activity has flourished. 
National Commission on Terrorist Attacks Upon the United States 

50

The U.S. financial community and some international financial institutions have 

generally provided law enforcement and intelligence agencies with extraordinary 

cooperation, particularly in furnishing information to support quickly developing 

investigations. Obvious vulnerabilities in the U.S. financial system, such as the largely 

unchecked use of correspondent or private banking accounts by foreign banks or other 

high-risk customers, have been corrected. However, no valid financial profile of terrorist 

financing exists (despite efforts to create one), and the ability of financial institutions to 

detect terrorist financing without receiving more information from the government 

remains limited. 

Law enforcement investigations often fail to prove the destination and purpose of money 

transferred across continents in complex transactions, and transactions recorded in a bank 

statement or a wire transfer say nothing about their source or purpose. Funds are sent 

overseas through a charity; a fraction of these funds may then be diverted for terrorist or 

jihadist purposes, often through additional charities and cash transactions. The 

investigations of the Benevolence International Foundation (BIF) and the Global Relief 

Foundation (GRF) vividly illustrate that even substantial intelligence of ties to terrorist 

groups can be insufficient to prove a criminal case beyond a reasonable doubt (see 

chapter 6). When terrorism charges are not possible, the government has brought 

nonterrorist criminal charges against those suspected of terrorist financing. Such an 

approach, while perhaps necessary, leaves the government susceptible to accusations of 

ethnic or religious profiling that can undermine support in the very communities where 

the government needs it most. Moreover, ethnic or geographic generalizations, 

unsupported even by intelligence, can both divert scarce resources away from the real 

threats and violate the Constitution. 

Because prosecuting criminal terrorist fund-raising cases can be difficult and timeconsuming, the government has at times used administrative orders under the IEEPA to 

block transactions and freeze assets even against U.S. citizens and entities, as we show in 

the case studies of the al-Barakaat money remitters and the Chicago charities (in chapters 

5 and 6). In some cases, there may be little alternative. But the use of administrative 

orders with few due process protections, particularly against our own citizens, raises 

significant civil liberty concerns and risks a substantial backlash. The government ought 

to exercise great caution in using these powers, as officials who have participated in the 

process have acknowledged,45 particularly when the entities and individuals involved 

have not been convicted of terrorism offenses.

The designated person or entity in such a situation does not have certain rights that might 

be available in a civil forfeiture action, when the government in most circumstances must 

file a lawsuit and bear the burden of proof by a preponderance of the evidence. As in any 

other lawsuit, the owner of the property has the right to conduct discovery of the 

government’s evidence, such as taking sworn depositions and obtaining documents. 

Moreover, the defendant has the right to avoid forfeiture by demonstrating that he or she 

45See, e.g., Treasury Memorandum, Apr. 12, 2002. The memorandum proposed a six-month limit for 

discussion purposes, and offered a “clear recommendation” that “temporary blocking orders be pursued 

with due diligence and an anticipated end date.”
Terrorist Financing Staff Monograph 

51

is an innocent owner—that is, obtained or possessed the property in question without 

knowing its illegal character or nature. The difference between an IEEPA freeze and a 

civil forfeiture is that a freeze does not technically divest title. But when a freeze 

separates the owner from his or her money for dozens of years, as it has in other IEEPA 

contexts, that is a distinction without a difference. 

Even more controversial is the government’s use of the provisions to block assets “during 

the pendency of an investigation,” codified in the USA PATRIOT Act. The government 

is able to (and has, on at least three occasions) shut down U.S. entities without 

developing even the administrative record necessary for a designation. Such action 

requires only the signature of a midlevel government official. The “pending 

investigation” provision may be necessary in true emergency situations, when there is not 

time to marshal the evidence to support a formal designation before a terrorist financier 

must be shut down. But when the interim blocking lasts 10 or 11 months, as it did in the 

Illinois charities cases (as we note in chapter 6), real issues of administrative due process 

and fundamental fairness arise. 

The premise behind the government’s efforts here—that terrorist operations need a 

financial support network—may itself be outdated. The effort to find, track, and stop 

money presumes that it is being sent from a central source or group of identifiable 

sources. As al Qaeda is further disrupted and its members are killed and dispersed, it 

loses the central command and control structure it had before. Some terrorist operations 

do not rely on outside sources of money, and cells may now be self-funding, either 

through legitimate employment or through low-level criminal activity. Terrorist groups 

only remotely affiliated with al Qaeda—and dependent on al Qaeda as a source of 

inspiration rather than operational funding—pose a significant threat of mass casualty 

attacks. Our terrorist-financing efforts can do little to stop them, as there is no “central 

command” from which the money flowed, as in the 9/11 attacks. Terrorist operations cost 

next to nothing. It is to our advantage to ensure that operational cells receive as little 

money as possible from established terrorist organizations, but our success in doing so 

will not guarantee our safety. 
National Commission on Terrorist Attacks Upon the United States 

52

Chapter 4

Combating Terrorist Financing in the United States: 

The Role of Financial Institutions 

Since the 9/11 terrorist attacks, U.S. financial institutions have, almost uniformly, wanted 

to do everything in their power to prevent their use by terrorist operatives and fundraisers. Indeed, law enforcement and intelligence officials have praised the private 

financial services sector for its willingness to assist in terrorist-related investigations. The 

effort is clearly there, but what about the results? 

The current regulatory regime was designed primarily for discovering and reporting 

money laundering—the efforts of criminals, such as drug traffickers, to filter huge 

amounts of cash through the financial system. Only banks have the information needed to 

discover and report those kinds of transactions. A regulatory regime in which valuable 

data are passed from the banks to the government, in that context, makes sense. 

For terrorist financial transactions, the amount of money is often small or consistent with 

the customer’s profile (such as a charity raising money for humanitarian aid) and the 

transactions seemingly innocuous. As a consequence, banks generally are unable to 

separate suspicious from legitimate transactions. The government, however, may have 

information that would enable banks to stop or track suspicious transactions. As a result, 

financial institutions can be most useful in the fight against terrorist financing by 

collecting accurate information about their customers and providing this information—

pursuant to legal process—to aid in terrorism investigations. At the same time, the 

government should strive to provide as much unclassified information to financial 

institutions as possible. 

Terrorist Financing in the United States 

The term “terrorist financing” is commonly used to describe two distinct types of activity. 

First, it can consist of the financing of operational terrorist cells, like the 19 hijackers 

who conducted the 9/11 attacks. This financing consists of the funds the cell needs to live 

and to plan, train for, and commit the terrorist act. The second type of terrorist financing 

is fund-raising—the process by which an organized terrorist group, such as al Qaeda or 

Hamas, raises money to fund its activities. Such fund-raising often takes place through 

nongovernmental organizations, which may raise money for legitimate humanitarian 

purposes and divert a fraction of their total funds for illicit purposes.

The funding of terrorist operations involves relatively small dollar amounts, from the 

estimated $10,000 cost of the 1998 U.S. embassy bombings in East Africa, to the 

estimated $400,000–500,000 for the 9/11 attacks themselves (of which roughly $300,000 

passed through U.S. bank accounts over a period of nearly two years). The 9/11 attack 

provides a good case study of how a large terrorist cell can be financed in the United 

States. The hijackers moved money into the United States in three ways. They received 
Terrorist Financing Staff Monograph 

53

wires totaling approximately $130,000 from overseas facilitators in the United Arab 

Emirates and Germany; they physically carried large amounts of cash and traveler’s 

checks with them; and some of them set up accounts overseas, which they accessed in the 

United States with credit or ATM cards. Once here, the hijackers opened bank accounts 

in their real names at U.S. banks, which they used just as millions of other people do to 

conduct the routine transactions necessary to their plan. The hijackers used branches of 

both large national banks and smaller regional banks.46

Nothing the hijackers did would have alerted any bank personnel to their being criminals, 

let alone terrorists bent on mass murder. Their transactions were routine and caused no 

alarm. Their wire transfers, in amounts from $5,000 to $70,000, were utterly anonymous 

in the billions of dollars moving through the international financial system on a daily 

basis. Their bank transactions, typically large deposits followed by many small ATM or 

credit card withdrawals, were entirely normal, especially for foreign students living in the 

United States. No financial institution filed a suspicious activity report (SAR) and, even 

with benefit of hindsight, none of them should have.47 Contrary to numerous published 

reports, there is no evidence the hijackers ever used false Social Security numbers to 

open any bank accounts. In some cases, bank employees completed the Social Security 

number fields on the new account application with a hijacker’s date of birth or visa 

control number, but did soon their own to complete the form.48

The use of a financial institution for a fund-raising operation looks entirely different from 

the use of an institution by a terrorist cell, like the 9/11 plotters. The transactions are 

often much larger. For example, the Benevolence International Foundation (BIF), an 

Illinois charity designated a terrorist supporter by the U.S. government in 2002, received 

more than $15 million in donations between 1995 and 2000.49 Funds are likely pooled 

from multiple small donors and then sent overseas, frequently to troubled places in the 

world under the auspices of a charity. For example, the Global Relief Foundation (GRF), 

another Illinois charity designated a terrorist supporter by the U.S. government in 2002, 

annually sent millions of dollars overseas, especially to such strife-torn regions as Bosnia, 

Kashmir, Afghanistan, Lebanon, and Chechnya. According to its IRS filings, GRF sent 

$3.2 million overseas in 1999 and $3.7 million in 2000. Like the financing of a cell such 

as the 9/11 hijackers, however, a competent terrorist fund-raising operation will not be 

apparent to bank personnel. The money sent overseas will not go to al Qaeda or any 

designated terrorist group. Instead, the money will go to an overseas office of the charity 

or an affiliated charity, and the diversions to terrorist facilitators or operatives will likely 

46 See appendix A (discussing 9/11 transactions in detail). 47 As discussed later, U.S. law requires banks to report potentially criminal financial activity by filing SARs 

with the Financial Crimes Enforcement Network (FinCEN) within 30 days of the suspicious transaction. 48 This is not to say that the hijackers were experts in the use of the U.S. financial system. For example, the 

teller who opened an account for plot leaders Atta and al Shehhi spent an hour with them, explaining the 

procedures for ATM transactions and wire transfers, and one branch refused to cash a check for al Shehhi 

on one occasion because he presented IDs with different addresses. This incident led the bank to issue a 

routine, internal security alert to watch the account for possible fraud, but provided no basis for concern 

about serious criminality—let alone terrorism. These minor blips provided no clue to the financial 

institution about the hijackers’ murderous purpose. 49Whether BIF actually funded al Qaeda remains an open question. See chapter 6. 
National Commission on Terrorist Attacks Upon the United States 

54

take place overseas. In the current environment, the donors presumably will not include 

pro-Jihad comments on the memo line of their checks, as did pre-9/11 donors to one 

suspect charity the FBI investigated. The fund-raising operation will look to the bank like 

a charity sending money to troubled parts of the world—which it is doing, at least in part. 

Why Suspicious Activity Reporting Works for Money Laundering 

But Is Less Useful for Terrorist Financing 

The Bank Secrecy Act (BSA) regime, described below, was designed to combat money 

laundering and related offenses and, assuming that it is well-implemented and wellenforced, it is reasonably effective for this purpose. However, the requirement that 

financial institutions file SARs does not work very well to detect or prevent terrorist 

financing, for there is a fundamental distinction between money laundering and terrorist 

financing. Financial institutions have the information and expertise to detect the one but 

not the other.

The Bank Secrecy Act—what it is and what it does 

The premise behind the money-laundering laws and regulations was that because the 

underlying crimes generate enormous amounts of cash, criminal enterprises need to 

convert that cash into something less traceable and more usable. In perhaps the bestknown example of money laundering, Russian and U.S. shell corporations were able to 

move billions of dollars through correspondent accounts owned by foreign banks at the 

Bank of New York and Citibank. Likewise, Raul Salinas, the former president of 

Mexico, was found to have laundered millions of dollars in alleged public corruption 

money through Citibank accounts. The role of Mexican banks was highlighted in a U.S. 

law enforcement investigation known as Operation Casablanca, which found that 

millions of drug-tainted dollars had been laundered through Mexican banks. 

The United States’ method to prevent criminals from taking advantage of the financial 

system relies on the basic premise that financial institutions—not the government—are in 

the best position to detect money laundering and related illicit transactions. Thus, the law 

imposes on financial institutions the obligation to report suspicious activity that involves 

their use. This law and related regulations, generically referred to as the “Bank Secrecy 

Act,” require banks (and now a host of other financial institutions, including brokerdealers, credit card companies, insurance companies, and money service businesses)50 to 

understand, control, and report transactions that may have a questionable origin or 

purpose. Specifically, banks are required to report cash transactions in excess of $10,000, 

as well as any other transactions they deem “suspicious.”51

50 For purposes of this discussion, we use the term bank, although in most respects the obligations extend to 

other financial institutions. 

51 Additionally, banks must ensure that they do not unwittingly engage in transactions with individuals 

listed on Treasury’s list of prohibited persons, maintained by the Office of Foreign Assets Control (OFAC). 

Such transactions are prohibited by a number of statutes tied to the president’s ability to bar U.S. persons 
Terrorist Financing Staff Monograph 

55

The SAR requirement is at the core of the government’s anti-money-laundering effort. 

Inherent in a bank’s responsibility to report (or refuse to conduct) a suspicious transaction 

is an obligation to have sufficient knowledge of its own transactions and customers to 

understand what is suspicious. This requires a bank to “know” its customer—who the 

beneficial owner of an account is, what the customer’s likely transactions should be, and 

what, in general, is the source of the customer’s money. Once it understands its customer 

and the customer’s likely transactions, the bank is able to determine whether the customer 

is conducting transactions out of character for that profile. Additionally, understanding 

the customer’s probable transactions enables the bank to assess the risk that the account 

will be used to launder money, and will in some respects determine how closely the 

institution monitors the customer’s account. A bank’s failure to report suspicious 

activities, or to have a system in place that could reasonably detect suspicious financial 

transactions, is punishable by some combination of administrative sanctions, civil fines, 

and criminal penalties. 

A bank can best detect suspicious transactions at one of two points. The “front end” of a 

transaction involves the tellers and other individuals who may have face-to-face contact 

with the customer and can often determine if a specific transaction is worth a second 

look. A bank will typically train tellers and other such individuals to look for specific 

“red flags” to determine if a transaction is suspicious. The second likely point of 

detection occurs in the “back office”—an analysis of financial transactions, which takes 

place in a specialized unit, for example, or in particularly high-risk areas such as the 

bank’s wire transfer operations. Money-laundering analysts look at the bank’s 

transactions to determine if they can conclude, by examining patterns of transactions, 

whether those patterns are suspicious.

Analysts are aided significantly by software that is programmed to catch “anomalies” 

(i.e., unusual financial transactions) that are indicative of money laundering. The key is to 

find those transactions that would be out of character for the customer’s purported 

business activity. A large cash deposit would not be suspicious for a customer like WalMart, but it would be for a customer whose only reported source of income is a Social 

Security check. Sophisticated software should be able to distinguish between such 

transactions and alert the money-laundering compliance analyst at the bank to investigate 

further. This software, however, is not self-executing. It must be set up and fine-tuned. 

Such adjustments can only be done by the bank itself; they require a deep and thorough 

understanding both of the bank’s ordinary business and of its potential high-risk product 

lines and high-risk customers. Additionally, the bank typically has specialists with a 

fairly sophisticated understanding of money laundering. Because money laundering must 

involve large transactions, banks are able to safely ignore a significant percentage of their 

transactions that fall below specific thresholds. 

from trading with an enemy of the state. Violations of these prohibitions are enforced by criminal penalties 

or by civil fines, depending on the seriousness of the offense, among other factors. The listing process, 

described elsewhere, is generally considered to be too cumbersome to be of use in detecting operational 

elements of terrorist organizations. 
National Commission on Terrorist Attacks Upon the United States 

56

If further review does not dispel suspicions, the bank is required to file a SAR within 30 

days from the discovery of the suspicious conduct. (When a bank cannot identify a 

suspect, it has an additional 30 days to try to do so.) The bank must also monitor the 

account and should refuse to engage in future transactions it deems to be suspicious. In 

some cases, it may terminate the relationship with the customer. 

The BSA regime also reflects sensitivities concerning financial privacy. A system 

requiring bank reporting was thought to be less intrusive than allowing unfettered 

government surveillance of bank records. The specter of a bank “knowing its customer” 

is somewhat less threatening than the idea that the government ought to understand and 

know all of a citizen’s probable financial transactions.

As a result of the BSA regime, most money launderers, drug dealers, and high-level 

fraudsters understand that trying to pump massive amounts of cash through a U.S. bank is 

fraught with peril. As a result, they generally prefer instead to use other, less risky, 

methods to move money—sending it in bulk across our porous borders, for example, or 

through a less-regulated industry like money-transmitting services. If they do use banks, 

they take care to structure smaller transactions among dozens of different accounts—less 

risky, to be sure, but considerably slower and more costly. 

The terrorist-financing model 

The model of banks having superior knowledge to detect illicit activity may not apply to 

terrorist financing. Although the U.S. government may possess the intelligence that could 

reveal terrorist operatives and fund-raisers, financial institutions generally do not. The 

9/11 operation provides a perfect example. The 19 hijackers hid in plain sight: none of 

their transactions could have revealed their murderous purpose, no matter how hard the 

banks looked at them (see appendix A). Intelligence the government had, however, could 

have been critical to identify the terrorists among us. For example, the U.S. government 

had reason to believe that future hijackers Khalid al Mihdhar and Nawaf al Hazmi were 

al Qaeda operatives in the United States. Both these terrorists had U.S. bank accounts, but 

bank personnel never could have suspected that their customers were terrorists no matter 

how diligently they studied the transactions, which were utterly routine. 

Since September 11, financial institutions and the government have made efforts to create 

a financial profile of terrorist operatives. The FBI examined the financial transactions of 

the 9/11 hijackers and came up with some distinguishing features: they arrived at banks 

in groups; they listed their occupation as students; they spent a large percentage of their 

income on flight schools and airfare, particularly first-class airfare; and they were funded 

in large part through wire transfers from the UAE. This profile might help detect another 

plot exactly like 9/11, but we can expect that the next plot will look entirely different. As 

a result, this profile does not especially help banks find future terrorist operatives, who 

we can expect will make different, although equally routine, use of the financial system. 

In fact, no effective financial profile for operational terrorists located in the United States 

exists. The New York Clearinghouse, a private consortium of the largest money-center 

banks, attempted to put together such a profile in partnership with government 

investigators. After two years, they concluded it could not be done.
Terrorist Financing Staff Monograph 

57

Creating a profile for terrorist fund-raising groups is not necessarily any easier. An 

Islamic organization that collects funds from small donors, pools the funds, and then 

sends large monthly wire transfers to Chechnya, Afghanistan, Kashmir, or the West Bank 

could be a jihadist or terrorist fund-raising operation, or an entirely legitimate 

humanitarian operation devoted to serving civilians in impoverished and war-torn regions 

of the world. The government may have information (derived from sources such as 

electronic surveillance or human intelligence) from which it can distinguish between the 

two rationales for the transactions, but it is unlikely that banks will be able to tell the 

difference from the transactions themselves. 

The government has also tried to describe suspicious activity indicative of terrorist fundraising. The Financial Crimes Enforcement Network (FinCEN) conducted a 

comprehensive analysis of potential terrorist-financing patterns, which it published in 

January 2002. Drawing on actual SARs filed by banks, it described five cases that might 

have been examples of terrorist fund-raising. Ultimately, these cases centered on 

financial transactions indicative of money laundering that involved, as FinCEN delicately 

put it, “nationals of countries associated with terrorist activity.”52 This analysis appears to 

be of little use in ferreting out a sophisticated terrorist fund-raising operation, which will 

likely look to the bank identical to a legitimate Islamic charity. 

Although FinCEN took great pains to caution that country of origin or ethnicity should 

not, absent other factors, be taken to indicate potential criminal activity, the report 

highlights a problem with applying the BSA regime to terrorist financing. The inability to 

develop meaningful indicia of a terrorist cell or terrorist fund-raising operation creates a 

risk that financial institutions could rely primarily on religious, geographic, or ethnic 

profiling in an attempt to find some criteria helpful for identifying terrorist financing. 

Such profiling raises a number of problems. Fundamentally, it will not be an effective 

means to combat terrorist financing. The vast majority of Islamic or Arab bank customers 

are not terrorists or terrorist supporters, so indiscriminately filing SARs on them will do 

nothing but waste resources and cause bad will. Similarly, reporting that an Islamic 

charity is sending money to Afghanistan will not be particularly effective in finding 

terrorist financiers; there are certainly many legitimate humanitarian needs there. In 

addition to doing little good, this type of profiling may subject customers to heightened 

scrutiny without legitimate basis, and could even extend to refusing to service customers 

meeting a certain profile. Of course, religion, nation of origin, or ethnicity can and should 

be taken into consideration, along with many other factors, in the subjective judgment as 

to whether a certain transaction or account is suspicious. Our point is that profiling—by 

itself—is both an unfair and an ineffective way for financial institutions to attack terrorist 

financing.

52 FinCEN, SAR Bulletin, no. 4 (Jan. 2002). Typically, they included structuring multiple deposits or other 

transactions to be below the $10,000 reporting threshold, collecting funds through a variety of financial 

channels then funneling them to a small number of foreign beneficiaries, or a volume of financial activity 

inconsistent with the stated purpose of the account. 
National Commission on Terrorist Attacks Upon the United States 

58

That being said, there may be utility in having financial institutions examine transactions 

for indicia of terrorist financing. It certainly assists in preventing open and notorious 

fund-raising and forces terrorists and their sympathizers to raise and move money 

clandestinely, thereby raising the costs and risks involved. The deterrent value in such 

activity is significant and, while it cannot be measured in any meaningful way, ought not 

to be discounted. 

Financial Institutions Have a Role in Combating Terrorist 

Financing in the United States 

The inability of financial institutions to detect terrorist operatives or terrorist fund-raising 

does not relegate the private sector to the sidelines in the fight against terrorism. To the 

contrary, there are a number of things that financial institutions can do right now. There 

also are a number of things that could be done in the future, if current law or government 

policies are changed. This section addresses what can be done now and assesses some 

possibilities for the future.

Now: Helping the government find the terrorists 

Financial tracking 

Although financial institutions lack information that can enable them to identify 

terrorists, they have information that can be absolutely vital in finding terrorists. If the 

government can determine where a terrorist suspect banks, his account opening 

documents can provide his address, and his ATM and credit card usage can show where 

he is and what he is doing. Again, the 9/11 plot provides a good example. Had the U.S. 

government been able in August 2001 to learn that hijackers Nawaf al Hazmi and Khalid 

al Mihdhar had accounts in their names at small New Jersey banks, it could have found 

them. The hijackers actively used these accounts, through ATM, debit card, and cash 

transactions, until September 10. Among other things, they used the debit cards to pay for 

hotel rooms—activity that would have enabled the FBI to locate them, had the FBI been 

able to get the transaction records fast enough. Moreover, al Hazmi used his debit card on 

August 27 to buy tickets on Flight 77 for himself, his brother, and fellow Flight 77 

hijacker Salem al Hazmi.

If the FBI had found either al Mihdhar or Nawaf al Hazmi, it could have found the other. 

They not only shared a common bank but frequently were together when conducting 

transactions. After locating al Mihdhar and al Hazmi, the FBI could have potentially 

linked them through financial records to the other Flight 77 hijackers. For example, as 

noted, Nawaf al Hazmi used his debit card on August 27 to buy plane tickets for himself 

and his brother, linking those two hijackers. Nawaf al Hazmi and Flight 77 pilot Hani 

Hanjour had opened separate savings accounts at the same small New Jersey bank at the 

same time and both gave the same address. On July 9, 2001, the other Flight 77 muscle 

hijacker, Majed Moqed, opened an account at another small New Jersey bank at the same 
Terrorist Financing Staff Monograph 

59

time as Nawaf al Hazmi, and used the same address. Given timely access to the relevant 

records and sufficient time to conduct a follow-up investigation, the FBI could have 

shown that Hani Hanjour, Majed Moqed, and Salem al Hazmi were connected to 

potential terrorist operatives al Mihdhar and Nawaf al Hazmi. No one can say where the 

investigation would have gone from there, but financial records could potentially have 

been used, along with other information—including perhaps information found in the 

possession of or provided by the Flight 77 hijackers—to link the Flight 77 hijackers to 

the others and, perhaps, disrupt the plot. 

Unfortunately, this theoretical investigation would not have worked quite as smoothly in 

the world that existed before September 11. First, an agent attempting to locate the 

hijackers would have needed to know where to look. There are thousands of financial 

institutions in the United States, and making an inquiry of each one of them, regardless of 

the exigency of the situation, would not have been a realistic enterprise. Even an 

experienced agent tasked to find al Mihdhar or al Hazmi would have been unlikely to 

think to use financial tracking; and an agent who did probably would have first called 

those institutions with which he or she had some personal relationship—probably big 

banks.

Moreover, before 9/11 financial investigations almost always moved at a slow, 

methodical pace. In a typical investigation, a financial institution received a grand jury 

subpoena or a National Security Letter (NSL) from a federal prosecutor or agent. The 

subpoena had a return date—the date by which the bank was required to produce the 

records requested. In a typical investigation, the bank searched its records and produced 

hard copies of the material requested. Banks and other financial institutions then needed 

substantial time to locate and produce records, even in response to a lawful subpoena. 

Financial institutions had been prohibited from giving law enforcement certain records 

absent compulsory legal process. 

Before 9/11, the U.S government did not think in terms of financial tracking, certainly 

not systematically and on an urgent basis. The terrorist attacks changed this thinking. 

Since 9/11, the government uses financial information to search out terrorist networks so 

that a known suspect like al Mihdhar could be quickly located. There are now two 

primary approaches for doing this: FBI outreach that has enhanced private sector 

cooperation and Section 314(a) of the USA PATRIOT Act.

The FBI’s Terrorist Financing Operations Section (TFOS) has taken the existing legal 

rules, which were developed within the context of traditional after-the-fact investigation 

of financial crimes, and created a systematic approach to gain expedited access to 

financial data in emergencies. To facilitate emerging situations, the FBI has compiled a 

list of high-level contacts within the financial community—banks, brokerage houses, 

credit card vendors, and money services businesses—to whom it can turn to get financial 

information on an expedited basis at any time, including nights, weekends, and holidays. 

The FBI serves them on an expedited basis with a subpoena or other legal process to get 

the relevant data. In true emergencies, the FBI can get information quickly to locate an 

individual or find links among co-conspirators.
National Commission on Terrorist Attacks Upon the United States 

60

Applying the post-9/11 FBI approach to the pre-9/11 search for al Mihdhar and al Hazmi 

strongly suggests the current system would have enabled the hijackers to be quickly 

located. Indeed, the recently retired founder and chief of TFOS stated that given the same 

circumstances today, the FBI would find al Mihdhar “in a heartbeat.”53 Corroborating this 

contention, FBI has successfully used its system a number of times to locate terrorist 

suspects and prevent terrorist attacks. For example, after the FBI received information 

that certain potential terrorists had infiltrated the United States, TFOS put into practice 

the process it had developed to track the suspects through their financial transactions. The 

TFOS process proved successful in obtaining useful data in a very compressed time 

frame. Although the subjects proved not to be terrorists, the system demonstrated its 

capability. The FBI’s ability to do near real-time financial tracking has enabled it to 

locate terrorist operatives in a foreign country and prevent terrorist attacks there on 

several occasions. The system also helped crack a major criminal case, played a role in 

clearing certain persons wrongly accused of terrorism, and has proved very valuable in 

vetting potential threats. 

The second approach to obtaining basic financial information on an expedited basis is 

through a regulation issued under Section 314(a) of the USA PATRIOT Act. By this 

regulation, the Department of Treasury requires financial institutions upon the 

government’s request to search their records and determine if they have any information 

involving specific individuals. Financial institutions must report any positive matches to 

law enforcement within two weeks after the request for information. If there are matches, 

law enforcement must follow up with a subpoena to obtain the actual transaction records 

as discussed above. In an emergency, law enforcement can ask Treasury to require banks 

to respond more quickly to the request, sometimes in two days, a procedure that they 

have used on several occasions thus far. 

In practice, this process enables law enforcement to find out if an individual of interest 

has accounts or has conducted transactions in any one of thousands of financial 

institutions across the country. It saves an investigator hundreds of hours that would have 

otherwise been spent on a bank-by-bank inquiry—an inquiry that would not have been 

done under the old system owing to time and resource constraints. One agent told the 

Commission staff that the new procedure so far has produced “tremendous results.” She 

cited an instance in which a terrorism investigation resulted in the discovery of two bank 

accounts using conventional investigative techniques. Then, as a result of the Section 314 

process, investigators were able to identify 19 other accounts across the country—

accounts that they would have never been able to find otherwise.54

53 By contrast, he said that while it would have been theoretically possible to use financial tracking to find 

the hijackers before 9/11, the probability of doing so in a timely fashion would have been extremely low. 54 One concern about the Section 314 process is the possibility that a request to thousands of financial 

institutions will cause the information to be leaked. In a Las Vegas criminal investigation in October 2002 

and a New York terrorism case in March 2003, the media published the fact of the law enforcement 

requests. In the New York case, the New York Post even called the subjects to ask them why the FBI was 

making the request. As a result, the FBI conducts a risk-benefit analysis before making each request. There 

are civil and criminal penalties in the event of a disclosure, and Treasury includes a warning with every 

request. There is no guarantee, however, that such warnings will be sufficient to deter leaks. 
Terrorist Financing Staff Monograph 

61

Account opening and customer identification procedures/data 

retention

Financial institutions play a critical role in any effort to find terrorists under either the 

FBI’s system or Section 314. To fulfill this role properly in the life-and-death 

emergencies that can arise, financial institutions must (1) know their customers by their 

real names and possess other essential identifying information, (2) have the ability to 

access this information in a timely fashion, and (3) quickly provide this information to 

the government in a format in which it can be effectively used. 

Section 326 of the USA PATRIOT Act requires that financial institutions “enhance the 

financial footprint” of their customers by ensuring effective measures for verifying their 

identity. Section 326 recognized that effective customer identification may deter the use 

of financial institutions by terrorist financiers and money launderers and also assist in 

leaving an audit trail that law enforcement can use to identify and track terrorist suspects 

when they conduct financial transactions. In May 2003 the Department of the Treasury 

issued regulations implementing the statute, setting forth the type of information that 

must be collected as well as the acceptable methods for verifying identity. 

The need for accurate identifying information puts a premium on financial institutions 

having effective account opening procedures that vet the true identify of each customer, 

to the extent possible. A name search for Khalid al Mihdhar will not find him if he is 

banking under another name. Obviously, banks cannot be expected to detect perfectly 

forged passports and other identification documents; but terrorists rarely are perfect, and 

training in spotting false identification documents could help bank personnel catch the 

most egregious examples. In addition, bank personnel must ensure that account 

documents reflect the full and accurate name of the customer, even if that name is long.55

Equally important, banks must obtain and accurately record key identifying information 

about their customers, including date of birth, Social Security number, and passport 

number. Many names are so common that nationwide searches for them would generate 

so many false positives as to be useless in an emergency. At times, however, the FBI can 

obtain and provide other identifying information, such as a passport number, which can 

be crucial in narrowing the search—provided that the institution where the subject is a 

customer has that information. 

The need to locate terrorist operatives in the most exigent circumstances means that 

financial institutions must be able to access their data quickly. Quick retrieval can be a 

problem for some financial institutions, where years of piecemeal information-system 

upgrades have created a dysfunctional structure that greatly complicates the task of 

determining if a particular person is a customer. For example, an official of one midsize 

55 Shortening the name could mean that the account will be missed if the FBI is seeking a permutation 

different than the one used. For example, Ali Abdul Aziz Ali, a.k.a. Ammar al Baluchi, a key facilitator of 

the 9/11 attacks, would not be found if a bank listed him only as Abdul Aziz Ali and the FBI was looking 

for Ammar al Baluchi.
National Commission on Terrorist Attacks Upon the United States 

62

regional bank told Commission staff that his institution must email 28 different people to 

respond to a Section 314(a) request. Some banks simply lack electronic searching 

capability altogether. An FBI agent with a leading role in the Bureau’s financial-tracking 

effort said that many financial institutions can search their data only manually, which is 

both resource-intensive and painfully slow in an emergency. Ideally, financial 

institutions should be able to do quick electronic searches by customer name, by other 

identifying information such as Social Security number or date of birth, or even by 

address or employment. Many financial institutions lack this ability today. 

Once a financial institution has informed the government that a suspect is a customer and 

has received appropriate legal process, it can assist law enforcement greatly by providing 

continuous updates about the suspect’s transactions. For example, the information that 

the suspect just used his credit card to rent a hotel room, book an airline flight, or rent a 

Ryder truck can be essential in an emergency. Many sophisticated financial institutions 

can provide the FBI with near “real-time” information on a suspect’s activities, but other 

institutions entirely lack this capability, owing to technical limitations. 

Finally, upon receipt of legal process, financial institutions must be able to communicate 

the relevant account information to the government officials quickly and efficiently. For 

many types of information, this means in electronic format. Although the FBI has long 

lagged behind the rest of the country in information systems technology, it has made 

tremendous strides since 9/11 in using available technology to find terrorists suspects, 

especially through TFOS’s financial-tracking efforts. In many cases, emergency tracking 

can be streamlined if information is provided to TFOS in electronic format. Many 

financial institutions lack this capability, however. 

The FBI’s ability to find terrorist suspects in an emergency through financial tracking 

depends in large part on the private sector’s voluntary cooperation. By all reports, the 

financial sector’s cooperation has been immense since 9/11, but there is a risk that 

cooperation will decrease as the terrorist attacks fade into history and antiterrorism efforts 

become just another cost center for financial institutions. Government misuse of 

emergency procedures in non-emergency situations could also substantially reduce the 

likelihood that the private sector will respond when its help is truly needed to save lives. 

To avoid this problem, it is critical that law enforcement and the financial community 

maintain good lines of communication. This communication is important at all levels. 

Industry groups and major national institutions must meet regularly with national law 

enforcement leaders, such as the senior agents running FBI TFOS and the director of 

FinCEN, to focus on larger strategic issues. At the same time, FBI field offices need to 

reach out to smaller regional financial institutions, which they may need to contact in an 

emergency. 

This is not to say that financial institutions should become simply another appendage of 

law enforcement. To the contrary, under either the FBI approach or Section 314(a), 

without legal process financial institutions can answer only one basic question: does X 

have an account at your bank? Everything beyond this question requires legal process 

under current law. It is hard to see why any privacy or liberty concerns should be raised 
Terrorist Financing Staff Monograph 

63

about the private sector and financial institutions working together to develop streamlined 

procedures for providing critical data quickly in an emergency—pursuant to a lawful 

subpoena or other process. 

The future: What more can be done? 

A number of proposals have been made in recognition that the traditional BSA approach 

is inadequate to address the challenges of terrorist financing.

Sharing classified information with bank personnel: A bad idea 

The BSA model fails with respect to terrorist financing because the government—not the 

financial institutions—has the information that can best identify the terrorist operatives or 

fund-raisers. Some have proposed correcting that problem by providing security 

clearances to financial institution personnel and then providing these cleared officials 

with classified intelligence about terrorist financing. The idea is that the cleared bank 

personnel, armed with intelligence to give them a better idea of what they are looking for, 

will be able to ferret out the terrorists among their customers.56

The idea of clearing financial institution personnel may be attractive on its face, 

particularly to those unfamiliar with the nature of financial intelligence. The proposal 

would likely do little, however, to help banks combat terrorist financing and creates a 

number of serious privacy and civil liberty concerns. Most intelligence on terrorist 

financing is not actionable—it does not identify specific terrorist financiers and their 

accounts with sufficient precision to allow actions to disrupt the activity. The intelligence 

tends to be limited and speculative, and it frequently relies on dubious sources of 

information. It can be valuable to trained intelligence experts, who can evaluate it in the 

context of the broad spectrum of available information, but not to bank compliance 

directors, who will necessarily lack the time and current knowledge to properly evaluate 

it. Even if bank personnel have time and expertise, the intelligence rarely will yield 

information that they would find useful, such as names of specific account holders. 

To the extent that the intelligence community can generate specific names or accounts, 

such information can usually be shared with banks in an unclassified way. Banks can be 

told to be aware of person X from country Y without needing to know how that 

information was obtained. If the intelligence community develops patterns or trends, this 

information presumably also can be shared with financial institutions without need for 

security clearances. 

56 See, e.g., testimony of former National Security Council official Richard A. Clarke, Senate Banking, 

Housing and Urban Development Committee (October 22, 2003) (clearing bank compliance personnel will 

“bring us back great benefits because then they’ll know what to look for”). Representatives of financial 

institutions made similar recommendations to Commission staff. 
National Commission on Terrorist Attacks Upon the United States 

64

Providing intelligence about terrorist financing to bank personnel raises serious privacy 

and civil liberty issues. People may be named in intelligence reports, but many of the 

allegations within these reports are unproven. Some reports prove to be entirely baseless. 

Turning these reports over to private citizens like bank personnel runs the risk that 

entirely unsubstantiated allegations may lead banks to shut customer accounts or take 

other adverse action. Even assuming that the classified information itself is never leaked, 

the names of people identified in the intelligence cannot be kept secret. When the bank 

compliance officer who receives the secret intelligence asks for scrutiny of a customer’s 

accounts for no apparent reason, other bank personnel will likely surmise that classified 

information drove this request. 

Supporters of giving security clearances to bank personnel point out that the U.S. 

government regularly clears private citizens, such as employees of defense contractors. 

There are, however, few if any instances in which the U.S. government provides 

classified information potentially adverse to U.S. citizens to private actors for the specific 

purpose of causing those private actors to subject the U.S. citizens to greater scrutiny.57

Creating such an unusual and potentially dangerous situation cannot be justified by the 

minimal benefits that sharing classified information might produce. 

Broad government access to private data: Perhaps someday 

A more radical, but perhaps far more effective, proposal would give government 

authorities direct unfettered access to private financial data for the limited purpose of 

finding or detecting terrorist operatives or fund-raisers.58 Under this approach, 

counterterrorist officials would be able to access privately held data by using computer 

technology to search for known terrorist suspects by name, data of birth, Social Security 

number, or other identifying information, which would find terrorist suspects living under 

their own name and also help identify others living under assumed names. The 

government could also use privately held financial data in conjunction with a wide 

variety of other data to link a suspect to his or her associates. As one former government 

official testified to the Commission: “Counterterrorism officers should be able to identify 

known associates of the terrorist suspect within 30 seconds, using shared addresses, 

records of phone calls to and from the suspect’s phone, emails to and from the suspect’s 

accounts, financial transactions, travel history and reservations, and common 

memberships in organizations, including (with appropriate safeguards) religious and 

expressive organizations.”59 The government is currently far from these capabilities, and 

57 The commonality of many names, especially Arabic names, compounds the potential for mayhem. For 

example, an official of one major financial institution told Commission staff that there were 85 Mohamed 

Attas in New York City alone. Intelligence reports of varying quality may provide the basis for bank action 

against not only the persons alleged to be involved in terrorist financing but innumerable people with the 

same or similar names. 

58 See, e.g, Creating a Trusted Network for Homeland Security, Second Report of the Markle Foundation 

Task Force (Dec. 2003), appendix F (“Within 30 seconds [of learning the identify of a terrorist suspect], the 

counterterrorism agency should be able to access U.S. and international financial records associated with 

the suspect”). 

59 Prepared testimony of Stewart Baker, Dec. 8, 2003. 
Terrorist Financing Staff Monograph 

65

significant technical, legal and privacy hurdles would need to be crossed before it would 

have anything remotely approaching this ability. 

Supporters of this approach contend that privacy would be protected through anonymity 

and technology. The data of millions of people could be electronically searched but all 

individuals would remain anonymous except those identified as terrorist suspects, who 

would then be subjected to further scrutiny. Sophisticated technology would control 

access to the data, electronically audit the data and keep a detailed record of exactly who 

accessed it for what purpose, and ensure the anonymity of persons whose data are 

searched. 

If such a system existed, it would be tremendously useful in looking for known terrorist 

operatives living under their own name, such as al Mihdhar or al Hazmi, or future 

hijackers living under false identities. Technology could be imagined that would scan 

masses of financial data looking for terrorist fund-raising operations as well, while 

preserving the anonymity of the data belonging to persons whom it does not identify as 

potential terrorist fund-raisers.

Of course, major technological improvements would be required to implement this kind 

of a system. Currently, financial records are spread out across the country in thousands of 

financial institutions, each with its own data collection and retrieval system and level of 

technological sophistication.60 There is no single database that the government can tap 

even in an emergency. 

Even if such a database could be created, sweeping legal changes would be required to 

use it. The government does not have unfettered access to this financial information 

under current laws. Although the Supreme Court has stated that an account holder does 

not have an expectation of privacy in information he or she gives to another, such as a 

bank, there are a number of restrictions on the government’s right to obtain such data. 

Most fundamentally, the government can obtain financial information or data only by 

lawful process, such as a grand jury subpoena or an NSL, for a particular case or 

investigation. The government has no general authority to access the entire country’s 

financial records en masse, so that it can scan them to find potential terrorists or criminal 

suspects. Instead, an inquiry has to be made of each financial institution for each 

investigation.

Pushing the technological and legal limits even further is the idea that the government 

could develop the technology to sift through all the financial data that exists and create a 

program able to single out those financial transactions that are inherently suspicious. 

60 Banks and other financial institutions keep records as a part of the operation of their ongoing businesses. 

Financial institutions are generally required to keep financial information on hand, in a retrievable form, for 

five years. In contrast, other industries whose records would also be of use to counterterrorism 

investigators, such as Internet service providers, are not required to keep transaction records for any length 

of time and can (and do) regularly destroy them unless law enforcement requests that they be maintained. 

This has often been a source of frustration to law enforcement and intelligence agents, whose investigations 

are often hampered in the digital age by lack of a uniform and mandated record retention policy for internet 

service providers. 
National Commission on Terrorist Attacks Upon the United States 

66

These ideas have been discussed in the open literature and have triggered major 

controversy and speculation. The Department of Defense’s “Total Information 

Awareness” program, complete with its logo of an all-seeing eye, was a prime example of 

this type of technology. This research program sought to use sophisticated technologies 

to detect terrorist planning activities from the vast data in cyberspace; in other words, it 

sought to “pick the signal out of the noise.” Congress has prohibited the funding of such 

a program, largely because of privacy concerns. Despite 9/11, it seems that privacy 

concerns will prevent anything remotely like these ideas from becoming reality in the 

foreseeable future. 

That is not to say research should not go forward. Government and the private sector can, 

and should, continue to work on technology that could scan vast amounts of financial 

data to find known terrorist suspects, while protecting the privacy of the innocent persons 

whose data are searched. Perhaps sophisticated technology can be developed that would 

even be able to pick out unknown terrorist operatives or fund-raisers by their financial 

transactions—currently a near impossibility. Legitimate concerns about privacy should 

not retard research that might someday make us safer and, at the same time, actually not 

infringe on privacy rights. Ideally, the research efforts should draw on both the law 

enforcement and intelligence expertise of the government and the sophisticated 

technology and data management expertise of the private sector. Obviously, no such 

technology should ever be implemented on real data without public acceptance that the 

technological and legal safeguards in place will be sufficient to ensure privacy. The 

development of such technology and any public acceptance of it remain, at this point, 

pure speculation. 
Terrorist Financing Staff Monograph 

67

Chapter 5

Al-Barakaat Case Study 

The Somali Community and al-Barakaat

In about 1991, the East African country of Somalia became embroiled in turbulent civil 

unrest that wreaked devastation on its people and institutions. Already destitute, the 

government collapsed and basic services withered. Famine and violence in the country 

were the norm, and a diaspora of Somalis began. Many arrived in the United States. In 

one of those strange flukes sometimes found in patterns of migration, cold and snowy 

Minneapolis has the largest concentration of Somali immigrants in the United States. 

Somali immigrants, like individuals in immigrant communities throughout the United 

States, sought a safe, quick, and effective way to move money earned in the United States 

back to their families and homes. The need was even more dire for Somalia, as this was 

one of the only sources of hard currency available to the country. Many foreign workers 

in the United States have a number of different options to move money internationally. 

The most formal and obvious way is to use the established backbone of the international 

wire transfer system to shift funds between a bank account in the United States and one in 

the destination country. This method has several significant advantages. It is safe and 

convenient, particularly when large amounts of money are being sent between 

commercial customers. There are drawbacks to wiring money, however: it can be 

expensive; banks can hold the money for extended periods before sending it; it requires a 

bank account in the United States; and the banks are required to use the official exchange 

rate and in some countries levy a tax on foreign exchange, which often makes the 

effective rate of exchange punitively high. Indeed, other countries often restrict the export 

of foreign currency and foreign exchange.

However, for Somalis living in the United States, the question was moot. Somalia simply 

had no banking system and no central bank by which foreign exchange could be made. 

Thus, a different way had to be found to get money to Somalia. The al-Barakaat network 

of money remitters was set up to address this need. Founded by Ahmed Nur Ali Jumale 

in 1985, al-Barakaat at the time of 9/11 had more than 180 offices in 40 countries, all 

existing primarily to transfer money to Somalia. The financial headquarters for alBarakaat was in the United Arab Emirates, where Jumale had opened a number of 

accounts at the Emirates Bank International (EBI) to facilitate the transmission of money. 

At the time of the terrorist attacks, al-Barakaat was considered the largest money 

remittance system operating in Somalia; in addition to being used by a significant number 

of Somalis who had fled the anarchy in their home country, it was the primary means that 

the United Nations used to transmit money in support of its relief operations there. 

A money remitter, described most simply, collects money from an individual at one point 

and pays it to another in another location, charging a fee for the service. The money itself 

does not actually move; rather, the originating office simply sends a message to the 

destination office, informing it of the amount of money and the identity of the sender and 
National Commission on Terrorist Attacks Upon the United States 

68

of the recipient. The destination office then pays the ultimate recipient. To settle, money 

is periodically wired in aggregate amounts from the originating office’s bank account 

either to a central clearing account owned by the money-remitting company or through 

correspondent bank accounts. The central office, in turn, settles with the destination 

office. Each office is typically an agent or licensee of the main office, and its 

relationships are usually arm’s-length and governed by a written contract. The main 

office is responsible for keeping track of the settling transactions with all of the other 

offices. Most money remitters in the United States belong to large franchise, such as 

Western Union or MoneyGram. They effectively operate along the same principles as alBarakaat, albeit more formally. Additionally, the absence of any agents for large, 

Western-based money remitters in Somalia forced Somalis to use smaller, ethnically 

based ones.

Al-Barakaat has been commonly called a hawala, but it is not one.61 There are similarities 

between the two systems. In both, there is a need to compensate the agent who has paid 

out money pursuant to a money transfer. In both, the money is not sent for each 

individual transaction; rather, there is a larger settling transaction conducted periodically 

to adjust for the differences in what each office took in and what it had to pay out.

The key difference is in how the money or value moves between the office obtaining the 

money from the customer and the office paying the money out to the ultimate 

beneficiary. In transferring value between the sending and the receiving offices, a money 

remitter uses the formal financial system, typically relying on wire transfers or a 

correspondent banking relationship. A hawala, at least in its “pure” form, does not use a 

negotiable instrument or other commonly recognized method for the exchange of money. 

Hawaladars instead employ a variety of means, often in combination, to settle with each 

other: they can settle preexisting debt, pay to or receive from the accounts of third parties 

within the same country, import or export goods (both legal goods, with false invoicing, 

or illegal commerce, such as drug trafficking) to satisfy the accounts, or physically move 

currency or precious metal or stones. 

There are other distinguishing characteristics of a hawala. Many hawalas operate between 

specific areas of the world, or even specific areas within a specific country. An individual 

wanting to send money from Canada to one area in Pakistan, for example, might use one 

hawaladar; to move money to a different part of Pakistan, it may be necessary to use a 

different one. Hawalas typically do not maintain a large central control office for settling 

transactions. Instead, a loose association of hawaladars conduct business with each other, 

typically without any formal or legally binding agreements. Hawaladars often keep few 

formal records; those that do exist are usually handwritten in idiosyncratic shorthand and 

are typically destroyed once the transaction is completed. 

As noted in chapter 2, Usama Bin Ladin and al Qaeda made significant use of hawalas to 

move money in the Middle East—particularly in Pakistan, the UAE, and Afghanistan—in 

61 The following discussion is aided by two reports, both produced by FinCEN: A Report to Congress in 

Accordance with Section 359 of the USA PATRIOT Act, (2002) and Hawala: the Hawala Alternate 

Remittance System and its Role in Money Laundering, (undated, probably 1996) 
Terrorist Financing Staff Monograph 

69

the period before 9/11. This does not make the use of hawalas inherently criminal, 

although it has been recognized that some of their characteristics allow criminal activity 

to flourish: little formal record keeping, lack of government controls, and settling 

transactions that do not go through formal financial channels. 

The Somali money remitters in Minneapolis had attracted official attention for some 

time. There were three primary remitters in Minneapolis in the late 1990s: al-Barakaat, 

Dahb Shiil, and Shirkadda Xawilada Amal. Al-Barakaat had by far attracted the most 

attention. A local bank had filed Suspicious Activity Reports (SARs)62 as early as the 

summer of 1996 with the Treasury Department regarding what they believed to be 

suspicious financial activity: large amounts of cash and other instruments were being 

deposited and then immediately wire transferred to a single account in the UAE the next 

day. The SARs did not describe what the bank thought the nature of the activity was, just 

that it seemed inconsistent with normal banking activity. By 9/11, these reports numbered 

in the hundreds. 

The FBI, which received a regular summary of these reports, opened a criminal moneylaundering case file on al-Barakaat in May 1997.63 In a typical money-laundering 

investigation, an investigative agent tries to develop evidence that the money was derived 

from a crime that was statutorily described as a “specified unlawful activity” (SUA), and 

that the purpose of the transaction was either to disguise the nature, source, ownership, or 

control of the money or to further the criminal activities. The difficulty here, which 

would plague both the intelligence and criminal investigators for the rest of the 

investigation into al-Barakaat, was that the transactions themselves revealed neither who 

the recipient of the money was nor what happened to the money once it arrived in the 

UAE. The source of the money or purpose behind the transaction could be legitimate or 

nefarious: in the absence of further information, it was impossible to know which. After a 

preliminary investigation, the FBI closed its criminal investigation of al-Barakaat in 

August 1998, unable to find an SUA or gain an understanding of the purpose of the 

transactions. More SARs continued to pour in, however, and U.S. Customs and Internal 

Revenue Service agents in Minneapolis, who had opened a separate investigation into alBarakaat, continued to investigate. 

62 Suspicious Activity Reports and their role in the overall scheme of anti-money laundering regulation of 

banks and other financial institutions are discussed in chapter 4. 63 The description of the FBI intelligence and multi-agency law enforcement investigation against alBarakaat was derived from a review of FBI case reports and source reporting, as well as face to face 

interviews with the agents and FBI officials involved. The description of the government’s understanding 

of al-Barakaat prior to 9/11 was derived from a review of intelligence agency reporting. The description of 

the foreign government participation in the al-Barakaat action is derived from State Department cables and 

Treasury memoranda. The discussion of OFAC is derived from review of internal Treasury documents and 

from interviews of Treasury and OFAC officials. 
National Commission on Terrorist Attacks Upon the United States 

70

The Early Intelligence Case 

The primary domestic investigation of potential Somali-based terrorist activities occurred 

in Minneapolis.64 The lead case agent was able to develop intelligence both from his own 

investigative efforts and from his review of the materials in the possession of the CIA. In 

December 1998, a case agent in the intelligence squad in Minneapolis developed a source 

of information on the activities of the Somali community. The source indicated that the 

terrorist group Al-Itihaad Al-Islamiya (AIAI) had a cell in Minneapolis, and that it 

supported radical Islamic activities against the United States. The investigation focused 

on a specific individual within the United States, who was alleged to have plotted to 

bomb U.S. embassies in Uganda and Ethiopia and to have been engaged in fund-raising 

in Minneapolis to support AIAI activities overseas. Additionally, the source provided 

information regarding about 15 Somali immigrants. After further inquiry, including 

searches and an interview, the investigations were closed when it was found that the 

FBI’s original source lacked credibility regarding this specific threat and that other 

reliable sources had no knowledge of the suspected plotter. 

While the original source did not pan out, the agent was able to learn from his contacts in 

the intelligence community, particularly the CIA, a great deal about AIAI. The agent 

learned that AIAI operated primarily in East Africa and was considered a loose affiliation 

of Islamists. AIAI was considered a significant threat by the Defense Intelligence 

Agency, which had experience in Somalia during the early 1990s, and intelligence 

suggested that AIAI had links to Usama Bin Ladin. For example, there were indications 

that Usama Bin Ladin had visited Somalia and visited an AIAI stronghold in southern 

Somalia to look for a new base of operations when his stay in Sudan ended. Bin Ladin 

purportedly met with the leaders of AIAI as well, and was said to have given AIAI 

$400,000 in 1997 to support attacks on Ethiopia. Some of this intelligence was reinforced 

after 9/11, when it was reported that AIAI discussed hiding Bin Ladin in the event he 

needed to leave Afghanistan. 

Despite these troubling links, the State Department thought AIAI did not meet the 

standard for designation as a Foreign Terrorist Organization (FTO), which would have 

the effect, among other things, of criminalizing support of it. Additionally, there was a 

concern on the part of the State Department that some of the reporting involving AIAI 

was simply not credible. State said that multiple reports from the CIA discredited its 

earlier sources. 

In the late 1990s, the intelligence community also began to draw links between AIAI, alBarakaat (particularly its founder, Ahmed Nur Ali Jumale) and Usama Bin Ladin. The 

reporting centered on a few key facts. First, it alleged that Usama Bin Ladin not only 

assisted Jumale in establishing al-Barakaat in about 1992 but was in fact a silent partner, 

and that Jumale managed Bin Ladin’s finances as well. This was consistent with other 

information that indicated a prior relationship between Jumale and Bin Ladin. Second, 

64 The first FBI investigation on AIAI and al-Barakaat was started in San Diego in October 1996, on an 

individual investigated as a result of his connection with HAMAS. 
Terrorist Financing Staff Monograph 

71

the reporting indicated that al-Barakaat was associated with AIAI, in that al-Barakaat 

managed the finances of AIAI, and AIAI used al-Barakaat to send money to operatives. 

Variations of that reporting stated that the head of al-Barakaat, Jumale, was part of the 

AIAI leadership, or that Usama Bin Ladin used al-Barakaat to fund AIAI. Third, there 

were allegations that al-Barakaat actually assisted in procuring weapons for AIAI or sold 

weapons to AIAI. There were specific reports, for example, of al-Barakaat’s supplying 

Somalia’s Sharia court with 175 “technicals” and 33 machine guns between January and 

mid-July 2000, and AIAI with 780 machine guns, which it had procured from sources in 

China and Chechnya. Other reporting indicated that al-Barakaat was founded by 

members of the Muslim Brotherhood in order to facilitate the transfer of money to 

terrorist organizations, including Hamas and AIAI. 

Lastly, there was fairly detailed information from a U.S. embassy in Africa in July 1999. 

Two sources known to the embassy claimed that Usama Bin Ladin was a silent partner 

and frequent customer of al-Barakaat. One of the sources further related that Bin Ladin 

gave Jumale $1 million of venture capital to start al-Barakaat, and that terrorist funds 

were intermingled with the funds sent by NGOs. A third source told the embassy that alBarakaat did not practice any kind of due diligence in making financial transactions. Both 

sources claimed that al-Barakaat security forces supported Usama Bin Ladin by 

providing protection for Bin Ladin operatives when they visited Mogadishu. The 

embassy cautioned that the allegations could not be confirmed and noted the risk that the 

sources may simply be spreading negative information about their rivals. 

The Minneapolis FBI intelligence agent continued to develop sources and investigate the 

activities of the Somali community. By July 1999, he was able to open a “full field 

investigation” (FFI) into AIAI as a group. All FBI FFIs require predication: that is, some 

evidence must already exist to give the FBI reason to believe that an individual is 

involved in activities on behalf of a foreign government or terrorist organization, which 

would justify further surveillance or intelligence collection. This requirement, which 

prevents the FBI from undertaking random domestic intelligence collection on 

individuals, was introduced as a way to protect civil liberties. An FFI can be instituted 

after a preliminary investigation (PI), which is opened to determine whether an FFI is 

justified. A PI can be opened only for a limited time, and agents in a PI are restricted in 

their methods of collecting intelligence. 

When they opened the AIAI investigation, the Minneapolis agents saw it as “purely 

intelligence gathering.” They simply wanted to learn whether AIAI was operating in the 

United States and, if so, determine the nature of its activities (such as fund-raising,

logistics, or operations). There was no attempt to build a criminal case in the traditional 

sense, nor was any effort given to developing probable cause, the standard that criminal 

case agents typically work toward. They were interested in developing probable cause 

that specific individuals were agents of a foreign power or the particular communications 

were to be used in the furtherance of terrorist activities, the standard used to obtain a 

FISA warrant. 
National Commission on Terrorist Attacks Upon the United States 

72

Considering a Criminal Case 

The intelligence agent knew of the SARs and knew that al-Barakaat was closely tied into 

the Somali network in Minneapolis. Moreover, the intelligence agent knew what the 

federal criminal agents investigating the money-laundering claims did not: intelligence 

reports tied the al-Barakaat network to AIAI and Usama Bin Ladin. As a result, the 

intelligence agent thought that it would be useful to open a criminal case on al-Barakaat. 

This was a matter of some controversy, as there was a fairly rigid rule within the FBI and 

Department of Justice against mingling intelligence cases and law enforcement cases. In 

the jargon of the day, this prohibition was known as “the wall,” and it was the source of 

considerable confusion among agents in the field. Working-level agents understood that 

headquarters frowned on having simultaneous criminal and intelligence cases, although it 

was hard for them to articulate why. 

Opening a criminal case to complement the intelligence case would have several 

advantages, however, if the agent could get the approvals. First, criminal charges could 

be threatened against subjects, providing motivation for them to cooperate in furthering 

the intelligence investigations. Equally important, a criminal case would give the 

intelligence agent far better tools to investigate al-Barakaat and the suspected AIAI 

members in Minneapolis. These tools included grand jury subpoenas to obtain bank 

records. Grand jury subpoenas were far preferable to National Security Letters (NSLs), 

the method for obtaining documents in intelligence investigations, because the FBI could 

obtain subpoenas almost instantly, whereas NSLs took 6 to 12 months to be issued.65

Outside of the New York Field Office, which had its own procedures, NSLs could be 

approved only at FBI headquarters and had to be signed by a supervisor. 

Additionally, the intelligence agent wanted to brief the Assistant U.S. Attorney (AUSA), 

the local federal prosecutor in Minneapolis, on the intelligence investigation. He thought 

that it would be useful for the prosecutor to obtain an understanding of the context and 

motivation for the criminal case. From past experience the agent believed that the U.S. 

Attorney’s Office would not get involved in a criminal spin-off of an intelligence case 

unless FBI headquarters approved the transfer. And he also knew from past experience 

that because the potential criminal charges evident at that time were relatively minor, the 

U.S. Attorney’s Office would not be interested unless the prosecutors were briefed on alBarakaat’s terrorist connections.66 As a result, the agent applied for permission to brief 

the AUSA on the case. He did not receive this approval for 13 months—many months 

after the FBI Director himself took a personal interest in the case. 

The FBI Radical Fundamentalist Unit (RFU) at headquarters, responsible for approving 

this briefing, initially opposed it. The RFU did not see it as necessary and questioned 

whether the evidence was strong enough to justify breaching the wall between criminal 

65 According to the intelligence agent doing these types of investigations, this delay no longer exists, and 

NSLs can be obtained just as fast as grand jury subpoenas. 66 The most obvious crime was “structuring financial transactions.” The crime consists of breaking apart 

cash bank deposits into increments of less than $10,000, so that the bank does not file a form identifying 

such depositors to the Department of the Treasury. 
Terrorist Financing Staff Monograph 

73

and intelligence cases. At the time, FBI headquarters required greater evidence to brief 

the U.S. Attorney’s Office on an intelligence case than it did to open an intelligence full 

field investigation, and headquarters did not think the evidence regarding the AIAI case 

had reached the requisite level. In the Minneapolis intelligence agent’s view, 

headquarters viewed Minneapolis as excessively aggressive in pushing the limits of the 

wall and may have been more cautious in this case as a result. 

According to the Minneapolis intelligence agent, the RFU thought the case was not 

strong for a number of reasons. First, the RFU supervisor did not believe AIAI was a 

threat to the United States and questioned whether AIAI, with its decentralized command 

structure, was really a group at all. Moreover, AIAI had not been designated a foreign 

terrorist organization by the Secretary of State. This was a significant point because 

without that designation, it was not a crime to give AIAI material support (absent 

evidence that the support went to carrying out a specific terrorist attack). As for alBarakaat, the RFU thought that the information about connections with al Qaeda was 

dated; also, it pointed out, there was no evidence that any of the Somalis who used alBarakaat to remit funds did so with the intention of supporting terrorism. The agent 

agreed that all of these allegations remained unproven and required further investigation, 

but he wanted to brief the AUSA to obtain better tools to find out the truth.

While waiting for the approval to brief the AUSA, the Minneapolis intelligence agent 

came to learn of the IRS and U.S. Customs investigation, and in October 1999 he met 

with those involved. The FBI opened a criminal investigation in November 1999. The 

agents agreed to work together, along with the Immigration and Naturalization Service, to 

see whether they could make a criminal case. Multiagency cooperation has become 

common in large criminal investigations, as each agency brings its unique skills to bear: 

the FBI provides resources and investigative experience, the IRS has a reputation for very 

well trained and skilled financial investigators, Customs has the ability to control the 

borders, and INS brings to bear its authorities to enforce the immigration laws (critical to 

developing witnesses in investigations of this type). Moreover, a joint case makes 

possible information sharing, as each agent can search his or her own agency’s database 

and communicate the results to the group. 

Ultimately, following several meetings by officials in Washington, the Minneapolis FBI 

received approval to brief the AUSA in December 2000 on the connections between the 

criminal violations and the larger intelligence issues, which it did. It thereafter enjoyed an 

excellent relationship with the U.S. Attorney’s Office in Minneapolis. 

The strategy in the criminal case was to try to gather evidence and gain an understanding 

of where the money was going once al-Barakaat sent it, and thus to determine whether it 

was being used to support terrorism. The focus was on the employees and owners of the 

three al-Barakaat outlets in Minneapolis. Part of the mission of the criminal case would 

be to support the intelligence case. At the time, the investigators were “still trying to find 

out what we had.” The criminal FBI agent (the criminal case had to have a separate 

investigator because of “wall” issues, although both agents worked in the same 
National Commission on Terrorist Attacks Upon the United States 

74

intelligence squad) was looking more toward a “nickel-and-dime fraud case.” There did 

not seem to be enough evidence to make a pure terrorist-financing case.67

One difficulty was that it was almost impossible to follow the money once it left the 

United States. All of the transfers went to the UAE, and there the investigators lost the 

trail. To pick it up again, they would have to get records from the bank the money was 

being wired to—the Emirates Bank International in Dubai. But U.S. law enforcement 

could not simply ask the EBI for the records. Rather, the agents would have to ask the 

government of the UAE to ask the EBI for the records. Then, the UAE could turn the 

records over to the United States. Obtaining records from a foreign government is a long 

and cumbersome process, filled with potential pitfalls. To begin with, there is no 

guarantee that the foreign country will even consider the request, particularly in the 

absence of a treaty requiring such cooperation. Each country has its own notions about 

bank secrecy and many jurisdictions resist opening up their records to another country. 

Even if the foreign jurisdiction agrees in principle to the request, it must be persuaded 

that the United States has a legitimate need for the records and is not merely undertaking 

a fishing expedition. This showing may require the disclosure of sensitive information to 

a foreign government, and the United States may not necessarily be able to trust that 

government or have confidence in its control over the further dissemination of the 

information. Thus, an agent conducting such an investigation has to balance the need for 

the records against the possibility of disclosure. 

Al-Barakaat was moving significant amounts of money overseas, and to the Minneapolis 

criminal case agent, it seemed improbable that the relatively low-skilled Somali 

community in Minneapolis, although large, could have amassed so much money through 

legitimate wages. In early 2001, al-Barakaat was transferring as much as $1,000,000 

through its Minneapolis facilities. The agent believed that some of that money must have 

been derived from fraud. 

The Other Field Offices Pick Up the Investigation

In the meantime, other FBI field offices were finding similar al-Barakaat activity. By the 

summer of 1999, the FBI knew that there were al-Barakaat offices in San Diego, 

Washington, D.C., and Minneapolis, and Minneapolis was actively polling other cities to 

determine the links. Seattle opened a case in December 1999, and by February 2001 had 

developed a source who reported that “apparently” al-Barakaat fees were used to fund 

AIAI.68 The FBI field offices coordinated with each other, and ultimately held 

67 The central terrorist financing crime is called “material support,” in violation of 18 U.S.C. 2339B. This 

requires the knowing contribution of something of value (it need not be money) to an organization that has 

been listed as a Foreign Terrorist Organization by the Secretary of State. It is an extraordinarily broad 

statue, in that prosecutors need not trace specific money to a terrorist act. 

68 A review of the FBI files in the case revealed a substantial amount of secondary reporting. The most 

valuable intelligence is from first hand witnesses: individuals who can report something based on personal 

experience. There were few sources who could do this regarding al-Barakaat. Rather, most of what was 

collected was information that others had heard. The line between intelligence and rumor mongering can be 

quite thin, and great care needed to be taken to evaluate that information for what it was. 
Terrorist Financing Staff Monograph 

75

multidistrict meetings in April 2000 and May and June 2001. Unlike in other cases, 

however, there was very little to coordinate: each al-Barakaat office appeared to be 

operating independently, with the EBI account in the UAE serving as the only link 

between them. By 9/11, there were FBI investigations in Charlotte, Cincinnati, New 

York, Seattle, San Diego, and Washington, D.C. 

Al-Barakaat also had attracted the attention of the Financial Crimes Enforcement 

Network (FinCEN), the Treasury agency established to review and disseminate 

suspicious activity reports submitted by banks and other financial institutions. In 

December 1999 (about four months after the FBI was reporting that al-Barakaat had ties 

to Bin Ladin and offices in at least three U.S. cities), a FinCEN analyst reviewing 

intelligence community cables noted a reference to al-Barakaat along with the 

identification of a specific account in the UAE. The analyst recalled that a co-worker the 

previous month had noted an anomaly in reviewing al-Barakaat SARs. FinCEN analyzed 

the al-Barakaat SARs and, in February 2000, briefed FBI headquarters concerning the 

results. By March 2000, FinCEN had prepared a report and link-analysis chart 

highlighting the connections between the al-Barakaat entities and the UAE accounts. 

Still, no one knew the purpose behind the money transfers, the source of the money, or 

the ultimate destination. To get to the source, the agents would have to locate informants 

in the community who could tell them; to understand the ultimate destination of the 

money, they would need access to the records within the UAE. 

The FBI had a number of informants who could tell them about al-Barakaat. The criminal 

case agent, in the course of the criminal investigation, had found two confidential sources 

who were reporting that al-Barakaat was siphoning money to AIAI. The sources also 

indicated that to be an al-Barakaat representative, one also had to be a member of AIAI. 

But the criminal case agent’s sources had no direct knowledge of these claims; they were 

simply repeating what was purportedly common knowledge within the Somali 

community.

In conjunction with members of the intelligence community, the intelligence agent also 

worked two sources who could speak out of personal knowledge. These sources were 

able to travel and provide intelligence on AIAI and the situation in East Africa. His 

sources claimed direct contact with senior al-Barakaat management. Much of the 

reporting, however, concerned AIAI in Somalia; there was less on the local AIAI cells 

within the United States, or on the relationship of al-Barakaat to either AIAI or Usama 

Bin Ladin. 

Nevertheless, the statements of these two sources did corroborate information regarding 

the relationship between al-Barakaat, al Qaeda, and AIAI. The sources contended that at 

the direction of senior management, al-Barakaat funneled a percentage of its profits to 

terrorist groups and that UBL had provided venture capital to al-Barakaat founder Ahmed 

Jumale to start the company. The agent believed these sources, because they had been 

vetted and the information they were providing was consistent with intelligence he had 

previously received. Moreover, the intelligence agent believed that relationship of these 
National Commission on Terrorist Attacks Upon the United States 

76

sources to al-Barakaat management was such that the sources would have firsthand 

knowledge of al-Barakaat’s activities. 

The September 11 attacks 

After the attacks, “all bets were off.” The al-Barakaat criminal team—the FBI, U.S. 

Customs, and the IRS—which had been working in separate offices received space to 

work together. More agents were assigned. Moreover, they contemplated bringing 

criminal charges, and considered getting criminal search warrants on the al-Barakaat 

businesses. The headquarters of both FBI and Customs, too, started to take a special 

interest in the case. FBI headquarters had set up a “financial review group” to sift through 

the financial transactions of the 9/11 hijackers. It started to look at the al-Barakaat case, 

as did “Operation Green Quest,” a newly formed Treasury task force with essentially the 

same mission as the FBI’s group. 

Moreover, within the upper levels of the National Security Council (NSC) and State, 

attention turned to al-Barakaat, and specifically to the EBI as a facilitator of terrorist 

finance. According to State Department cables at the time, the U.S. government had 

“strong evidence” that the EBI was used as a facilitator of terrorist financing. An obvious 

option would be to designate the bank as a supporter of terrorism and block its assets 

from coming into the country, a move that would send a message to the world financial 

community. The UAE agreed to act against al-Barakaat and allowed a U.S. law 

enforcement team to take a look at the EBI records—something none of the agents in 

either the intelligence or the law enforcement investigations had been able to access 

previously.69

Designation by the Office of Foreign Asset Control

On September 23, 2001, the President signed Executive Order 13224, which expanded 

the list of terrorist organizations subject to freezing and blocking.

Pre-9/11 designation efforts 

The mission and authorities of the Office of Foreign Asset Control (OFAC) deserve a 

brief discussion here. In implementing sanctions programs aimed at combating global 

terrorism, OFAC derives its authority from delegations under the President’s powers 

pursuant to the International Emergency Economic Powers Act (IEEPA) and other 

Presidential authorities. IEEPA grants the President broad powers to deal with any 

unusual and extraordinary threat to the national security, foreign policy, or the economy 

of the United States if the President declares a national emergency with respect to such 

threat. The source of the threat must be in whole or substantial part outside the United 

69 As we note in chapter 3, the UAE had been a source of concern before 9/11 for their largely unregulated 

financial system. 
Terrorist Financing Staff Monograph 

77

States. The President may also designate specific entities or individuals who pose or 

contribute to the threat and set forth the standards for identifying more such entities and 

individuals. The President delegates to the Executive Branch, generally the Department 

of Treasury or State, the task of finding those who meet that criteria and “designating” 

them as subject to the Executive order. 

President Bill Clinton signed Executive Order 12947 in January 1995, blocking the assets 

in the United States of specific terrorists and terrorist groups who threatened to use force 

to disrupt the Middle East peace process and prohibiting U.S. persons from engaging in 

transactions with these groups. The groups were named as a result of a presidential 

judgment that they stood in the way of peace in the Middle East and, because peace in the 

Middle East is deemed to be vital to our own national security, posed a national security 

threat to the United States. The authority was not limited to those named in the executive 

order; those supporting or associated with those named could also be listed by an 

administrative designation authorized by the director of OFAC (a “secondary 

designation”). Usama Bin Ladin was not named on this 1995 list. However, beginning in 

approximately 1995 until the East Africa embassy bombings in the summer of 1998, 

OFAC attempted to discover a link between Usama Bin Ladin and those named on the 

list. This effort was not successful, both because the links between Usama Bin Ladin and 

such groups were tenuous and because OFAC did not have the ability to undertake any 

significant classified research or analysis.70 In the late 1990s, there was no thought given 

to issuing a new executive order naming Bin Ladin, because of what one participant in 

the process described as “sanctions fatigue” and a general reluctance by Treasury 

policymakers to impose additional sanctions. 

The NSC had a long and deep interest in trying to provide OFAC with sufficient 

resources to conduct classified all-source analysis on terrorist financing. At the direction 

of Richard Clarke, the Office of Management and Budget requested, and Congress 

appropriated, $6.4 million dollars for a center to conduct such analysis, dubbed the 

Foreign Terrorist Asset Tracking Center (FTATC), beginning in fiscal year 2001 

(nominally October 2000). By November 2000, Clarke had suggested a two-week pilot 

program, which would use CIA facilities to test if the FTATC concept was workable. On 

the eve of 9/11, FTATC was little more than a plan on paper and an unspent budget 

authorization.

After the East Africa bombings, President Clinton amended E.O. 12947 to name Usama 

Bin Ladin and his key aides, thereby prohibiting any U.S. persons from financial dealings 

with any of them. But the OFAC’s success in blocking terrorist assets under this order 

was limited, for it covers only property or interests in of U.S. persons or within the 

United States. Moreover, because it named individuals, not groups, OFAC could not 

build on it with secondary designations—a listing by the head of OFAC of individuals 

70 This was a significant problem both before and after the September 11 attacks. OFAC line level analysts 

were nearly universal in their frustration in not being able to engage in the type of all source analysis that 

would be required to understand the financial links involved. One analyst with a background in intelligence 

described the process by which OFAC obtained classified documents as 20 years behind the procedure used 

by the CIA. 
National Commission on Terrorist Attacks Upon the United States 

78

supporting the group named in the executive order. In addition, there was little 

intelligence on assets to block. These limitations were sources of frustration for the NSC, 

which wanted action on the financial front of the government’s war on Bin Ladin. In 

retrospect, one OFAC official thought that the reason it was unable to freeze Bin Ladin 

assets is because none existed within OFAC’s jurisdiction. 

The United Nations Security Council passed UNSCR 1267 on October 15, 1999, calling 

for the Taliban to surrender Bin Ladin or face a U.S.-style international freeze of its 

assets and transactions. The resolution gave a 30-day period before sanctions took effect, 

however, allowing the Taliban and al Qaeda to repatriate funds from banks in the United 

Kingdom and Germany to Afghanistan. As a result, these sanctions brought official 

international censure but were easily circumvented. 

Post-9/11 designation efforts 

After the 9/11 attacks, the President signed Executive Order 13224 with great fanfare (the 

White House described it as the “first strike in the war on terror”), but since OFAC 

already had the ability to go after Bin Ladin and Taliban assets from the prior executive 

orders, it did little to change OFAC’s authorities to name, block, and freeze assets 

associated with Usama Bin Ladin or the Taliban. After the attacks, OFAC accelerated the 

search for entities to name by either a presidential declaration (by amending the list 

attached to E.O. 13224) or a secondary administrative designation, working off a CIAsupplied list of entities and persons. OFAC analysts and attorneys, like everyone in the 

government engaged in counterterrorism at the time, were working nights and weekends 

to evaluate and put together administrative records sufficient to freeze the assets of these 

entities. A significant number of these individuals needed access to classified 

information, but they had virtually no facilities in which to handle it. As a result, a 

number of them crammed into the secure FinCEN facility in Northern Virginia that, 

unlike OFAC’s downtown offices, could handle the most highly sensitive materials. 

OFAC analysts started working on the designation of al-Barakaat about two weeks after 

the attacks. This effort won preliminary approval almost immediately from Treasury 

officials, on the basis of a one-page memo. Thereafter, OFAC officials began a twopronged approach to supporting the designation: gathering information informally 

through an OFAC analyst’s contacts with U.S. law enforcement, and conducting research 

on classified documents at FinCEN’s secure facility. The informal method for gathering 

law enforcement data was necessary because of the weaknesses of the FBI’s data system. 

The FBI, unlike the foreign intelligence agencies, wrote very few finished intelligence 

reports. The only way to find out what was happening domestically was either to troll the 

FBI’s data system, ACS (Automated Case Support), for periodic reports (a hit-or-miss 

proposition at best) or call field agents and ask them what was going on (if you knew 

whom to call). The analysts’ efforts to survey the foreign intelligence were easier because 

the reports were more centralized, but had other frustrations: because of Treasury’s 

archaic method of retrieving intelligence, the analysts received only about half of the 

relevant intelligence on Jumale and al-Barakaat, and the omitted material included some 
Terrorist Financing Staff Monograph 

79

of the best, most useful reports (a fact that was not known to the analysts until after the 

designation).

Nevertheless, the OFAC analysts plowed forward and put together a package on alBarakaat. They were greatly helped by a list of worldwide al-Barakaat offices seized 

during a raid of an al-Barakaat office in Norway and shared with the United States. The 

analysts were told that they did not need to have evidence that each al-Barakaat entity 

took part in terrorist financing; it was sufficient to show only that the main entity itself 

was involved to be able to close all of the branches and freeze all of the money. Thus, the 

analysts needed only to refer to the seized telephone lists or a commercial index of 

businesses such as Dun & Bradstreet to justify the closing of each al-Barakaat branch 

office. The Justice Department, which would have to defend any action should there be a 

legal challenge, blessed the sufficiency of this tactic. 

More nationwide coordination took place, including meetings at the NSC, the FBI, and 

Customs. As people within the law enforcement community came to understand what 

OFAC was planning, they asked it to hold off for 60 or 90 days so they could continue 

their investigations. A number of field offices made this request, as did the Office of 

Naval Intelligence, which was in the midst of a major intelligence operation on alBarakaat. OFAC, however, was under substantial pressure to proceed with the 

designation as rapidly as possible. The analysts also wanted more time to make their 

evidentiary package more complete and robust, but the OFAC management, apparently 

reacting to external demands, told them they could not have it. Moreover, the head of the 

FBI’s terrorist-financing effort ultimately concurred in the action. 

The post-9/11 period at OFAC was “chaos.” The goal set at the policy levels of the White 

House and Treasury was to conduct a public and aggressive series of designations to 

show the world community and our allies that the United States was serious about 

pursuing the financial targets. It entailed a major designation every four weeks, 

accompanied by derivative designations throughout the month. As a result, Treasury 

officials acknowledged that some of the evidentiary foundations for the early 

designations were quite weak. One participant (and an advocate of the designation 

process generally) stated that “we were so forward leaning we almost fell on our face.” 

The rush to designate came primarily from the NSC and gave pause to many in the 

government. Some believed that the government’s haste in this area, and its preference 

for IEEPA sanctions, might result in a high level of false designations that would 

ultimately jeopardize the United States’ ability to persuade other countries to designate 

groups as terrorist organizations. Ultimately, as we discuss later, this proved to be the 

case with the al-Barakaat designations, mainly because they relied on a derivative 

designation theory, in which no direct proof of culpability was needed. 

A range of key countries were notified several days in advance of the planned U.S. 

designation of the al-Barakaat entities, and were urged to freeze related assets pursuant to 

the own authorities.
National Commission on Terrorist Attacks Upon the United States 

80

The November Raids 

On November 7, 2001, federal agents entered eight al-Barakaat offices in Minneapolis; 

Columbus, Ohio; Alexandria, Virginia; Seattle, Washington; and Boston, Massachusetts. 

Using Treasury Department private contractors who handle asset forfeiture, OFAC and 

federal agents seized everything with the businesses. In the UAE, about $1 million was 

seized from the UAE EBI accounts, four offices were raided and their records seized, and 

Jumale was ordered not to leave the UAE. The U.S. actions resulted in the freezing of 

approximately $1.1 million, and Treasury claimed that the actions disrupted 

approximately $65 million in annual remittances from the United States alone. 

The President of the United States traveled to FinCEN’s offices and, with the Secretary 

of the Treasury and Attorney General, announced the action in a press event, describing 

Jumale as a “friend and supporter of Usama Bin Ladin.” Secretary of the Treasury Paul 

O’Neill described al-Barakaat offices as “the money movers, the quartermasters of terror 

. . . a principal source of funding, intelligence and money transfers for Bin Ladin.” He 

later announced that “we estimate that $25 million was skimmed from the al-Barakaat 

network of companies each year, and re-directed toward terrorist operations.”

Abdullahi Farah was the owner of Global Services, one of the Minneapolis wire 

remittance companies named in the November 7, 2001 blocking order. He is a naturalized 

U.S. citizen, having emigrated from Somalia in 1992. Although there already were 

money remitters in Minneapolis at the time, Farah believed that there was still a need for 

his services in the Somali community. Farah previously had been a customer of alBarakaat and had dealt with the al-Barakaat business representative for North America. 

After having applied for a license and after establishing a formal business relationship 

with al-Barakaat, Farah opened his operation. He claims that he never met Jumale and 

had only an arm’s-length business relationship with al-Barakaat. While the business was 

cyclical, with more money being transmitted during Ramadan, Farah generally 

transmitted about $200,000 per month. He banked at the local Norwest Bank, where he 

would deposit cash from his customers and then wire aggregate amounts to al-Barakaat’s 

central office in the UAE. Farah made approximately $1,200 per month from this 

business, and paid another employee about the same. 

Farah’s first interaction with the federal government with regard to his business occurred 

on November 7, 2001, when armed agents entered and seized his business, confiscated all 

his records and his office equipment, and put a seal on the door preventing reentry. His 

three business accounts, containing approximately $298,000 of his customers’ money, 

were frozen, making it impossible for him to send that money forward on their behalf. 

The name of his company was placed on the U.S. and UN lists as a supporter of 

terrorism. 

The money that his customers, primarily Somali immigrants, had entrusted to Farah was 

not delivered to the intended recipients; his customers were angry and suspicious and did 

not accept his explanations as to what had become of it. Most of his customers simply did 

not believe that the U.S. government could do such a thing. For many Somalis, the 
Terrorist Financing Staff Monograph 

81

blocked money represented their life savings and an economic lifeline to an impoverished 

country. The United Nations estimated that the freeze cut the remittances to Somalia in 

half.

Another of the Minneapolis money remitters, Garad Nor (also a U.S. citizen), had a 

considerably bigger problem. On November 30, 2001, both Nor and his business were 

publicly designated as a supporter of terrorist as a consequence of running a moneyremitting company. The net effect of that designation was that no one in the United States 

could engage in any financial transactions with him. Not only could he not work but, in 

the words of his lawyer, “the guy couldn’t buy a cup of coffee” without violating the 

OFAC blocking order. On April 26, 2002, after he filed suit against the United States, 

OFAC issued a license to Nor to allow him to get sufficient money to live. As a result, for 

five months Nor, a U.S. citizen, faced the unenviable choice of starving or being in 

criminal violation of the OFAC blocking order. 

The Effect of the al-Barakaat Seizures 

Al-Barakaat offices were closed in the United States, the UAE, Djibouti, and Ethiopia. 

Before the action against al-Barakaat, the CIA surmised that AIAI would easily move to 

other financial institutions in the event that al-Barakaat was shut down. It also understood 

that the loss of money from al-Barakaat would only temporarily disrupt AIAI, which had 

other revenue sources. Early intelligence reporting after the freeze indicated that AIAI 

came under financial pressure because of the closure of al-Barakaat, but moved quickly 

to develop alternative funding mechanisms. There was no analysis of whether that 

pressure was the natural result of the closing of the country’s largest conduit of funds or 

was due particularly to al-Barakaat’s alleged complicity in funding AIAI. Al-Barakaat 

ultimately moved its offices to other locations in Dubai and Somalia and changed its 

name. Moreover, AIAI was able to move money through alternative means. Even as 

early as mid-November 2001, the CIA judged the Islamic terrorist-funding networks to 

be “robust,” indicating that most Sunni-based Islamic terrorist funding went through 

interlocking Islamic NGOs and financial entities in the Gulf region. To this day, the 

Commission staff has uncovered no evidence that closing the al-Barakaat network hurt al 

Qaeda financially.

U.S. Investigators Travel to the UAE

As OFAC continued to gather support for designations, or designation packages, plans 

were made to send a team of investigative agents to the UAE to look at records seized 

from the al-Barakaat offices as well as the al-Barakaat bank records at the EBI. The 

investigators moved into the main conference room of the UAE’s central bank and were 

supplied with thousands of pages of documents culled from ten accounts held by alBarakaat. They were able to take back to the United States for further analysis about 

7,000 pages of documents from this trip. The investigators obtained unparalleled access 

and support (unparalleled even in the United States, where criminal investigators do not 

typically work closely with the central bank regulators). However, the size and 

complexity of this investigation of a worldwide financial network, responsible for 
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82

moving millions of dollars, required a follow-up trip in March 2002. In the United States, 

a financial investigation can take years before investigators understand the intricate 

financial transactions involved. 

Before the second trip, the agent spearheading the effort for the FBI reviewed the OFAC 

designation package for al-Barakaat and noticed some discrepancies between it and the 

evidence obtained on the first UAE trip. His review left him with a number of significant 

factual questions concerning what he thought to be uncorroborated allegations of alBarakaat’s ties to al Qaeda and AIAI. For example, the designation package described 

Jumale as an associate of Usama Bin Ladin from the original Afghanistan jihad, who was 

expelled from Saudi Arabia and then moved to Sudan, and who currently lives in Kenya. 

However, the documentation obtained from the first UAE trip, including Jumale’s 

passport, did not support that intelligence. In addition, a number of EBI accounts that had 

been frozen did not appear, from the records obtained and analyzed, to be associated with 

al-Barakaat at all. Overall, the agent believed that much of the evidence for al-Barakaat’s 

terrorist ties rested on unsubstantiated and uncorroborated statements of domestic FBI 

sources.

The second U.S. delegation to the UAE enjoyed a level of cooperation similar to that of 

the first. The UAE Central Bank placed 15 people at the investigative team’s beck and 

call. The UAE government did everything the U.S. team requested, including working all 

night at times to make copies of documents. Jumale was interviewed by U.S. federal 

agents twice, the first time for ten hours. The U.S. investigative team interviewed 23 

individuals (including Jumale), other top al-Barakaat personnel, its outside accountant, 

and various UAE banking officials. They also reviewed approximately 2 million pages of 

records, including the actual EBI bank records.

To review some records, the U.S. government team worked where the records were 

maintained: in un-air-conditioned warehouses in the desert, in stifling 135-degree heat. 

The agents found that the bank maintained the same kind of records as one would find in 

the United States and that they were relatively complete, well-organized, and wellpreserved. In fact, it appeared to the agent that the records extended far into the past; 

UAE banks apparently did not systematically destroy older records, as U.S. financial 

institutions commonly do. Constraints of time and resources prevented the agents from 

conducting a comprehensive audit of all the records. Instead, they focused on key persons 

and entities, looked for suspicious transactions, and selected certain dates as 

representative samples for detailed analysis. On this second trip, the U.S. team brought 

copies of about 10,000 pages back to the United States for further analysis. Additionally, 

the FBI was able to make mirror images of data from dozens of the al-Barakaat and EBI 

computers for further analysis. 

No Direct Evidence That al-Barakaat Funded Terrorism 

The FBI agent who led the second U.S. delegation said diligent investigation in the UAE 

revealed no “smoking gun” evidence—either testimonial or documentary—showing that 

al-Barakaat was funding AIAI or al Qaeda. In fact, the U.S. team could find no direct 
Terrorist Financing Staff Monograph 

83

evidence at all of any real link between al-Barakaat and terrorism of any type. The two 

major claims, that Bin Ladin was an early investor in al-Barakaat and that al-Barakaat 

diverted a certain portion of the money through its system to AIAI or al Qaeda, could not 

be verified. Jumale and all the al-Barakaat witnesses denied any ties to al Qaeda or AIAI, 

and none of the financial evidence the investigators examined directly contradicted these 

claims. Moreover, some of the claims made by the early intelligence, such as the 

assertion that Jumale and Bin Ladin were in Afghanistan together, proved to be wrong. In 

additional, it appeared that the volume of money was significantly overstated. Secretary 

O’Neill, in his announcement of the al-Barakaat action, had estimated that al-Barakaat 

had skimmed $25 million per year and redirected it toward terrorist operations. The 

agents found that the profits for all of al-Barakaat (from which this money would have to 

come) totaled only about $700,000 per year, and could not conclude whether any of that 

money had been skimmed. 

Although the U.S. team could not find evidence of terrorist financing, they did identify 

several inexplicable anomalies in the evidence. For example, the team’s review of 

documents revealed several suspicious transactions that Jumale could not adequately 

explain. Specifically, two NGOs made a number of unusually large deposits into the 

account of a Kuwaiti charity official over which Jumale had power of attorney. The funds 

were then moved out of the account in cash. When asked to explain the transactions, 

Jumale claimed that the money was deposited for use in Somalia. After the deposit, the 

charity would direct Jumale to send cash from those accounts to Somalia for charitable or 

religious purposes, such as building a mosque. Because the funds were sent as cash, no 

other records existed. 

The FBI thought this explanation suspicious, as it was inconsistent with Jumale’s normal 

business practices. Although the cash nature of the transactions may have been 

necessitated by the state of the financial system in Somalia—given the absence of 

financial institutions there, sending cash may have been the best way to build a mosque—

al-Barakaat had a bank in Somalia to which the funds for charitable use could have been 

sent. However, the agents could draw only suspicions and no conclusions from these 

transactions. The money transfers might have involved terrorism, they might have 

represented the proceeds of another kind of crime, or they might have been nothing at all. 

There was just no way to tell. 

At the conclusion of the trip, the agent spearheading the FBI portion of the trip drafted a 

memorandum, to be distributed to the UAE officials, describing the conclusion the team 

had reached: 

It has been alleged that the Barakaat Group of Companies were 

assisting, sponsoring, or providing financial, material, or other 

services in support of known terrorist organizations. Media and U.S. 

law enforcement reports have linked al-Barakaat companies and its 

principle manager, Ahmed Nur Ali Jumale, to Usama bin Ladin and 

bin Ladin’s efforts to fund terrorist activities. However, this 

information is generally not firsthand information or it has not been 
National Commission on Terrorist Attacks Upon the United States 

84

corroborated by documentary or other circumstantial evidence that 

supports the allegation. For example, it has been reported that it is 

common knowledge in the United States–based Somali community 

that Al Barakaat is a money laundering operation backed by bin 

Ladin. It has also been reported that bin Ladin provided Mr. Jumale 

the initial financing to start the Al Barakaat businesses. At this time, 

these items of information have not been substantiated through 

investigative means. (emphasis added) 

Thus, notwithstanding the unprecedented cooperation by the UAE, significant FBI 

interviews of the principal players involved in al-Barakaat (including its founder), and 

complete and unfettered access to al-Barakaat’s financial records, the FBI could not 

substantiate any links between al-Barakaat and terrorism. 

OFAC analysts hotly contest this conclusion, and insist that their designation was based 

on solid intelligence. The FBI’s conclusions, they argue, reflect a profound 

misunderstanding of the case, and ignore certain pieces of intelligence. 71 At the very 

least, the OFAC officials contend, there is credible evidence that al-Barakaat was a 

money-laundering group, responsible for millions in U.S. currency being laundered 

through the United States, to an account in the UAE, and then out to suspect third-party 

countries. Additionally, they point to documents yet to be translated, as well as records 

from the hard drives of al-Barakaat, in the FBI’s possession and yet to be analyzed. At 

this writing, neither the FBI nor OFAC is attempting to continue to investigate this case.

Delisting Designated Entities and Concluding the Case

Other countries who had joined in the international designation of al-Barakaat were 

voicing real concern by early 2002. Their concern stemmed in part from a difference in 

how each country set up its terror-financing designation scheme. In the United States, for 

example, the power to designate derives from the executive’s power to wage war against 

foreign enemies. As a result, the executive may rely on less evidence than is required in a 

criminal or even civil trial. The judicial review that is afforded a designation is extremely 

deferential to the executive’s judgment. In other countries, a designation is viewed as a 

judicial or quasi-judicial act, in which the accused is afforded a right to answer the 

charges and the standard of evidence is at least as high as would be needed to sustain a 

civil lawsuit. 

In January 2002, three Swedish citizens of Somali origin who were listed in the original 

al-Barakaat designation petitioned OFAC and the United Nations for removal from the 

list. Sweden, although not a member of the UN Security Council, sought to have the 

Council adopt a criminal evidentiary standard prior to placing anyone on the sanctions 

list. The Canadians, similarly, moved to take one of its own citizens off the UN list. All 

71 Intelligence community sources have informed Commission staff that the intelligence sources for much 

of the reporting regarding al-Barakaat’s connection to al Qaeda have since been terminated by the relevant 

agency as intelligence sources, based on concerns of fabrication. 
Terrorist Financing Staff Monograph 

85

of the UN designations to that point had come at the suggestion of the United States, and 

the Swedish proposal could have required the removal of either most or all of the names 

on the list. The State Department sent demarches to all Security Council member 

nations, urging “in the strongest terms” that they oppose Swedish effort. 

Meanwhile, in Minneapolis, Abdullahi Farah and Garad Nor were trying to resolve their 

cases and working toward getting their money unfrozen. They hired a lawyer, who made 

both men available for interviews with the U.S. Attorney’s Office and federal agents 

concerning their involvement in al-Barakaat.72 The lawyer contacted OFAC to try to 

resolve the case; for months the calls were unreturned and neither of his clients was told 

of the evidentiary basis of the freezing actions. Finally, in April 2002, Farah and Nor 

filed suit against the government, alleging that the OFAC action deprived them of their 

constitutional rights. 

In response to the lawsuits and the concerns of our allies, and in order to forestall more 

drastic action, the United States moved to develop a delisting process for those who 

claimed that they were designated incorrectly. At the time, there was no procedure to 

delist, either at the United Nations or at OFAC. Ultimately, the Policy Coordinating 

Committee decided on a set of standards to use. Treasury Under Secretary Jimmy Gurule 

went to the UN in the spring of 2002 and presented a whitepaper on delisting, which 

included a requirement for an attestation that the individual had severed the link with the 

tainted organization and a commitment not to associate with terrorist-related entities 

again. The goal was to force behavior changes and to have an orderly process based on 

principles, as opposed to requests for delistings based on the “inconvenience” or dislike 

of the designations regime. 

The OFAC analysts were then required to go back and justify their designations of the 

three Swedes and the U.S. al-Barakaat entities and individuals. For the original listing, 

the analysts were required to show only that the individual entities were part of the 

overall al-Barakaat operation, which they could do through commercial directories such 

as the Dun & Bradstreet registry, as well as the list that had been seized in Norway. In the 

spring and summer of 2002, however, the analysts were tasked to show that each alBarakaat individual was involved in the funding of terrorism, rather than that he or she 

simply belonged to an entity that, overall, supported terrorism. There was no such 

evidence, although OFAC analysts complained of not having sufficient access to 

classified information, as well as being denied information held by the FBI.73

72 Farah was interviewed, but the US Attorney’s Office never arranged to interview Nor. 73 The analysts were hampered in the fact that they did not have access to the records seized in the 

November raids. While those records were seized under OFAC authority, it was limited only to seizing and 

retaining them. In order to exploit them for evidentiary purposes, the FBI was able to execute a search 

warrant, which was then served on OFAC as custodian of the records. Those records were imaged and 

made available to the criminal agents and the U.S. Attorney’s Office. According to the OFAC analysts, the 

FBI, perhaps burned by what they considered a premature designation, never shared a copy of the seized 

records with them. 
National Commission on Terrorist Attacks Upon the United States 

86

On August 27, 2002, OFAC removed the U.S.-based money remitters in Minneapolis and 

Columbus, Ohio, as well as two of the three74 Somali Swedes, from its list of designated 

entities. Abdullahi Farah, the Minneapolis money remitter, signed an affidavit stating that 

he had severed all ties with al-Barakaat, and received his money back. Throughout the 

litigation, Nor had maintained that he was unassociated with al-Barakaat, and signed an 

affidavit to that effect. He, too, received his money back. 

The federal agents working on the al-Barakaat criminal investigation in Minneapolis 

spent hundreds of hours reviewing financial records and interviewing witnesses. Despite 

this effort, their attempt to make a criminal case simply had no traction. Ultimately, 

prosecutors were unable to file charges against any of the al-Barakaat participants, with 

the exception of one of the customers in Minneapolis who was charged with low-level 

welfare fraud. The FBI supervisor on the criminal case, deciding that their efforts could 

be better spent elsewhere, closed their investigation. 

74 The third was found to have made false statements to the investigating agents and on his application for 

removal from the list. 
Terrorist Financing Staff Monograph 

87

Chapter 6

The Illinois Charities Case Study 

Two Illinois-based charities, the Global Relief Foundation (GRF) and the Benevolence 

International Foundation (BIF), were publicly accused by the federal government shortly 

after 9/11 of providing financial support to al Qaeda and international terrorism. The FBI 

had already been investigating both GRF and BIF for several years, but only after 9/11 

did the government move to shut down these organizations and stop their flow of funds 

overseas.75

Introduction 

GRF, a nonprofit organization ostensibly devoted to providing humanitarian aid to the 

needy, with operations in 25 countries around the world, raised millions of dollars in the 

United States in support of its mission. U.S. investigators have long believed that GRF 

was devoting a significant percentage of the funds it raised to support Islamic extremist 

causes and jihadists with substantial links to international terrorist groups, including al 

Qaeda, and the FBI had a very active investigation under way by the time of 9/11. BIF, a 

nonprofit organization with offices in at least 10 countries around the world, raised 

millions of dollars in the United States, much of which it distributed throughout the world 

for purposes of humanitarian aid. As in the case of GRF, the U.S. government believed 

BIF had substantial connections to terrorist groups, including al Qaeda, and was sending 

a substantial percentage of its funds to support the international jihadist movement. BIF 

was also the subject of an active investigation by 9/11.

After 9/11, the Office of Foreign Assets Control (OFAC) froze both charities’ assets, 

effectively putting them out of business. The FBI opened a criminal investigation of both 

charities, ultimately resulting in the conviction of the leader of BIF for non-terrorismrelated charges. The Immigration and Naturalization Service (INS) detained and 

ultimately deported a major GRF fund-raiser. No criminal charges have been filed against 

GRF or its personnel, as of this writing. 

The cases of BIF and GRF illustrate the U.S. government’s approach to terrorist fundraising in the United States before 9/11 and how that approach dramatically changed after 

the terrorist attacks, moving from a strategy of merely investigating and monitoring 

terrorist financing to one of active disruption through criminal prosecution and the use of 

its powers under the International Emergency Economic Powers Act (IEEPA) to block 

the assets of suspect entities in the United States. Although effective in shutting down its 

75 This chapter is based on interviews with many participants, including FBI agents and supervisors, OFAC 

personnel, representatives of BIF and GRF, as well as other witnesses, extensive review of 

contemporaneous documents, both classified and unclassified, from a variety of agencies, and the court 

filings and judicial opinions from litigation concerning BIF and GRF. 
National Commission on Terrorist Attacks Upon the United States 

88

targets, this aggressive approach raises potential civil liberties concerns. The BIF and 

GRF investigations also highlight two fundamental issues that span all aspects of the 

government’s efforts to combat al Qaeda financing: the difference between seeing “links” 

to terrorists and proving the funding of terrorists, and the problem of defining the 

threshold of information necessary to take disruptive action. 

FBI Investigations of BIF and GRF before 9/11 

Contrary to a common misconception, the FBI did not ignore terrorist financing before 

9/11. The intelligence side of the FBI gathered extensive information on terrorist fundraising in the United States, although the Bureau lacked any strategy for disrupting the 

activity. In various field offices around the country, street agents actively investigated 

groups and individuals, including GRF and BIF, suspected of raising funds for al Qaeda 

or other extremist groups. Working in the face of many obstacles, including what agents 

believed to be a dysfunctional FISA (Foreign Intelligence Surveillance Act) process, 

these agents aggressively gathered information and tried to coordinate with other field 

offices, the intelligence community, and even foreign governments. The FBI lacked a 

headquarters unit that focused on terrorist financing before 9/11, however, and also 

lacked a coherent national approach to tackling the problem. As Assistant Director, 

Counterterrorism John Pistole testified, “there did not exist within the FBI a mechanism 

to ensure appropriate focus on terrorist finance issues and provide the necessary expertise 

and overall coordination to comprehensively address these matters.”76

Origins of GRF 

GRF was incorporated in Bridgeview, Illinois, in 1992. According to the U.S. 

government, GRF’s founders had previously been affiliated with the Mektab al Khidmat 

(MAK) or “Human Services Office,” cofounded by Abdullah Azzam and Usama Bin 

Ladin in the 1980s to recruit and support mujahideen to fight against the Soviets in 

Afghanistan. MAK funneled money and fighters to the mujahideen and set up a network 

of recruiting offices around the world, including in the United States. The U.S. 

government has called MAK the “precursor organization to al Qaeda.”77 One offshoot of 

MAK in the United States, the Al Khifa Refugee Center in Brooklyn, facilitated the 

movement of jihadist fighters in and out of Afghanistan. After the defeat of the Soviets, 

MAK and Al Kifah continued the mission of supporting jihadist fighters throughout the 

world. According to the U.S. government, a number of the persons convicted in the first 

World Trade Center bombing were associated with the Al Khifa Refugee Center, as was 

Sheikh Omar Abdel Rahman, the “Blind Sheikh,” who is now serving a life sentence for 

his role in the foiled plan to bomb New York City tunnels and landmarks. President 

76 J. Pistole, July 31, 2003, Prepared Testimony, Senate Governmental Affairs Committee. 77 Treasury Department Statement Regarding the Designation of the Global Relief Foundation, October 18, 

2002 (Treasury GRF Statement). 
Terrorist Financing Staff Monograph 

89

George W. Bush designated MAK/Al Khifa a specially designated global terrorist in the 

original annex to Executive Order 13224 on September 23, 2001. 

GRF described itself as a nongovernmental organization (NGO) that provided 

humanitarian relief aid to Muslims through overseas offices around the world, especially 

in strife-torn regions such as Bosnia, Kashmir, Afghanistan, Lebanon, and Chechnya. 

GRF began operating with $700,000 in cash. By 2000, it reported more than $5 million in 

annual contributions. According to its Internal Revenue Service (IRS) filings, GRF sent 

90 percent of its donations abroad between 1994 and 2000.78 GRF’s numerous offices 

overseas received their own contributions in addition to what they received from the U.S. 

operation.

The FBI investigation of GRF before 9/11 

 

GRF came to the attention of the FBI’s Chicago Division in the mid-1990s, because of 

GRF’s affiliation with Al Khifa and other unsubstantiated allegations about GRF’s 

potential involvement in terrorist activity. After lying dormant for some time, the GRF 

investigation was assigned to two agents, who began to discover evidence of what they 

viewed as suspicious conduct. The Chicago office opened a formal full field investigation 

(FFI)79 in late 1997, largely on the strength of a series of telephone calls between GRF 

personnel and others with terrorist affiliations, as well as information from the 

intelligence community that GRF personnel had undertaken suspicious travel to 

Afghanistan and Pakistan. The Chicago agents stepped up the investigation of GRF, 

including physical surveillance, review of GRF’s trash, and attempts to get telephone 

records through a legal request known as a National Security Letter (NSL). Among other 

things, the trash revealed copies of GRF’s newsletter, “Al-Thilal” (“The Shadow”), 

which openly advocated a militant interpretation of Islam and armed jihad. 

The NSLs yielded very useful information, but the process for their internal approval 

frustrated the Chicago agents, who said that the tremendous delays in getting NSLs 

authorized by FBI headquarters was the biggest obstacle they had to overcome in their 

pre-9/11 investigation of GRF. It routinely took six months to a year to get NSLs 

approved for routine documents, such as telephone or bank records. The Chicago agents 

believed their contact at the FBI headquarters in the Radical Fundamentalist Unit was 

very good at his job, but was overwhelmed with work, which caused a major bottleneck 

in getting the NSLs.

The Chicago agents received substantial information about GRF from foreign 

government agencies. They worked directly through the relevant FBI legal attaché, or 

Legat (an FBI agent posted overseas who acts as a liaison with foreign officials), to get 

foreign information. The process could be very slow and somewhat uncertain, but it often 

78 For example, GRF sent $3.2 million overseas in 1999; and $3.7 million overseas in 2000.

79 Approval to open an FFI requires some predication that the investigation is being conducted for 

legitimate intelligence purposes. Agents, using limited investigative techniques can open a preliminary 

investigation (PI) for a limited time to gather evidence to determine whether a FFI is warranted. 
National Commission on Terrorist Attacks Upon the United States 

90

yielded helpful information. One European country where GRF had a substantial office 

provided the most useful information in the early stages of the investigation.

By mid-1998, the Chicago agents had evidence that led them to conclude that GRF was 

doing much more than providing humanitarian aid. The Chicago office summarized its 

views in an August 3, 1998, memorandum: “The FBI believes that GRF, through its 

Bridgeview headquarters and satellite offices around the globe, is actively involved in 

supplying and raising funds for international terrorism and Islamic militant movements 

overseas.” At the time, the FBI suspected the executive director of being a supporter or 

member of the Egyptian extremist group Al Gama’a Al Islamiyya (AGAI), which was 

affiliated with the Blind Sheikh.

The Chicago office submitted a FISA application for GRF in mid-1998; it was not 

approved until mid-1999. According to the Chicago agents, the application posed no 

significant problems, although it appeared that the fact that domestic charities were 

involved may have slowed the process. In any event, it took a year for the application to 

be approved and authorized. After receiving FISA approval, the agents initiated 

electronic surveillance, which allowed them to expand the investigation. 

By late 1999, the Chicago case agents were comfortable in their conclusion that GRF was 

a jihadist organization and that its executive director had connections to both AGIA and 

what they called the “Islamic Army organization of international terrorist financier 

Usama Bin Ladin.”80 They believed that multiple sources of evidence supported these 

conclusions. In the agents’ view, the phone records they had obtained proved a 

compelling, although indirect, link between GRF’s executive director and Usama Bin 

Ladin. In reviewing intelligence information and the executive director’s phone records, 

they concluded that the executive director called a phone used by a mujahideen leader 

who was a close associate of Usama Bin Ladin. Phone records also connected GRF, 

through its office in Brussels, Belgium, with Bin Ladin’s former personal secretary, Wadi 

al Hage, who is now serving a life sentence in the United States for his role in the 1998 

embassy bombings. 

The Chicago FBI agents were able to get critical information about the persons associated 

with international phone numbers because they had a working relationship with the CIA 

before 9/11. The Chicago agents said the quality of this relationship varied depending on 

the CIA representatives, who tended to be replaced frequently. Although the relationship 

was not always smooth, it did succeed in providing important information. 

The Chicago agents also conducted “trash covers,” virtually every week for years, which 

provided key intelligence on GRF. In this technique, the agents secretly entered GRF’s 

dumpster late at night and took out its trash for review. Among other things, GRF threw 

away pictures of communication gear it had shipped overseas, including sophisticated 

military-style handheld radios that the agents believed were far beyond what relief 

workers would ever need, but valuable to set up a military communications network. 

After 9/11, they learned this communication gear was shipped to Chechnya. They also 

80 January 20, 1999, FBI Document. 
Terrorist Financing Staff Monograph 

91

found in GRF’s trash pro-jihad books and literature, including the writings of Abdullah 

Azzam. 

The Chicago agents summarized their view of GRF to a foreign government service in a 

January 6, 2000, memorandum: 

Although the majority of GRF funding goes toward legitimate relief 

operations, a significant percentage is diverted to fund extremist causes. 

Among the terrorist groups known to have links to the GRF are the 

Algerian Armed Islamic Group, the Egyptian Islamic Jihad, Gama’at Al 

Islamyia, and the Kashmiri Harakat Al-Jihad El-Islam, as well as the Al 

Qaeda organization of Usama Bin Laden. . . . In the past, GRF support to 

terrorists and other transnational mujahideen fighters has taken the form of 

purchase and shipment of large quantities of sophisticated 

communications equipment, provision of humanitarian cover 

documentation to suspected terrorists and fund-raising for terrorist groups 

under the cover of humanitarian relief.81

By 9/11, the Chicago agents believed that they had uncovered enough information to 

conclude that GRF was raising substantial funds in the United States to support 

international jihad. Bank records obtained through NSLs revealed large transfers of funds 

to the GRF overseas offices. The agents believed GRF distributed the bulk of funds as 

humanitarian relief, but also supported armed militants in the strife-torn regions where it 

was active. 

On January 10, 2001, the Chicago agents wrote that “GRF is a highly organized 

fundraising machine, which raises millions of dollars annually” and that GRF’s 

“operations have extended all over the globe.”82 The executive director, in his capacity as 

head of the organization, “has been and continues to be a supporter of worldwide Islamic 

extremist activity” and he “has past and present links and associations with a wide variety 

of international Muslim extremists,” including al Qaeda and Usama Bin Ladin. The 

agents did not believe GRF was part of the formal al Qaeda network. Instead, they 

believed it “free-lanced” to support jihadists around the world, including in Europe, 

Bangladesh, India, and Pakistan. They also knew GRF was underwriting substantial 

humanitarian aid, which they thought was critical to its pro-jihad mission.83

The Chicago agents believed GRF had two types of donors during this period. People not 

in the know thought they were giving money for humanitarian relief. Others clearly knew 

the purpose of their donations: When the agents later obtained donors’ checks, they saw 

that some donors had actually written pro-jihad statements on their memo lines. 

The money trail generally stopped at the U.S. border, and the agents could never trace it 

directly to jihadists or terrorists. Before 9/11, they had no means to get foreign bank 

81 January 6, 2000 FBI Document. 82 January 10, 2001 FBI Document. 

83 January 10, 2001 FBI Document. 
National Commission on Terrorist Attacks Upon the United States 

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records. A formal request for records, called a mutual legal assistance treaty (MLAT) 

request, was impossible because the FBI did not have an open criminal investigation—

the GRF inquiry was an intelligence investigation. The agents did ask one European 

country for help, but were told that that country’s restrictive laws prohibited electronic 

surveillance and obtaining bank records. The Chicago agents wanted to travel to Europe 

to meet with officials who had investigated GRF, but the Chicago FBI office denied 

permission because of budgetary constraints. 

The Chicago investigation of GRF in turn led to an investigation by the Detroit FBI 

agents of GRF subjects within its jurisdiction. In early 2000, Chicago informed Detroit 

that GRF’s executive director had been calling two Michigan residents. One of these 

subjects was considered GRF’s spiritual leader and the other, Rabih Haddad, was a major 

GRF fund-raiser. A Detroit agent went to Chicago and reviewed the extensive 

investigative file. Upon his return, the agent prepared a request to open FFIs on the two 

subjects; it was approved in late March 2000. The evidence gathered in Chicago made 

clear to the Detroit agent that the GRF investigation was potentially “pretty big.”84

The Detroit agents, however, believed themselves to be stymied by the inability to get 

FISA coverage. At the same time that the case agent opened the FFIs, he sought FISA 

coverage of those two subjects. None of these FISA applications was approved until 

after 9/11, some 18 months later. The Detroit agent was never given even an ostensible 

reason for the holdup. On the contrary, FBI headquarters told the agent that the 

applications looked good. These applications were being actively reviewed by both OIPR 

and FBI headquarters. Still, nothing ever happened. When he called FBI headquarters to 

check on the status of his applications, the Detroit agent was told only “we’re [the FBI] 

working on it.” The Detroit agent was very frustrated and upset by the delay, which he 

believes caused him to miss a great opportunity to gather critical intelligence and 

substantially limited the Detroit investigation of GRF before 9/11. 

Resource limitations also limited Detroit’s role before 9/11. Though many 

counterterrorism investigations might have been undertaken, Detroit had only 12 agents 

on these cases; and because each agent was working multiple cases, no case could receive 

the attention it needed. Because of the lack of FISA coverage, resource limitations, and 

the apparent focus GRF’s activities in Chicago, the Detroit investigation was largely a 

satellite to the Chicago investigation before 9/11.

The Chicago agents thought that FBI headquarters provided support for their GRF 

investigation before 9/11, approving the FISA application, for example, and providing 

analytical support. In addition, one of the analysts at headquarters saw relevant material 

in a case file from another field office and very helpfully brought it to Chicago’s 

attention. From the Detroit perspective, however, headquarters was interested in the GRF 

investigation but was swamped with work and itself understaffed.

84 Commission Staff Interview. 
Terrorist Financing Staff Monograph 

93

No realistic opportunities for disruption before 9/11 

The Chicago agents saw no way to make a criminal case against GRF before 9/11, even 

though the agents thought they had considerable evidence that GRF was a major fundraising operation for international jihad. The two lead agents thought about and even 

discussed the possibility of mounting a criminal case, but dismissed it. They had much 

smoke but no real fire—they had no direct evidence of serious criminal activity. They 

could not trace the millions of dollars GRF sent overseas to any specific jihadist or 

terrorist organization, although they had their suspicions. Even the electronic surveillance 

coverage yielded no evidence that would conclusively prove a criminal offense. 

The Chicago agents worked with the INS to pick up several GRF employees on 

immigration overstays, with the goal of seeing if they would cooperate with the FBI 

against their employer. This effort proved fruitless, however. They considered doing the 

same with Rabih Haddad, the Detroit subject and major GRF fund-raiser, but decided it 

made more sense to continue investigating him; the Detroit agents agreed.85 The Chicago 

agents thought that the executive director himself was also technically out of status—he 

had requested a certain status adjustment from the INS but not yet received it—though an 

arrest in such a situation would be unusual. In any event, they did not ask the INS to 

arrest him, preferring to continue to monitor him. 

The very concept of a criminal international terrorism case was foreign to the Chicago 

agents, and they did not think that the U.S. Attorney’s Office had sufficient expertise in 

such cases. In addition, the agents believed that the rules regarding “the wall” between 

intelligence and criminal cases prevented the case agents from even discussing 

intelligence information with the U.S. Attorney’s Office. Other than in New York, there 

were few criminal international terrorist (IT) investigations or cases in process. The 

Chicago office was undertaking only two criminal IT investigations, neither of which 

focused on al Qaeda suspects. According to the agent who supervised the GRF and BIF 

cases before 9/11, the case agents had always wanted to open a criminal case, despite the 

wall; but they thought that doing so would have hurt their ability to get and maintain 

FISA coverage because of their perception of the Department of Justice’s restrictive 

interpretations of the wall restrictions, which they understood had impaired the Chicago 

office’s ability to get FISA warrants approved in the past. As result, Chicago agents were 

cautious about pursuing criminal matters pertaining to ongoing intelligence 

investigations.

The lead Detroit investigator also saw no prospect of a criminal case before 9/11. He said 

that while working the case as an intelligence investigation he always kept in the back of 

his mind that possibility, but he knew that he had nowhere near the type of evidence 

required for criminal prosecution; he had his own concerns about the wall as well. In any 

event, neither Detroit nor Chicago, which had the lead in formulating an overall strategy, 

had sufficient evidence to move forward with criminal charges. 

85 The Chicago and Detroit agents each attributed to the other the decision to refrain from detaining 

Haddad, but both agree they concurred with the decision made by the other, without objection. 
National Commission on Terrorist Attacks Upon the United States 

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The Chicago investigation of GRF suffered a major blow in late spring or early summer 

2001 when the FISA warrants were not extended. The Chicago agents were now in the 

same position as those in Detroit—deprived of electronic surveillance, their most potent 

intelligence-gathering tool. 

GRF’s status on 9/11 

The FBI’s investigation over the several years before 9/11 led the investigating agents to 

believe GRF was an organization dedicated to supporting international jihad and was 

raising substantial funds in the United States toward that goal. The FBI agents developed 

what they thought was a good understanding of GRF’s activities, despite significant 

obstacles imposed by a dysfunctional process for obtaining NSLs and FISA warrants. 

Although the FBI did the bulk of the work investigating GRF, the investigation benefited 

from contributions by the intelligence community and by foreign law enforcement 

sources, both of which substantially aided the FBI’s understanding of the GRF’s overseas 

activities. Despite the considerable body of knowledge they had, the FBI agents believed 

they lacked the evidence necessary to bring a criminal prosecution against GRF or its 

principals. In any event, the perceived restrictions imposed by the wall made such a 

prosecution extremely difficult, at best, and initiating a criminal investigation could have 

put the FISA warrants at risk. As a result, the FBI was left with nothing to do but 

continue to gather intelligence on GRF’s activities in the United States. This task was 

made far more difficult by the inability to renew the FISA warrants in Chicago or obtain 

FISA coverage in Detroit. The agents did not have any plan to disrupt what they believed 

to be a major jihadist fund-raising operation, or any endgame for their investigation. 

The origin of BIF 

BIF was incorporated in Illinois in March 1992 and received tax-exempt status in March 

1993. Its origins can be traced to Saudi Arabia, where in 1987 Sheikh Adel Abdul Jalil 

Batterjee founded Lajnat Al-Birr Al-Islami (LBI), a Jeddah-based NGO. LBI provided 

support to the mujahideen fighting the Soviets in Afghanistan, as well as humanitarian 

aid to refugees of the war in Afghanistan. Batterjee, from a merchant family in Saudi 

Arabia, was affiliated with a group of wealthy donors from the Persian Gulf region 

known as the “Golden Chain,” which provided support to mujahideen, including 

mujahideen under the leadership of Usama Bin Ladin. The U.S. government has alleged 

that BIF was incorporated in the United States to attract more donations and deflect 

scrutiny from LBI. 

At BIF’s founding in 1992, its three directors were Batterjee and two other Saudis. In 

March 1993, Batterjee and the two other Saudis were replaced by three new directors, 

including Enaam Arnaout, who became BIF’s executive director, managing its day-today operations and reporting to Batterjee. The U.S. government contends the change was 

made after Batterjee came under scrutiny in Saudi Arabia for financially supporting jihad 
Terrorist Financing Staff Monograph 

95

outside of approved channels. Despite his formal removal, Batterjee continued to play a 

major role in running BIF and was in frequent contact with Arnaout from his home in 

Saudi Arabia. The government contends that Arnaout was a longtime jihadist supporter, 

with personal ties to Usama Bin Ladin dating back to the 1980s. He allegedly provided 

military and logistical support to the mujahideen in the late 1980s and early 1990s, as an 

employee of LBI and another Saudi NGO, the Muslim World League. In doing so, he 

allegedly worked closely with Usama Bin Ladin and other mujahideen who later became 

significant members or supporters of al Qaeda. According to INS data compiled by the 

FBI, Arnaout, a native Syrian, lived in Hama, Syria, from his birth in 1962 until 1981, 

when he went to study in Saudi Arabia. In 1989, Arnaout married an American citizen he 

met in Peshawar, and he became a naturalized U.S. citizen in March 1994. 

BIF publicly described itself as an “organization devoted to relieving the suffering of 

Muslims around the world.” According to its IRS filings, it received more than $15 

million in donations between 1995 and 2000. 

The FBI investigation of BIF 

The FBI started its investigation of BIF in 1998 as a result of a conference that a Chicago 

agent attended in Washington, D.C., where he learned of foreign intelligence reports 

indicating that Arnaout was involved in providing logistical support for jihadists. The 

FBI in Chicago opened an FFI in February 1999, focusing on Arnaout as the key player. 

The GRF case agents also served as the lead case agents on BIF investigation. Much like 

the early GRF investigation, BIF investigation featured surveillance and digging through 

garbage. The FBI also sought to develop sources. The trash covers were fruitful, as BIF 

“threw out everything”—including telephone bills and detailed and elaborate reports on 

its activities, which Arnaout demanded from his subordinates on a daily basis. The FBI 

began to run down some of the names and numbers appearing in the trash. In addition, on 

April 21, 1999, the agents recovered from BIF’s trash a newspaper article on 

bioterrorism, in which someone had highlighted sections relating to the United States’ 

lack of preparedness for a biological attack.

When it opened the FFI, the FBI in Chicago knew of Adel Batterjee but had little 

understanding of who he was. They later obtained records showing Batterjee was 

contributing funds to BIF. In the summer of 1999, they sent what the Bureau calls a 

lead—relaying information and requesting action—to Saudi Arabia, through the Legat, 

for information on Batterjee. As of 9/11 they still had received no response. 

Chicago submitted a FISA request in April 2000, but it was not approved until after 9/11. 

Notwithstanding evidence that BIF had significant links to Usama Bin Ladin and was 

sending significant amounts of money overseas, the Chicago agents could not get an 

inside look at the organization that a FISA could provide. As we will later show, after 

9/11 it was simply too late. 
National Commission on Terrorist Attacks Upon the United States 

96

After opening the FFI, FBI Chicago obtained NSLs for phone and bank records. The 

bank records gave a good indication of the scope of BIF’s fund-raising activities. 

According to contemporaneous documents, the FBI believed based on its yet to be 

completed investigation that BIF was receiving approximately forty to sixty thousand 

dollars a week, and that between 1997 and 1998, BIF sent more than $2.5 million to its 

overseas offices in Bosnia, Azerbaijan, Pakistan, and Tajikistan. 

FBI Chicago had cultivated a good human source who provided useful information on 

BIF, though never any smoking guns. The Chicago agents had a much closer relationship 

with the CIA on BIF than they did on GRF, because they cooperated on certain 

international matters in the BIF investigation. They regularly met with the CIA 

concerning BIF, received some useful information, and shared much of their information. 

For example, the Chicago agents learned from the CIA important information about 

BIF’s founding and the sources of its funding. Still, the CIA and the FBI did not have a 

perfect relationship, and the CIA held back some information. The Chicago agents 

believed the CIA wanted to shield certain information from the FBI because of fears of 

revealing sources and methods in any potential criminal litigation in the United States. 

The Chicago agents obtained all the bank account numbers for the BIF’s overseas offices, 

which BIF had typed up and later thrown out in the trash. They provided this information 

to the intelligence community, which they hoped could trace the money overseas. They 

never heard anything back about such a trace, however. 

The BIF investigation revealed the difficulties in securing foreign cooperation in 

terrorism investigations. FBI Chicago submitted a lead to a European ally, through the 

Legat, for information about European intelligence reports concerning a BIF official’s 

purported involvement in the kidnapping of Americans in Kashmir. The U.S. ally never 

even acknowledged the request, let alone replied. The FBI did not submit MLAT requests 

for foreign records because, again, it had no criminal case. 

The FBI’s New York Field Office, which ran the primary FBI investigation of Bin Ladin, 

was a key source of information for Chicago. But the New York agents were 

overwhelmed with work, and did not always coordinate well with their Chicago 

counterparts. Although the New York agents were aware of the BIF/GRF investigations, 

they sent out their own leads relevant to these investigations, annoying the Chicago 

agents. The agents in New York did not have time to share information proactively, 

although those in Chicago were welcome to look through New York’s files for relevant 

information—which they did, gaining helpful information.86

GRF’s bank filed a money-laundering Suspicious Activity Report with the Treasury 

Department’s Financial Crimes Enforcement Network (FinCEN) regarding BIF’s large 

transfers of money to the Republic of Georgia. It was apparently concerned that BIF was 

involved with Russian organized crime. The Chicago agents said they did not make any 

requests of FinCEN before 9/11, explaining that FinCEN would not have been useful to 

86 According to the BIF’s attorney, the bank actually closed the BIF’s accounts just before 9/11, forcing 

BIF to find another bank in the Chicago area, which it was able to do. 
Terrorist Financing Staff Monograph 

97

them because it could not help them trace the money once it got overseas. They knew that 

BIF was sending big money overseas, and even knew the account numbers and office 

directors of the BIF overseas offices that were receiving the money. Their problem was 

tracing the money once it got there, and the believed FinCEN could provide no help in 

this regard because, like the FBI agents, it had no access to the relevant foreign records. 

Inability to bring a criminal case to disrupt BIF 

Overall, BIF investigation was in the same position as the GRF investigation on 9/11: the 

agents believed BIF had substantial ties to al Qaeda, was supporting jihad, and was 

sending a great deal of money overseas, but they could not trace the money directly to its 

ultimate destination overseas. Although they had access to considerable information, the 

agents believed they still could not come close to proving a criminal case against Arnaout 

or BIF. The BIF investigation was actually in worse shape because, unlike in the GRF 

investigation, the agents could not get approval for electronic surveillance. The agents 

tried to understand what was going on overseas, and a European agency had invited the 

Chicago agents to a meeting to share information. The agents tried to go but, as had 

happened with the GRF investigation, the Chicago FBI could not afford to send them. 

The misunderstanding of the wall also created the same problems in the BIF investigation 

as it did in that of the GRF. For all of these reasons, the FBI could not take any action 

against BIF, despite what the agents considered extensive knowledge of BIF’s 

malfeasance. 

Like the GRF investigation, the BIF investigation lacked an endgame. Believing 

themselves unable to initiate a criminal investigation and lacking any other means to 

disrupt what they thought to be a major jihadist fund-raising operation with substantial 

links to Bin Ladin and al Qaeda, the Chicago agents saw no options other than continued 

monitoring of BIF’s activities. In this respect, the BIF and GRF investigations typified 

the FBI’s pre-9/11 approach to terrorist financing. The FBI had numerous terroristfinancing investigations under way, but the vast majority of them were pursued as 

intelligence-gathering exercises by FBI intelligence agents, with little or no thought of 

disrupting the fund-raising through criminal prosecution or otherwise. 

Post-9/11 Developments

FBI investigations of BIF and GRF after 9/11 

Everything changed almost immediately after 9/11 with respect to the BIF and GRF 

investigations. Major obstacles to the investigation dropped away, more resources 

became available, and the issue of terrorist financing gained new prominence among 

national policymakers in Washington. 

As a result, the course of the BIF and GRF investigations dramatically changed and led to 

a series of events unimaginable on 9/10: the long-delayed FISA warrants were 
National Commission on Terrorist Attacks Upon the United States 

98

instantaneously approved; the FBI opened a major criminal investigation of GRF and 

BIF; FBI agents raided the Illinois headquarters of both organizations in an 

unprecedented overt FISA search; OFAC—an entity entirely unknown to the FBI case 

agents before 9/11—froze the assets of GRF and BIF; NATO troops kicked in doors of 

the charities’ overseas offices and carted away all their contents; and Bosnian criminal 

investigators raided BIF’s office in Bosnia, seizing a treasure trove of documents directly 

concerning BIF’s relationship with Bin Ladin that dated to the origins of al Qaeda. 

In the immediate wake of 9/11, the Chicago FISA warrant for GRF was reinstated, and 

that for BIF was finally approved. The previously moribund FISA applications from 

Detroit for GRF were approved as well, as the agent was informed by an emergency call 

from FBI headquarters. 

But after the events of 9/11, electronic surveillance was not very useful, even though the 

FBI assigned a significant number of translators to the cases. The agents believed that the 

GRF subjects feared electronic monitoring in the wake of the attacks; they were 

extremely cautious about their communications. The GRF FISA warrants proved 

unproductive. On the other hand, electronic surveillance of BIF yielded some useful 

information, including the fact that Arnaout was passing messages to Batterjee. In 

addition to electronic surveillance, the agents continued other investigative techniques, 

including trash covers and physical surveillance.

Coincidentally, the U.S. Attorney for Chicago, Patrick Fitzgerald, on the job for only a 

couple of weeks, had extensive experience as a terrorism prosecutor and immediately 

became involved in the investigation of BIF and GRF.87 Fitzgerald was very interested in 

prosecuting the cases criminally and, at his urging, the FBI opened a criminal 

investigation of BIF and GRF in October 2001. The intelligence cases continued as well, 

and the electronic surveillance continued. Because the wall between criminal and 

intelligence matters still existed, they decided to have separate case agents for the 

criminal and intelligence investigations. The lead intelligence case agents moved to the 

criminal case, and two new agents were assigned to the intelligence cases. The new 

intelligence agents were responsible for passing information over the wall to the criminal 

agents.

Fitzgerald immersed himself in the case and took a major role. He directed the FBI to 

interview al Qaeda cooperators from the New York cases, who provided considerable 

information on BIF and some on GRF as well. One cooperator, an admitted former al 

Qaeda member and Bin Ladin associate, said that BIF engaged in financial transactions 

for al Qaeda in the early 1990s. He also described how al Qaeda would take cash from 

charitable NGOs, which would then cover the transactions with false paperwork. After 

87 Fitzgerald took office pursuant to an interim appointment on September 1, 2001; he was formally 

appointed and confirmed by the Senate in October. Fitzgerald had extensive experience prosecuting 

terrorism cases as an Assistant U.S. Attorney in New York, where he prosecuted the Landmarks and 

Embassy Bombings cases and served nearly six years as co-chief of the Organized Crime and Terrorism 

Section. 
Terrorist Financing Staff Monograph 

99

opening the criminal case, the agents also were able to issue grand jury subpoenas for 

additional phone and bank records.

OFAC involvement and the shutdown of BIF and GRF 

While the Chicago agents and prosecutors were starting to think about bringing criminal 

cases against BIF and GRF, policymakers in Washington were thinking about disrupting 

al Qaeda financing using whatever tools they had. BIF and GRF came to the attention of 

OFAC, which began to consider them for possible designation as a supporter of al Qaeda. 

To this end, OFAC dispatched two analysts to Chicago in early December 2001 to review 

the FBI files and begin putting together the evidentiary packages that would support 

designations.

These plans were dramatically accelerated when CIA analysts, drawing on intelligence 

gathered in an unrelated FBI investigation, expressed concerns that GRF could be 

involved in a plot to attack the United States with weapons of mass destruction (WMD). 

Neither the Chicago agents nor the FBI headquarters analysts, who had extensive 

knowledge of GRF, were consulted on this analysis, which a Chicago FBI supervisor 

characterized as baseless. The WMD fears led to a plan to enter and search the overseas 

offices of GRF and BIF to obtain swabbings and other evidence related to possible WMD 

deployment. BIF was included because the two charities were thought to be related. 

Although the WMD allegations were never corroborated, the events of 9/11 led to an 

understandably cautious approach in dealing with potential threats of mass casualties. 

At the same time, OFAC received word from the General Counsel of Treasury, who was 

coordinating the interagency effort against terrorist financing, that it needed to designate 

BIF and GRF immediately. OFAC had not yet developed the evidence necessary for a 

designation under IEEPA. As a result, OFAC relied on a provision of IEEPA clarified by 

the Patriot Act, which provides that OFAC could freeze the assets belonging to a 

suspected terrorist supporter “during the pendency of an investigation.” Only a single 

piece of paper, signed by the director of OFAC, was required.88 OFAC announced this 

action on December 14, 2001, thereby effectively shutting down both charities in the 

United States while gaining additional time to develop the evidentiary packages 

necessary for permanent designations. This extraordinary power enabled the government 

to stop the charities’ operations without any formal determination of wrongdoing. 

The raids on a number of overseas offices also occurred on December 14, 2001, 

conducted, in various locations, by NATO troops and U.S. government personnel. NATO 

troops raided two GRF offices, and NATO publicly stated that GRF “is allegedly 

involved in planning attacks against targets in the U.S.A. and Europe.”89 At the same 

time, Albanian National Police, accompanied by an FBI agent, raided the GRF office in 

Tirana and the home of a GRF employee, seizing $20,000 and taking swabbings for 

residue of WMD.

88According to OFAC, in practice, an interagency group discusses and agrees to any designation. 89 Shenon, “A Nation Challenged: The Money Trail”, New York Times, Dec. 18, 2001. 
National Commission on Terrorist Attacks Upon the United States 

100

The original plan did not call for searches or takedowns of the GRF and BIF offices in 

Illinois. Rather, the FBI was to use its FISA warrants to monitor the charities’ reaction to 

the overseas searches. This plan went awry when word of the impending action 

apparently leaked to GRF. FBI personnel learned that some of the targets of the 

investigations may be destroying documents.90 As a result, the FBI decided to do an 

unprecedented “overt” FISA search of both GRF and BIF offices, which was hastily 

assembled and conducted. Following a chaotic process, the government agents searched 

both BIF and GRF offices in Illinois on December 14, 2001, carting away substantial 

evidence. The agents also searched the residence of GRF executive director and Arnaout.

On December 14, 2001, the INS detained GRF fund-raiser Rabih Haddad, one of the 

subjects of the Detroit investigation, on the basis that he was out of his allowed 

immigration status, having overstayed a student visa issued in 1998. Following bond 

hearings that were closed to the press, public, and Haddad’s family, an immigration judge 

denied bail and ordered Haddad detained.91

While officials and investigators around the world moved to eliminate the perceived 

WMD threat and shut down the operations of BIF and GRF, investigators working on the 

9/11 attacks sought to understand a curious connection between hijackers Nawaf al 

Hazmi and Khalid al Mihdhar and a GRF fund-raiser. On 9/11, the FBI learned that two 

days before, hijackers Hazmi and Mihdhar had dropped off bags at an Islamic prayer 

center in Maryland. The bags, to which the hijackers had affixed a note stating “[a] gift 

for the brothers,” contained fruit, clothing, flight logs, and various other materials. The 

FBI launched an investigation to determine if the imam of the prayer center played any 

roles in the attacks. The investigators quickly determined in addition to his other 

responsibilities, the imam worked part-time raising money for GRF, at the direction of its 

executive director in Illinois. The FBI investigated his involvement with 9/11 for one and 

a half years. It ultimately concluded that he had no role in supporting the 9/11 attacks, 

although the investigating agents considered him to be a supporter of and fund-raiser for 

the international jihadist movement. 

BIF and GRF challenge the government’s actions 

The charities aggressively denied any connection to terrorism and condemned the raids 

and assets freeze. GRF’s lawyer immediately called the government’s action “a terrible, 

terrible, terrible tragic mistake,” and stated, “If they’re investigating terrorism, they’re 

not going to find anything here.” Another GRF spokesman said the government seized 

90 Press leaks plagued almost every OFAC blocking action that took place in the United States. The process 

had extremely poor operational security. In a number of instances, agents arrived at locations to execute 

blocking orders and seize businesses only to find television news camera crews waiting for them. 91See Detroit Free Press v. Ashcroft et al, 303 F.3d 681 (6th Cir. 2002) (setting out background). The 

hearing was closed pursuant to a September 21 directive from the chief immigration judge that immigration 

judges close immigration proceedings in certain “special interest” cases defined by the chief judge. 
Terrorist Financing Staff Monograph 

101

resources that GRF used to “prevent the slow starvation and gruesome death in parts of 

the Muslim world that rely on such badly needed aid.”92

On January 28, 2002, GRF sued the Secretaries of Treasury and State, the Attorney 

General, and the Directors of OFAC and the FBI in federal court in Chicago. GRF 

requested that the government “unfreeze” its assets and return the items it seized during 

the December 14 searches. Two weeks later, GRF filed a motion for a preliminary 

injunction, contending that the government’s blocking of its assets and records violated 

the law and Constitution.93 BIF filed a similar suit on January 30, 2002, and a similar 

motion on March 26, 2002. BIF’s complaint proclaimed its activities “entirely lawful,” 

and contended that since its founding in 1992 it “has provided tens of millions of dollars 

worth of humanitarian aid in a dozen countries around the world, as well in the United 

States.”94

Upon filing the complaint, BIF’s lawyer said, “The government’s actions threaten to 

destroy our essential constitutional liberties. If we no longer live in a society where we 

are secure from unreasonable searches and from the taking of liberty and property 

without any form of due process, then the terrorists will have succeeded in an even 

greater degree of destruction than the devastation of Sept. 11.”95 Despite the blocking of 

its assets, BIF and GRF could retain counsel because OFAC granted them “licenses” to 

do so. A license is written authorization from OFAC to spend money in ways otherwise 

prohibited by the blocking order, such as the release of blocked funds to pay for legal 

services.

BIF also sought a license to dispense the bulk of the funds blocked by the government, 

which totaled $700,000–800,000, to fund its overseas charitable causes, including a 

tuberculosis hospital for children in Tajikistan and the Charity Women’s Hospital in 

Makhachkala, Daghestan. BIF supported its request with evidence of its charitable work, 

including affidavits from nurses in the hospital attesting to the importance of BIF’s 

donations. According to BIF’s counsel, the organization wanted to give away $500,000 

of the blocked funds rather than let legal bills consume the money, and it even offered to 

have FBI agents accompany the funds overseas to their charitable destination. OFAC did 

not grant the license due to concerns that even funds sent to seemingly legitimate 

charities can be at least partially diverted to terrorist activities and OFAC’s extremely 

limited ability to monitor the use of funds overseas. OFAC did license BIF and GRF to 

sustain some operations—retaining some employees and paying utilities, taxes and U.S. 

creditors—but most of the employees had to be let go, and the charities could neither 

raise new funds nor distribute existing funds overseas.96

92 Deanna Bellandi, “Two Chicago-area Muslim Charity Groups Raided by Federal Agents; Assets 

Frozen,” Associated Press, Dec. 15, 2001. 

93 See, Global Relief Foundation, Inc. v. O’Neill et al., 207 F. Supp. 2d 779 at 787 (N.D. Ill. 2002), 

affirmed 315 F.3d 748 (7th Cir. 2002) (quoting complaint). 94 Benevolence International Foundation Inc. v. Ashcroft, (N.D. Ill.), Complaint. 95 Laurie Cohen, “2nd Muslim Charity Sues U.S. Officials on Terrorism,” Chicago Tribune, Jan. 31, 2002, 

p. 1. 

96 Ultimately, the charities’ legal bills consumed most of the frozen money, which angered donors who had 

intended their donations be used for humanitarian relief. See, e.g., Gregory Vistica, “Frozen Assets Going 
National Commission on Terrorist Attacks Upon the United States 

102

Supporters of GRF fund-raiser Rabih Haddad, who was detained on immigration 

violations, rallied to his defense. Pointing out that Haddad had condemned the 9/11 

attacks and contending he was a moderate and respected religious leader in the Detroit 

community, they considered his detention in solitary confinement on what appeared to be 

a minor visa violation as a prime example of discrimination against Muslims and an 

overzealous government response to 9/11, in violation of basic civil rights. For example, 

a sympathetic story in a London paper quoted U.S. Representative John Conyers: “The 

treatment of Rabih Haddad by the Immigration and Naturalization Service over the past 

several weeks has highlighted everything that is abusive and unconstitutional about our 

government’s scapegoating of immigrants in the wake of the September 11 terrorist 

attack.”97

Efforts to develop criminal cases against BIF and GRF 

After the preliminary designations and searches of December 14, 2001, the FBI and U.S. 

Attorney’s Office in Chicago focused their attention on developing a criminal case. To do 

so, they initially faced major logistical challenges. The Illinois searches yielded an 

enormous amount of information, including hundreds of tapes and videos that had to be 

translated and reviewed, and many computer hard drives. According to the legal 

requirements imposed by FISA, all of this information had to be reviewed for 

“minimization.” Since the evidence was seized under intelligence authorities, the Justice 

Department could use only that evidence relevant to an intelligence investigation or a 

crime such as terrorism. The logistical difficulties were compounded by the charities’ 

civil litigation, the blocking order and OFAC’s continued need for access to the materials 

so that it could build a case for permanent designations. The latter issue caused 

considerable frustration and confusion, as there were no rules about exactly what 

information in the FBI files OFAC could lawfully see. In addition, the lead case agents, 

who had been intelligence agents, lacked any significant federal criminal investigative 

experience, let alone experience in preparing a complex, document-intensive financial 

investigation for prosecution.

The criminal investigation of BIF received a huge boost in March 2002. The Chicago 

agents, who had been working with Bosnian officials on the case, provided the Bosnians 

with enough evidence to gain legal authority to conduct a criminal search of BIF’s offices 

there. An FBI agent accompanied the Bosnians on the search to ensure a proper chain of 

custody necessary for the admission of anything found into a U.S. criminal proceeding. 

This search yielded compelling evidence of links between BIF’s leaders, including 

Arnaout, and Usama Bin Ladin and other al Qaeda leaders, going back to the 1980s. The 

material seized included many documents never before seen by U.S. officials, such as the 

actual minutes of al Qaeda meetings, the al Qaeda oath, al Qaeda organizational charts, 

to Legal Bills,” Washington Post, Nov. 1, 2003, p. A6. According to OFAC, when BIF exhausted the pool 

of blocked BIF funds, OFAC also issued licenses authorizing BIF to establish and maintain a legal defense 

fund in which to accept donations to offset its legal expenses. 

97 Andrew Gumbel, “The Disappeared,” The Independent, Feb. 26, 2002. 
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and the “Golden Chain” list of wealthy donors to the Afghan mujahideen, as well as 

letters between Arnaout and Bin Ladin, dating to the late 1980s. It was an enormous 

break.

The Bosnian documents helped kick BIF investigation into high gear. Meanwhile, the 

GRF investigation temporarily took a back seat. On April 30, 2002, Arnaout and BIF 

were charged with two counts of perjury; the charge was based on a declaration that 

Arnaout had filed in the civil case against OFAC, in which he asserted that BIF never 

supported persons engaged in violence or military operations. Arnaout was taken into 

custody and denied bail. In September, the court dismissed the charges because 

established Supreme Court precedent held that the particular criminal statute under which 

he was charged did not apply to the out-of-court statements in Arnaout’s declaration.98

The government filed a criminal obstruction of justice case against Arnaout that same 

day, on the basis of the same false declaration. BIF was not charged again. 

The government came back with a more substantive indictment of Arnaout in October 

2002, directly alleging that BIF supported al Qaeda.99 The indictment alleged that 

Arnaout operated BIF as a criminal enterprise that for decades used charitable 

contributions to support al Qaeda, the Chechen mujahideen, and armed violence in 

Bosnia. The government modified the allegations against Arnaout in a superseding and 

then a second superseding indictment, the latter of which was filed on January 22, 2003. 

It charged Arnaout with one count each of racketeering conspiracy under RICO (the 

Racketeer Influenced and Corrupt Organization Act), conspiracy to provide material 

support to terrorists, providing material support to terrorists, conspiracy to launder 

money, and wire fraud and two counts of mail fraud. 

Attorney General John Ashcroft personally came to Chicago to announce the filing of the 

October indictment in a high-profile press conference. His public statements emphasized 

BIF’s alleged support for al Qaeda and recounted much of the historic evidence linking 

Arnaout to Bin Ladin, including a recitation of the most significant al Qaeda documents 

seized at the BIF’s office in Bosnia. Condemning BIF and Arnaout, the Attorney General 

declared, “There is no moral distinction between those who carry out terrorist attacks and 

those who knowingly finance those attacks.”100 BIF’s lawyer believed that the Attorney 

General’s inflammatory comments about al Qaeda and Bin Ladin compromised 

Arnaout’s right to a fair trial before an impartial jury and characterized the press 

conference as “astounding” and “egregious.” The trial judge also took notice, later 

referring to the extensive publicity the case received “in the wake of the Attorney 

General’s remarkable press conference announcing this indictment.”101

98 United States v. Benevolence International, 02 CR 414, 2002 U.S. Dist. Lexis 17223 (Sept. 13, 2002) 

(court opinion and order). 

99 United States v. Arnaout, Second Superseding Indictment at ¶ 3 (same language in initial indictment). 100 Attorney General Remarks, Chicago, October 9, 2004 

(www.usdog.gov/ag/speeches/2002/100902agremarksbifindictment.html, accessed Apr; 1, 2004). 101 United States v. Arnaout, 02 CR 892 (Jan. 28, 2003) (unpublished court order). 
National Commission on Terrorist Attacks Upon the United States 

104

The indictment itself contained almost no specific allegations that BIF funded al 

Qaeda.102 Instead, the charges focused primarily on BIF’s diversion of charitable 

donations to fund Chechen and Bosnian fighters. At the same time, the indictment 

highlighted Arnaout’s historical relationship with Bin Ladin and BIF’s links to certain al 

Qaeda leaders, including BIF’s origins with LBI, the Saudi entity Batterjee created in 

1987 in large part to support mujahideen then fighting the Soviets in Afghanistan, and the 

handoff of nominal control of BIF from Batterjee to Arnaout. The indictment described 

Arnaout’s history of supporting armed jihad, including Arnaout’s having worked in the 

1980s for the Mektab al Khidmat103 and LBI to support various mujahideen—among 

them, those under the command of Usama Bin Ladin.104

The indictment charged Arnaout with racketeering conspiracy under RICO, alleging that 

Arnaout, Batterjee, and others operated BIF as a criminal enterprise and used the cover of 

a legitimate Islamic charity to support armed jihadist combatants. The government 

contended that BIF fraudulently solicited and obtained donations by falsely representing 

that the funds would be used solely for humanitarian purposes, while concealing that 

some of the donated funds were used to support armed fighters engaged in violence 

overseas. Through these illicit diversions, the indictment alleged, BIF provided a variety 

of military supplies, including boots, uniforms, and communications equipment, as well 

as an X-ray machine to fighters in Bosnia-Herzegovina and Chechnya. The indictment 

alleged that the conspirators engaged in various acts to conceal their support of armed 

militants and BIF’s relationship to al Qaeda and other extremists. 

The indictment also alleged that Arnaout and others provided material support to 

“persons, groups and organizations engaged in violent activities—including al 

Qaeda[.]”105 The charge contains no specific claims about providing funds to al Qaeda, 

although it alleges that in 1998 Arnaout facilitated the travel of a key al Qaeda member 

into Bosnia-Herzegovina and that a leading al Qaeda member served as a BIF official in 

Chechnya.106 An additional count in the indictment charged Arnaout with providing 

material support to persons engaged in violent activity by supplying 2,900 pairs of steelreinforced anti-mine boots to Chechen fighters. The remaining counts charged Arnaout 

with money laundering and fraud in connection with BIF’s activities. 

The government indictment drew heavily on the documents seized from the BIF office in 

Bosnia that directly linked BIF and Arnaout to the formative period of al Qaeda. These 

links included (1) notes summarizing meetings during which al Qaeda was founded in 

Afghanistan in August 1988, and which specify the attendance of Usama Bin Ladin at the 

102 The government did not charge BIF with providing material support to a designated foreign terrorist 

organization (FTO) in violation of 18 USC 2339, which would seem like a logical charge had the 

government been able to prove that the BIF funded al Qaeda after it was designated an FTO in 1999. 103As discussed above, the Mekhtab al Khidemat was an organization primarily operated by Sheik Abdullah 

Azzam and Usama Bin Ladin to provide logistical support to the mujahideen in Afghanistan. 

104 Of course, Arnaout’s defenders point out that supporting bin Ladin in the 1980s when he was fighting in 

a cause supported by the United States is hardly evidence of supporting terrorism. 105 Second Superseding Indictment, count 2. 106 See discussion later in this chapter regarding OFAC designation of the BIF for more detail on the key al 

Qaeda operative whose travel the BIF allegedly facilitated. 
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original oath of allegiance (bayat) that prospective members made to al Qaeda; (2) a list 

of wealthy mujahideen sponsors from Saudi Arabia, including references to Bin Ladin 

and Batterjee; (3) various documents showing Arnaout’s substantial role in procuring 

weapons for the mujahideen in the 1980s or early 1990s; and (4) a 1988 newspaper 

article showing a picture of Arnaout and Bin Ladin.107

Arnaout initially pled not guilty to all charges and mounted a vigorous legal defense. 

OFAC refused to license BIF to use its blocked assets to pay for Arnaout’s criminal 

defense on the grounds that BIF’s funds could not be used by Arnaout in his individual 

capacity. Although Arnaout personally was not designated and could use whatever funds 

he had to defend himself, the OFAC refusal impaired Arnaout’s ability to pay his counsel 

and caused considerable bitterness among his supporters.

OFAC Designations 

Following its blocking of BIF’s and GRF’s assets pending investigation, OFAC 

continued to try to develop the evidentiary case it believed necessary to make permanent 

designations. Meanwhile, the charities’ finances were effectively frozen, with the 

exception of the licenses discussed above. At least one senior Treasury official was 

concerned about the potential length of a temporary blocking order. On April 12, 2002, 

roughly four months after the blocking order was issued, the Treasury General Counsel 

wrote to other senior Treasury officials that “common fairness and principles of equity 

counsel that we impose a reasonable end date on the duration of such orders.”108 On 

October 18, 2002, OFAC designated GRF a specially designated global terrorist (SDGT) 

pursuant to Executive Order 13224, thereby freezing its assets and blocking transactions 

with it. As a result, four days later, the United Nations listed GRF as an organization 

belonging to or associated with al Qaeda. BIF met the same fate, as a result of OFAC 

action on November 19 and UN action on November 21. 

The OFAC designations of BIF and GRF relied on the material gathered by the FBI 

during its pre-9/11 investigations and, in the case of the former, on the materials obtained 

in the March 2002 search of BIF’s Bosnian offices. In its official Statement of the Case 

that provides support for the designation, OFAC traced BIF’s founding by Batterjee and 

“the close relationship between Arnaout and Usama bin Ladin, dating from the mid107The government later put together this evidence and much more in an evidentiary proffer it submitted to 

the court in advance of trial. 

108 Treasury Memorandum, April 12, 2002. The memo proposed a six-month limit for discussion purposes, 

and offered a “clear recommendation” that temporary blocking orders be pursued with “due diligence and 

an anticipated end date.” In May and June 2002, OFAC provided GRF and BIF, respectively, with notice of 

its intent to designate them and provided them with time to respond. The lengthy duration of the temporary 

designations resulted in part from extensions of time requested by BIF and GRF. These requests were 

necessary, at least in part, because OFAC continually added additional documents to the administrative 

record, and BIF and GRF wanted time to review and respond to them before any permanent designation 

was issued. In addition, BIF and GRF were only slowly getting access to their own records, which the 

government had seized, and they wanted additional time to use these records in their defense. 
National Commission on Terrorist Attacks Upon the United States 

106

1980s and continuing at least until the early 1990s.”109 OFAC drew links between BIF 

and Bin Ladin by noting (1) in 1998, BIF provided direct logistical support for an al 

Qaeda member and Bin Ladin lieutenant, Mamdouh Mahmud Salim, to travel to BosniaHerzegovina;110 (2) telephone records linked BIF to Mohammed Loay Bayazid, who had 

been implicated in al Qaeda’s effort to obtain enriched uranium; (3) in the early 1990s, 

BIF produced videotapes that eulogized dead fighters, including two al Qaeda members; 

and (4) in the late 1990s, a member of al Qaeda’s Shura Council served as an officer in 

BIF’s Chechnya office. OFAC cited a number of ways in which BIF’s activities differed 

from its ostensible purpose (e.g., it altered its books to make support for an injured 

Bosnian fighter appear as aid to an orphan), the purchase of equipment for Chechen 

fighters, and the newspaper article the FBI agents had found in the trash, in which 

someone had highlighted the weaknesses in the U.S. defenses against bioterrorism. 

As for GRF, OFAC’s internal documents supporting the designation spelled out its ties to 

al Qaeda leaders, including (1) evidence that GRF provided $20,000 to a suspected al 

Qaeda fund-raiser in November 2001; (2) the phone contacts between GRF’s executive 

director and the mujahideen leader associated with al Qaeda leadership; (3) the phone 

contacts linking GRF to Wadi al Hage, UBL’s personal secretary, who was convicted in 

the United States for his role in the 1998 embassy bombings; and (4) funds that GRF 

received from Mohammed Galeb Kalaje Zouaydi, a suspected al Qaeda financier in 

Europe who was arrested in Spain in 2002.

OFAC’s unclassified Statement of the Case laid out the extensive evidence indicating 

GRF’s role in supporting jihad. This evidence included the pictures of sophisticated 

communications equipment the FBI had found in the trash, photographs of jihadists both 

alive and dead, and documents establishing GRF’s enthusiastic support for armed jihad. 

For example, a GRF pamphlet from 1995 stated, “God equated martyrdom through 

JIHAD with supplying funds for the JIHAD effort. All contributions should be mailed to: 

GRF.” Another GRF publication stated that charitable funds “are disbursed for equipping 

the raiders, for the purchase of ammunition and food, and for [the mujahideen’s] 

transportation so that they can raise God the Almighty’s word[;] . . . it is likely the most 

important . . . disbursement of Zakat in our times is on the jihad for God’s cause[.]”111

OFAC’s assertions and the resulting UN actions publicly designated BIF and GRF as 

supporters of al Qaeda and effectively shut down these operations around the world.

109 OFAC BIF Statement of the Case. 110 Salim was later indicted for conspiracy to kill U.S. nationals, an overt act that included the 1998 

embassy bombings. While in custody, he assaulted a corrections officer, inflicting grievous and permanent 

injury. Testimony in the 2001 embassy bombing trial also implicated Salim in al Qaeda’s efforts to develop 

WMD. 

111 OFAC GRF Statement of the Case. 
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BIF and GRF Challenges to OFAC’s Actions 

GRF failed in its efforts to challenge OFAC’s initial asset blocking in court. On June 11, 

2002, the court denied GRF’s claim for an injunction requiring the government to 

“unfreeze” its assets and return its property. The court held that GRF was not entitled to 

an injunction because it had failed to establish a reasonable likelihood of success on its 

claims that the U.S. government had violated its constitutional rights or the laws of the 

United States.112 GRF’s appeal was denied, and the U.S. Supreme Court refused to 

consider the case.113 Although its legal challenge to the preliminary designation failed, 

GRF has continued to litigate the issue of whether sufficient evidence existed to justify its 

designation as an SDGT. As of this writing, that litigation is pending in federal district 

court in Chicago. 

BIF’s challenge to having its assets blocked pending investigation was stayed until the 

criminal case was resolved, and eventually it was dismissed. BIF elected not to challenge 

OFAC’s designation of it as an SDGT. By that time, BIF was focused on the criminal 

issues, and, in any event, it was clear that BIF was dead as an organization. 

Counsel for BIF and GRF expressed great frustration with the OFAC process, including 

the blocking of assets without any adversarial process adjudicating culpability, their view 

that the process lacked defined standards, their perception of OFAC’s unresponsiveness 

to attorney inquiries and licensing requests, the use of classified evidence unavailable to 

the defense, and OFAC’s reliance on evidence that would not be admissible in a judicial 

proceeding. For example, BIF’s counsel was stunned to see that the administrative record 

supporting BIF’s designation included newspaper articles and other rank hearsay. To BIF 

and GRF’s counsel, experienced lawyers steeped in the federal courts’ rules of evidence 

and due process, the OFAC designation process seemed manifestly unfair. In response, 

OFAC points out that the courts have upheld the process and standards it uses in 

designations, as well as the use of classified information, news articles and other hearsay 

in support of the designations. OFAC further maintains that its administrative record 

fully supports the designations of BIF and GRF. 

Vigorous Defense in the Criminal Case 

Before his plea, Arnaout vigorously litigated the criminal charges against him. As the 

case moved closer to trial, the government submitted a lengthy statement of facts setting 

forth the historical evidence tying Arnaout to Bin Ladin and al Qaeda. This proffer, 

which included multiple voluminous appendixes, drew heavily on the documents seized 

in Bosnia. The government did not provide specific evidence that BIF funded al Qaeda. 

112 Global Relief Foundation v. O’Neill et al., 207 F. Supp. 2d 779, 809 (N.D. Ill. 2002). 113 Global Relief Foundation v. O’Neill et al, 748 (7th Cir. 2002), cert denied, 124 S. Ct. 531 (2003). 
National Commission on Terrorist Attacks Upon the United States 

108

Rather, it relied heavily on evidence that predated both BIF’s creation and Bin Ladin’s 

having become an avowed enemy of the United States. 

Through his counsel, Arnaout asked the court to exclude all evidence related to al Qaeda, 

Bin Ladin, or other terrorist groups. To Arnaout, the government’s case essentially boiled 

down to diverting charitable funds to support Chechen and Bosnian fighters, and had 

nothing to do with bin Ladin, terrorism, or al Qaeda. The proffer demonstrated, he 

contended, that “the United States intends to try Enaam Arnaout not for acts he 

committed in violation of United States laws, but rather for associations he had over a 

decade ago, before he relocated to this country, with people who were at the time 

America’s allies but who are now its enemies.”114 The court reserved ruling on the 

evidence until trial, but in a ruling ominous to the government held that Arnaout 

“persuasively argues that a significant amount of the government’s . . . proffer contains 

materials that are not relevant to him nor probative of the charges in the indictment(s), 

but rather are highly prejudicial matters suggesting guilt by association.”115

Conviction and Sentence 

On the morning that trial was to commence, Arnaout pled guilty to one count of 

racketeering conspiracy for fraudulent diversion of charitable donations to promote 

overseas combatants. He admitted that BIF solicited donations by representing the money 

would be used to provide humanitarian relief to needy civilians, while concealing “from 

donors, potential donors, and federal and state governments in the United States that a 

material portion of the donations received by BIF based on BIF’s misleading 

representations was being used to support fighters overseas.”116 The supplies Arnaout 

admitted that he and others agreed to provide included boots for fighters in Chechnya, 

boots, tents, uniforms for soldiers in Bosnia-Herzegovina, and uniforms for a provisional 

but unrecognized government in Chechnya. The court later determined that the amount of 

funds diverted from humanitarian relief to support these fighters totaled $315,624.117

Arnaout never admitted to supporting al Qaeda or any other terrorist group. To the 

contrary, as the presiding federal district court judge pointed out, “In its written plea 

agreement, the government agreed to dismiss sensational and highly publicized charges 

of providing material support to terrorists and terrorist organizations.”118

The court sentenced Arnaout to more than 11 years in prison, but flatly rejected the 

government’s request that it apply the sentencing enhancement for crimes of terrorism, 

which would have mandated a 20-year prison sentence. The court said plainly, “Arnaout 

does not stand convicted of a terrorism offense. Nor does the record reflect that he 

114 Defendant’s Motion in Limine to Exclude Evidence of Historical Events (January 13, 2003). 115 Order, Jan. 30, 2003. Separately, the court rejected the government’s proffer as insufficient to satisfy 

the hearsay exception for co-conspirator statements. U.S. v. Arnaout, 2003 U.S. Dist. Lexis 1635 at *1 

(Feb. 4, 2003). This order made it more difficult and riskier for the government to offer such statements at 

trial.

116 Plea Agreement at 4. 117 U.S. v. Arnaout, 282 F. Supp. 2d 838, 840 (N.D. Ill. 2003). 118 United States v. Arnaout, 282 F. Supp. 2d at 843. 
Terrorist Financing Staff Monograph 

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attempted, participated in, or conspired to commit any act of terrorism.”119 Moreover, the 

court held that the offense to which Arnaout pled guilty, racketeering conspiracy, was not 

a crime of terrorism as defined by law. The court further held that applying the 

enhancement would be improper because the “government has not established that the 

Bosnian and Chechen recipients of BIF aid were engaged in a federal crime of terrorism, 

nor that Arnaout intended the donated boots, uniforms, blankets, tents, x-ray machine, 

ambulances, nylon and walkie-talkies to be used to promote a federal crime of 

terrorism.”120 The court did increase Arnaout’s prison time on the grounds that he 

diverted humanitarian aid from the destitute population BIF was aiding to armed fighters. 

Both the government and Arnaout appealed the sentence. Arnaout challenged the court’s 

enhancement of his sentence for diverting funds from needy civilians, and the 

government challenged the refusal to apply the terrorism enhancement. A decision is 

pending.

Although Arnaout pled guilty to a serious felony and received a long prison sentence, 

many people in the Islamic and Arab communities concluded that Arnaout had been 

vindicated of any charge of supporting terrorism. They interpreted the judge’s refusal to 

apply the terrorism sentencing enhancement as a major defeat for the government. As Al 

Jazeera told its online readers, “The U.S. government had hoped for a high profile 

‘terrorism’ conviction, but the judge said the case had not been made.”121 The charge 

Arnaout pled to, although undeniably serious, fell far short of what the judge derisively 

called “sensational and highly publicized” charges of supporting terrorists, which the 

Attorney General himself had announced with great fanfare. A BIF lawyer believes that 

Arnaout’s case, along with the shutdown of BIF, hurt and angered the Muslim 

community in the Chicago area. She fears that the bad feelings left by the case 

substantially reduce the likelihood of cooperation with law enforcement in the future. 

Senior FBI agents in the Chicago office, who devote substantial effort to community 

outreach, agreed that the plea and the court’s refusal to sentence Arnaout as a terrorism 

offender led many in Chicago’s large Islamic community to see him as vindicated and to 

believe the government unjustly targeted him for prosecution—“picking on a poor guy” 

who is standing up for Muslims, as one agent described it.122 These agents, as well as the 

case agents, agree that accepting a plea to a serious RICO (Racketeer Influenced and 

Corrupt Organization Act) charge was the right decision, but believe a trial would have 

allowed the government to lay out all its evidence against Arnaout in open court. They 

believe the community then would have seen what the agents saw—that Arnaout and BIF 

were supporting terrorism. 

119 Id. 120 Id. at 845. 121 Http://english.aljazeera.net (accessed Dec. 31, 2003). 122 Commission Staff Interview. 
National Commission on Terrorist Attacks Upon the United States 

110

Status of the GRF Criminal Case 

The government’s criminal investigation of GRF included the review of the voluminous 

documents and computer records seized from the GRF office and interviews with GRF 

personnel. Despite this effort, the government has to date filed no criminal charges 

against GRF or its leadership, and any such charges appear increasingly unlikely. GRF 

steadfastly denies any wrongdoing and its supporters view the government’s failure to 

follow the OFAC blocking with a criminal indictment as a vindication of the 

organization. GRF’s counsel contends that GRF never provided a single dollar to fund 

terrorism and that the government’s evidence of suspicious links with terrorists all have 

innocuous explanations. He asserts GRF is an entirely innocent victim of the 

government’s attempt to take some actions to respond to public panic caused by 9/11. 

The government never proved a criminal case against GRF fund-raiser Haddad. Instead, 

Haddad was deported to his native Lebanon in July 2003 after an immigration judge 

found him ineligible for asylum because he was a security danger to the United States, a 

decision which was affirmed by the Board of Immigration Appeals. The decision to 

deport him rather than continue the criminal investigation was made in Washington, 

without consultation with the Detroit case agent who had investigated Haddad. Despite 

the findings of the immigration judge, Haddad’s deportation generated considerable 

sympathy for him and condemnation of an alleged violation of his civil rights by the U.S. 

government. The government contends that ample evidence demonstrated that Haddad 

had significant terrorist ties and was a substantial threat to the United States.123

Lessons of BIF/GRF 

The agents and officials in these cases faced one of the most important and difficult 

issues in the fight against al Qaeda and jihadist fund-raising: there is a difference between 

troubling “links” to terrorists and compelling evidence of supporting terrorists. This gives 

rise to a further issue: how much information does the government need before it can take 

action against a potential terrorist fund-raiser? 

Law enforcement officials had concluded that both BIF and GRF had substantial and 

very troubling links to al Qaeda and the international jihadist movement. Government 

agents had little doubt that the leadership of these organizations endorsed the ideology of 

armed jihad and, in many cases, supported an extremist and jihadist ideology. Both of 

these organizations raised large amounts of money in the United States, which they sent 

overseas, often to or through people with jihadist connections. When the money went 

overseas, it became virtually untraceable, since it could be converted to cash and sent 

123It is not our purpose to assess Haddad’s culpability, but we recognize the decision not to criminally 

prosecute him does not amount to an exoneration. A decision about whether to prosecute an individual can 

turn on a number of factors other than his guilt, including whether unclassified evidence is available to use 

in court against him. 
Terrorist Financing Staff Monograph 

111

anywhere in the world. Moreover, BIF, at least, was plainly funding armed jihadist 

fighters.

But there is another side to the story. Despite these troubling links, the investigation of 

BIF and GRF revealed little compelling evidence that either of these charities actually 

provided financial support to al Qaeda—at least after al Qaeda was designated a foreign 

terrorist organization in 1999. Indeed, despite unprecedented access to the U.S. and 

foreign records of these organizations, one of the world’s most experienced and best 

terrorist prosecutors has not been able to make any criminal case against GRF and 

resolved the investigation of BIF without a conviction for support of terrorism. Although 

the OFAC action shut down BIF and GRF, that victory came at considerable cost of 

negative public opinion in the Muslim and Arab communities, who contend that the 

government’s destruction of these charities reflects bias and injustice with no measurable 

gain to national security. 

The cases of BIF and GRF reveal how fundamentally 9/11 changed law enforcement and 

the approach of the U.S. government to those suspected of financing terrorists. In the 

past, suspicions of terrorist connections often resulted in further investigation but not 

action. The FBI watched jihadist sympathizers send millions of dollars overseas because 

they did not have a sense of urgency about disrupting the fund-raising and, in any event, 

had no practical way to do so. The 9/11 attacks changed everything. Suddenly, letting 

money potentially earmarked for al Qaeda leave the United States became another 

potential mass casualty attack. The government after 9/11 had both the will and the tools 

to stop the money flow. Thus, the government targeted and destroyed BIF and GRF in a 

way that was inconceivable on September 10.

But the question remains, was the destruction of BIF and GRF a success? Did it enhance 

the security of the United States or was it a feckless act that violated civil rights with no 

real gain in security? A senior government official who led the government’s efforts 

against terrorist financing from 9/11 until late 2003 believed the efforts against the 

charities were less than a full success and, in fact, were a disappointment because neither 

charity was publicly proved to support terrorism. The former head of the FBI’s Terrorist 

Financing Operations Section believes that strong intelligence indicated GRF and BIF 

were funding terrorism and, although the evidence for a strong criminal terrorism case 

may have been lacking, the government succeeded in disrupting terrorist fund-raising 

mechanisms. At the same time, he believes the cases have not been successful from a 

public relations perspective because there have been no terrorism-related convictions. 

BIF and GRF still contend they never supported terrorism, and decry the government’s 

conduct as counterproductive and abusive. A BIF lawyer said she understands the 

government’s desire to take decisive action after 9/11 but thinks in moving against BIF 

the government overreached, lost sight of what the evidence showed, sought to graft 

irrelevant, dated al Qaeda allegations onto a simple fraud case, and ignored the rules of 

fairness and procedural safeguards that make our system the best in the world. In her 

view, the U.S. government “needs to be better than that,” especially in times of crisis 

when our values are put to the test. 
National Commission on Terrorist Attacks Upon the United States 

112

Our purpose is not to try to resolve the question of whether BIF or GRF actually provided 

funds to terrorists. We can, however, come to some understanding about whether the 

government action against them was justified. Reviewing the materials, classified and 

unclassified, available to the government makes it clear that their concerns about BIF and 

GRF were not baseless. There may not have been a smoking gun proving that these 

entities funded terrorism, but the evidence of their links to terrorists and jihadists is 

significant. Despite the charities’ humanitarian work, responsible U.S. officials 

understandably were concerned about these organizations sending millions of dollars 

overseas, given their demonstrable jihadist and terrorist ties. Moreover, Arnaout has 

admitted to fraudulent conduct, which in and of itself constitutes a serious felony, even 

though it does not prove he funded al Qaeda.

At the same time, the government’s treatment of BIF and GRF raises substantial civil 

liberty concerns. IEEPA’s provision allowing blocking “during the pendency of an 

investigation” is a powerful weapon with potentially dangerous applications when 

applied to domestic institutions. This provision lets the government shut down an 

organization without any formal determination of wrongdoing. It requires a single piece 

of paper, signed by a midlevel government official. Although in practice a number of 

agencies typically review and agree to the action, there is no formal administrative 

process, let alone any adjudication of guilt. Although this provision is necessary in rare 

emergencies when the government must shut down a terrorist financier before OFAC can 

marshal evidence to support a formal designation, serious consideration should be given 

to placing a strict and short limit on the duration of such a temporary blocking. A 

“temporary” designation lasting 10 or 11 months, as in the BIF and GRF cases, becomes 

hard to justify.

Using IEEPA at all against U.S. citizens and their organizations raises potentially 

troubling civil liberties issues, although to date the courts have rejected the constitutional 

challenges to IEEPA in this context.124 As the Illinois charities cases demonstrate, IEEPA 

allows the freezing of an organization’s assets and its designation as an SDGT before any 

adjudication of culpability by a court. The administrative record needed to justify a 

designation can include newspaper articles and other hearsay normally deemed too 

unreliable for a court of law. A designated entity can challenge the designation in court, 

but its chances of success are limited. The legal standard for overturning the designation 

is favorable to the government, and the government can rely on classified evidence that it 

shows to the judge but not defense counsel, depriving the designated entity of the usual 

right to confront the evidence against it. Still, because of the difficulties of prosecuting 

complex terrorist-financing cases the government may at times face the very difficult 

choice of designating a U.S. person or doing nothing while dollars flow overseas to 

potential terrorists.125

124 As noted above, the GRF challenge to IEEPA’s constitutionality failed in court. See also Holy Land 

Found. For Relief and Dev. v. Ashcroft, 219 F. Supp. 2d 57 (D.D.C. 2002) (upholding use of IEEPA 

against purported charity accused of funding terrorism). 

125 The IEEPA process gives the designated person fewer rights than in the somewhat analogous 

circumstance of civil forfeiture, in which the government seeks to take (as opposed to freeze) property that 
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Finally, we need to keep BIF and GRF in mind as we evaluate the efforts (or lack of 

efforts) of our allies as they respond to intelligence concerning persons allegedly 

financing terrorism. Several former government officials have criticized the Saudi 

government for its failure to prosecute individuals for financing terrorism. As one put it, 

Saudi Arabia needs a “Martha Stewart”—a high-profile donor whose prosecution can 

serve as deterrent to others. Much of the frustration with the Saudis results from their 

apparent lack of will to prosecute criminally those persons who U.S. intelligence 

indicates are raising money for al Qaeda. Although willing to take other actions based on 

the intelligence—such as removing someone from a sensitive position or shutting down a 

charity—the Saudis have failed to impose criminal punishment on any high-profile 

donor. BIF and GRF should remind us that terrorist links and evidence of terrorist 

funding are far different things. Saudi Arabia and other countries certainly have at times 

been recalcitrant in seeking to hold known terrorist fund-raisers accountable for their 

actions. But in criticizing them, we should remember that in BIF and GRF, the total 

political will, prosecutorial and investigative talent, and resources of the U.S. government 

have so far failed to secure a single terrorist-related conviction.

it claims was derived from or used to commit specific crimes or unlawful acts. In seeking forfeiture where 

no crime is charged, the government must file a civil lawsuit and bear the burden of proof by a 

preponderance of the evidence (the standard used in most civil cases) that the property in question is 

forfeitable. The defendant gets the same type of discovery of the evidence available to any other litigant, 

such as taking sworn depositions and obtaining documents. Moreover, the defendant has the right to avoid 

forfeiture by demonstrating that he is an innocent owner, that is, he obtained or possessed the property in 

question without knowing its illegal character or nature.
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Chapter 7

Al Haramain Case Study 

The al Haramain Islamic Foundation (al Haramain or HIF) is one of the most important 

and prominent Saudi charities.126 Al Haramain has been on the radar screen of the U.S. 

government as a potential terrorist-financing problem since the mid- to late 1990s, when 

the U.S. government started to develop evidence that certain employees and branch 

offices might be supporting al Qaeda and related terrorist groups.127

The U.S. government, however, never moved against al Haramain or pushed the Saudi 

government to do so until after 9/11. Terrorist financing simply was not a priority in its 

bilateral relationship with the Saudis before 9/11. Even when discussing terrorist 

financing with the Saudis, the U.S. government was more concerned about issues other 

than Saudi charities and al Haramain.128 Meanwhile, the Saudis were content to leave the 

issue unexplored. 

After the 9/11 attacks, a more focused U.S. government sought to work with the Saudis to 

stem the flow of funds from al Haramain to al Qaeda and related terrorist groups. 

Progress was initially slow; though some U.S.-Saudi cooperation on al Haramain 

occurred within the first six months after 9/11, it was not until the spring of 2003 that the 

U.S. government and the Saudi government began to make real strides in working 

together to thwart al Haramain. 

Background

Al Haramain, a Saudi Arabia–based nonprofit organization established in the early 1990s, 

has been described by several former U.S. government officials as the “United Way” of 

Saudi Arabia. It exists to promote Wahhabi Islam by funding religious education, 

mosques, and humanitarian projects around the world.129

At its peak, al Haramain had a presence in at least 50 countries. Al Haramain’s main 

headquarters are in Riyadh, Saudi Arabia, but it maintains branch offices in a number of 

126 See chapter 1 for the scope of this analysis. 127 This chapter is derived from a review of internal government document and interviews with government 

policy makers. It was especially aided by the commission staff’s ability to access and review NSC 

subgroup minutes of meetings, as well as internal memoranda from the NSC, State, Treasury and the 

intelligence community. 

128 Our investigation has focused on al Haramain in the context of al Qaeda financing. Although much of 

our analysis may apply to the financing of other terrorist groups, we have made no systematic effort to 

investigate any of those groups, and we recognize that the financing of other terrorist groups may present 

the U.S. and Saudi governments with problems or opportunities not existing in the context of al Qaeda. 129 The Web site uses the term salafi, which is the preferred term of Saudi practitioners of Wahhabism. 

Some argue that Wahhabism is a virulent form of religious extremism, while others have a more benign 

view of it. See chapter 2 for more information. 
Terrorist Financing Staff Monograph 

115

countries to facilitate the distribution of charitable funds. Some of these offices are 

staffed by Saudi citizens; others are managed by the nationals of the countries involved. 

Estimates of its budget range from $30 to $80 million. It claims to have constructed more 

than 1,299 mosques, it funds imams and others to work in the mosques, and it sponsors 

more than 3,000 “callers to Islam” for tours of duty in different locations “to teach the 

people good and to warn them from wrongs.” HIF provides meals and assistance to 

Muslims around the world, distributes books and pamphlets, pays for potable water 

projects, sets up and equips medical facilities, and operates more than 20 orphanages.

Although both the Saudi government and al Haramain say that it is a private organization, 

al Haramain has considerable ties to the Saudi government. Two government ministers 

have supervisory roles (nominal or otherwise) over al Haramain, and there is some 

evidence that low-level Saudi officials had substantial influence over various HIF offices 

outside of Saudi Arabia. The Saudi government has also historically provided financial 

support to al Haramain, although that may have diminished in recent years. 

Charity and charitable organizations, like al Haramain, are extremely important to Saudi 

society. As discussed in more detail in chapter 2, religious and civic duty and government 

and religious functions in Saudi Arabia are intertwined. This dynamic creates 

complications for the Saudi government as it seeks to stem the flow of funds from Saudi 

Arabia to al Qaeda and related terrorist groups, and difficulties for the U.S. government 

as it seeks to engage the Saudis on terrorist financing. 

Before 9/11 

After the East Africa bombings in the summer of 1998, the U.S. government began to 

give more attention to terrorist financing. The National Security Council established a 

subgroup of the Counterterrorism Security Group to focus the U.S. government’s efforts 

on terrorist financing.130 As a result of this focus, and the consequent discovery that al 

Qaeda was not financed from Bin Ladin’s personal wealth, the NSC became increasingly 

interested in Saudi charities and Bin Ladin’s use of charities to fund terrorism.131

By no later than 1996, the U.S. intelligence community began to gather intelligence that 

certain branches of HIF were involved in financing terrorism. Later, the U.S. intelligence 

community began to draw links among HIF, the 1998 East Africa bombings, jihad 

actions in the Balkans, Chechnya, and Azerbaijan, and support for al Qaeda generally. 

The United States shared some of its information with the Saudis in an effort to spur 

action, including evidence that al Haramain officials and employees in East Africa may 

have been involved in the planning of the 1998 embassy bombings. The United States 

sought information and reports from the Saudis on employees of al Haramain around the 

globe and their connections to Bin Ladin, but received no substantive responses.

130 Terrorist financing was also a component of the larger strategic plan Richard Clarke developed after the 

embassy bombings. 

131 The U.S. government’s efforts to understand al Qaeda financing, and its engagement with Saudi Arabia, 

are described in chapter 3. 
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The Saudis took little initiative with respect to their charities. They did not make tough 

decisions or undertake difficult investigations of Saudi institutions to ensure that they 

were not being used by terrorists and their supporters. Although the Saudis did institute 

“Guidelines for Preventing Money Laundering” in 1995 and “Regulations on Charitable 

Organizations and Institutions” in 1990, these were very loose rules whose enforcement 

was doubtful. Moreover, the regulations covered only domestic charities, through the 

Ministry of Labor and Social Affairs, and exempted all charities set up by royal decree. 

There may have been a number of reasons for Saudi inaction. Certainly, as we have 

discussed elsewhere (see chapter 2), the prominence of religion-based charities in Saudi 

culture may have made the Saudis reluctant to entertain the idea that charities might be 

involved in clandestine activities. Some in the United States suspected that the Saudis 

were complicit or at least turned a blind eye to the problem posed by charities during this 

period, although others vehemently disagreed. 

Ultimately, however, the U.S. government simply did not ask much of the Saudis on 

terrorist financing, and the Saudis were content to do little. We did not provide sufficient 

information for the Saudis to act against charities like al Haramain, did not push the 

Saudis to undertake investigations of charities like al Haramain, and did not request real 

cooperation from the Saudis on intelligence or law enforcement matters relating to 

charities like al Haramain. 

Other areas of U.S. policy involving the Saudis took precedence over terrorist-financing 

issues such as those concerning al Haramain. The U.S. government wanted the Saudis to 

support the Middle East peace process, ensure the steady flow of oil, cut off support to 

the Taliban, continue various mutually beneficial economic arrangements, and assist in 

the containment of Iraq. Given these other interests, stopping the money flow to terrorists 

was not a top priority in the U.S.-Saudi relationship.

Saudi policy was formulated at a very high level in the U.S. government. During the late 

1990s, the U.S.-Saudi relationship was handled primarily by the U.S. government’s most 

senior officials, including the secretaries of key departments (collectively referred to as 

the “Principals”), and often even by the President alone. This situation reflected the 

significance of the U.S. interests involved, considerable Saudi ties to senior U.S. officials, 

and U.S. willingness to accede to the strong Saudi preference for bypassing the U.S. 

bureaucracy. One former NSC official noted that before 9/11, lower-level officials in 

both governments generally handled terrorist financing, especially given the weakness of 

the intelligence on terrorist financing and the issue’s low priority. The officials with 

knowledge about it were not the ones interacting with the Saudis, and those who were 

interacting with the Saudis did not push the issue of terrorist financing because their 

concerns were different.

Moreover, the U.S. government had too little unilateral intelligence on HIF and on al 

Qaeda’s funding mechanisms generally to press the Saudis. The Principals did not want 

to confront the Saudis with suspicions; they wanted firm evidence. One NSC official 
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117

indicated that there was some intelligence regarding charities, but it did not rise to the 

level of being actionable against any specific charity. As he said, “One individual could 

be dirty, but it would be difficult to justify closing down a charity on that basis.” 

Occasionally the U.S. government provided select pieces of information out of context, 

but this method lessened the impact of the intelligence.

After 9/11 

As we described in chapter 3, the 9/11 attacks generated a sudden and high-level interest 

in terrorist financing. Attention invariably turned to Saudi Arabia. The U.S. and Saudi 

governments initially agreed on a joint strategy, represented by the mutual U.S.-Saudi 

action against two branches of al Haramain in March 2002 designating them as financiers 

of terror.132 But it was not until the spring of 2003 that the U.S. government developed a 

coherent strategy on engaging the Saudis on terrorist financing and specified a senior 

White House official to deal with the Saudi government on these issues. These elements 

enabled the U.S. government to capitalize on a new Saudi commitment to countering the 

financing of terrorism after the Riyadh bombings on May 12, 2003. 

From 9/11 to March 2002: The U.S. government’s initial efforts to 

organize the interagency process and engage the Saudis 

Two things occurred immediately after 9/11: first, the U.S. government formed what 

turned out to be a generally effective interagency coordinating committee on terrorist 

financing; second, this group began discussing possible action to take against al 

Haramain. 

Immediately after 9/11, the U.S. government, for the first time, developed a generally 

effective mechanism to coordinate agencies’ approach to terrorist finance. Initially, an ad 

hoc gathering of agency representatives met under the auspices of the NSC to discuss and 

coordinate terrorist-financing issues. In March 2002, this ad hoc group was formalized 

by the NSC as the Policy Coordinating Committee (PCC), chaired by the Treasury 

Department with representatives from eight agencies with relevant subagencies. The PCC 

was designed to recommend to the President policy initiatives and actions aimed at 

destroying the financial infrastructure of terrorism.

After 9/11, there was constant discussion at the PCC about how to engage the Saudi 

government on terrorist financing. The U.S. government had new, aggressive legal 

authorities under Executive Order 13224 and UN Security Council Resolution 1373 (see 

chapter 5). The major issue was whether to use these coercive tools unilaterally or take a 

more diplomatic approach in engaging Saudi Arabia and their charities. On the one hand, 

using these tools against al Haramain, one of the most important Saudi charities, could be 

132 For an explanation of the IEEPA and UNSC process, see chapter 5, concerning al-Barakaat. 
National Commission on Terrorist Attacks Upon the United States 

118

counterproductive without Saudi support.133 On the other hand, using these strong tools 

could send an unequivocal message that the U.S. government and the international 

community were serious about fighting terrorist financing.

After considering the options for designating al Haramain, the PCC decided to try to 

engage the Saudis constructively on this charity. The United States wanted many things 

from the Saudis: information about the hijackers, action against al Qaeda cells training 

and operating in Saudi Arabia, intelligence sharing, and access to detained individuals. 

Terrorist financing was not the only element of the U.S.-Saudi counterterrorism 

relationship, nor the only objective of U.S. counterterrorism policy. The concern was that 

if the U.S. government pressed the Saudis on al Haramain, the Saudis’ cooperation with 

the United States on counterterrorism issues or other issues would be jeopardized.

Moreover, as was the case before 9/11, the intelligence was simply not strong enough 

against the HIF headquarters to push the Saudi government to take aggressive action 

against the whole organization. As an early 2002 strategy paper emphasized, the United 

States needed to gather more solid, credible evidence on al Haramain, which could be 

released to the Saudi government as a way to ensure continued Saudi cooperation. 

Although the intelligence community expressed repeated concerns that al Haramain was 

deeply corrupted, others argued that there was little actionable intelligence on the charity. 

The intelligence presented to the policymakers was either dated, spoke to fund-raising for 

“extremism” or “fundamentalism” and not for terrorism, or lacked specificity. Indeed, 

because of the lack of specific intelligence, the U.S. government was in “asking mode” 

on al Haramain when interacting with the Saudis. 

There was also the sense that the Saudi government would prefer to cooperate quietly 

with the U.S. government for internal political reasons. Perhaps they did not want to 

create the impression that charities were under attack. U.S. officials agreed to pursue 

quiet cooperation as long as the U.S. government saw concrete results. Although the 

United States saw no concrete results until 2003, it stuck with its plan to engage the 

Saudis quietly on terrorist-financing matters. 

This cooperative approach was in evidence in the first interactions between U.S. and 

Saudi officials on al Haramain. In late November 2001, Assistant Secretary of State 

William Burns traveled to the Kingdom and shared U.S. concerns about terrorist 

financing with his Saudi interlocutors.134 Al Haramain was not a subject of the questions 

but was listed in the talking points for the trip as an entity of concern. 

Then, on January 17, 2002, Assistant Secretary Burns and Ambassador Robert Jordan 

provided the Saudi Crown Prince Abdullah and Foreign Minister Prince Saud al Faisal 

with a proposal for a joint U.S.-Saudi freeze of the accounts of eight Saudi entities and 

133 Within weeks after 9/11, the United States used its new powers of designation to freeze the assets of a 

prominent Saudi citizen, Yasin al Qadi. Apparently this unilateral action had created backlash in the Saudi 

government. 

134 An OFAC team received a one page response in Arabic from Saudi Arabia to these concerns in January 

2002. This response was never supplemented by the Saudi government. 
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individuals, including the al Haramain offices in Bosnia and Somalia. In their 

discussions, the governments focused their attention on the U.S. proposal relating to the 

two al Haramain branch offices. 

In Saudi Arabia at the end of January, Richard Newcomb, the director of Treasury’s 

Office of Foreign Assets Control (OFAC), also raised the possibility with his Saudi 

interlocutors of joint designations. His talking points included two pages of classified 

intelligence on al Haramain (and other charities) to provide the Saudis. The Saudis agreed 

to “look into” the U.S. concerns on al Haramain. In addition to proposing joint 

designations, the U.S. delegation expressed “concern” over several other HIF branches, 

including those in Pakistan and Kenya (both designated in January 2004), and requested 

information from the Saudis. 

On February 5, 2002, the Saudi government issued an official statement acknowledging 

“reports” of abuses by individuals affiliated with foreign offices of HIF and committed 

publicly to take actions to prevent such abuse. However, the Saudis were slow to 

respond to the U.S. proposal on the two al Haramain offices. The issue was taken up by 

senior levels in the U.S. government. For example, Treasury Secretary Paul O’Neill 

raised the proposal on his March 2002 trip to Saudi Arabia. 

Eventually, the Saudi government agreed to the joint designation of the two al Haramain 

offices, although it did not agree to designate the other six entities or individuals 

originally proposed. On March 11, 2002, the U.S. and Saudi governments designated the 

Somali and Bosnian offices of al Haramain, freezing their assets and prohibiting 

transactions with them. Two days later the United Nations added the two branch offices 

to its list of sanctioned entities under UNSCR 1267 and subsequent related resolutions.

From March 2002 to January 2003: The U.S. loses traction

In early 2002, senior-level government officials started developing a new U.S. strategy 

toward Saudi Arabia on counterterrorism generally; terrorist financing would necessarily 

play a part. Because the strategy was so politically sensitive, the task of developing it was 

given to a small group within the NSC. As a result, PCC efforts to deal with the Saudis 

on terrorist financing were placed on hold for most of 2002, while the NSC drafted the 

strategy with a small team of agency representatives. 

During that time, the U.S. government engaged the Saudis only sporadically on HIF. 

Although in the spring of 2002 the U.S. government requested specific information from 

Saudi Arabia on HIF associates, no action was to take place until the larger Saudi strategy 

on counterterrorism had been finalized. 

During the summer and fall of 2002, the U.S. government received information that the 

Bosnian and Somali offices of al Haramain, whose assets were supposed to have been 

frozen and offices shut down, had reopened or were still active in some fashion. In 

September 2002, the U.S. government decided to approach the Saudi government about 
National Commission on Terrorist Attacks Upon the United States 

120

the reopenings of the Bosnian and Somali branches of HIF. The topic was raised at a 

senior level by U.S. government officials in Washington and through official visits to the 

region in the fall of 2002. The Saudis indicated they were unaware of the reopenings but 

said they would work with the U.S. government on the issue. 

During 2002, the Saudis repeatedly said they would be prepared to act against al 

Haramain if the U.S. government provided them with more information, especially about 

specific branch offices and individuals. Some thought that this was perhaps simply lip 

service. For instance, in October 2002 Under Secretary of State Alan Larson raised with 

the Crown Prince strong concerns about the activities of several al Haramain offices. The 

Crown Prince responded that he was ready to act on any specific information the United 

States could provide. Some viewed Saudi requests for information from the United 

States as somewhat disingenuous given Saudi Arabia’s ability to gather information on 

HIF and its supporters. Others were not so sure the Saudis had that ability. Perhaps even 

a tit-for-tat dynamic was at work: the U.S. government did not share intelligence that the 

Saudis thought we had, and which in many cases we did have, so the Saudi government 

feigned ignorance in order not to share its intelligence with the United States. 

In December 2002, the Deputies Committee (DC), which consists of deputy secretaries of 

key departments and generally oversaw the activities of the PCC, approved the 12-step 

program for reinvigorating U.S. policy toward Saudi Arabia on counterterrorism overall. 

Much of the Saudi strategy dealt with terrorist financing. The steps included naming a 

senior interlocutor on terrorist finance, sharing more concrete and actionable intelligence 

with the Saudis, providing expertise in money laundering and investigative techniques, 

encouraging more public discussion of the business risks generated by opaque financial 

structures, pressuring Saudi nongovernmental organizations (NGOs) to adopt better 

oversight practices, and encouraging better use of the media to combat terrorist financing. 

Concurrently with the approval of the Saudi strategy, the DC formally pushed forward a 

“nonpaper”135 on al Haramain. Its goal was to compile U.S. government information on 

HIF, urge the Saudis to take specific actions, and set time frames for such actions. 

Agencies were tasked and the nonpaper was finalized by January 2003. Attention from 

the DC gave the nonpaper sufficient strategic importance for agencies to devote resources 

to developing it and motivated the approval of the release of information. 

Two relatively new appointees, State Department Coordinator for Combating Terrorism 

Cofer Black and Special Assistant to the President and Senior Director on Combating 

Terrorism at the NSC Rand Beers, presented the nonpaper on al Haramain to Saudi 

officials during a previously planned trip on counterterrorism at the end of January 2003. 

At last, the U.S. government was providing the Saudis with the information that they had 

long requested and that the U.S. government had previously failed to supply. The mood 

was optimistic. A Department of State memo from January 2003 referring to al Haramain 

and other cases of concern suggested that “there is every indication that the Saudis are 

135 A “nonpaper” is generally understood to be an official but not definitive statement on an issue by a U.S. 

government agency. 
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ready to work with us on these specific cases now that we have specific information for 

them to act upon.” 

The nonpaper set out al Haramain’s ties to terrorism, with details on various individuals, 

branch offices, and methods of transferring funds. The nonpaper suggested that many al 

Haramain field offices and representatives operating throughout the world, as well as its 

headquarters in Saudi Arabia, appeared to be providing important support to al Qaeda. 

The nonpaper recited prior U.S. requests for information from the Saudis and specific 

points of intelligence the United States had shared with the Saudis since 1998, and it 

noted that the United States had shared with the Saudis very little information between 

9/11 and its delivery.136 The nonpaper contained substantial information, including details 

on the role of the HIF headquarters in supporting terrorist organizations. Reflecting the 

new U.S. strategy, the U.S government was more direct and forceful in its message and 

gave the Saudi government concrete challenges to meet. 

While the nonpaper represented a new and effective tactic, its delivery illustrated a 

shortcoming in the U.S. government’s approach to Saudi Arabia on terrorist financing: 

Cofer Black and Rand Beers were new faces for the Saudis on this issue, and their 

portfolios were much broader than the fight against terrorist financing. The U.S. 

government had used a number of messengers, and there was no single person sending 

the Saudi government a clear message; each individual spoke about terrorist financing 

and HIF in the context of his or her predetermined and wide-ranging agenda; each 

individual spoke to different interlocutors with differing responsibilities and chains of 

command; and despite the sensitivity of the issue, not all the officials were senior. A U.S. 

official on the PCC said that Saudi representatives complained that junior U.S. officials 

were, in essence, bothering them. This failure to focus U.S. engagement of the Saudis 

was most apparent during our efforts to raise the reopenings of the Bosnian and Somali 

offices with Saudi officials. Within a six-week period in the fall of 2002, about five 

emissaries from the United States approached the Saudi government. Our efforts suffered 

from the diffusion of the message and, in the words of one senior U.S. official, the U.S. 

government allowed itself to be “gamed” by the Saudis because it failed to speak with 

one voice.

Moreover, it was acknowledged that the Saudis would be more likely to follow the 

leadership of the U.S. government on this subject if a senior White House official served 

as the interlocutor on terrorist financing to the Saudi government. In fact, the Saudis 

requested such an appointment in the fall of 2002. The U.S. government agreed the idea 

was a good one, but could not settle on an appropriate individual for the role until more 

than six months later. This failure to appoint a senior White House official in a timely 

fashion arguably caused a crucial delay in U.S. efforts to engage the Saudis on terrorist 

financing and al Haramain. One U.S. terrorist-financing official said the Saudis did not 

take terrorist financing seriously until this appointment was made. They looked at U.S. 

actions and concluded that terrorist financing was not as important to the United States as 

other issues.

136 At that time, most of the intelligence on HIF released to the Saudis since 9/11 related to the Bosnian and 

Somali offices of HIF, in connection with the U.S.-Saudi joint designation of these offices in March 2002. 
National Commission on Terrorist Attacks Upon the United States 

122

From 9/11 to May 2003: A lack of real cooperation from the 

Saudis

After 9/11, Saudi government officials appeared to be in denial that vast sums of money 

were flowing from Saudi Arabia to al Qaeda and related terrorist groups, or that the 

government had any responsibility in connection with these money flows. Some in the 

U.S. government thought that it simply never occurred to the Saudi government that a 

charity could be a conduit for terrorist financing. As well, some argued that charities’ 

record keeping and the Saudi government’s controls were insufficient for the Saudi 

government to know of al Haramain’s links to terrorist organizations.

Even after the Saudi government froze the assets of the Bosnian office in March 2002, 

one senior Saudi government official denied in the press that the al Haramain office in 

Sarajevo was engaged in illicit activities. He claimed that the U.S. government had 

apologized to HIF for designating the wrong office. Another senior Saudi official 

characterized any terrorist financing out of the Kingdom as involving isolated cases and 

government controls as sufficient to prevent further problems; a third described HIF’s 

clandestine activities as outside activities. We know these descriptions were inaccurate, 

as the U.S. and Saudi governments continued to take action against al Haramain and its 

employees. 

Despite having frozen the accounts of entities and individuals listed by the United 

Nations under UNSCR 1373, the Saudis did little else initially. They insisted that their 

then 12-year-old charities law would suffice, as would their then 7-year-old anti-moneylaundering statute. Foreign operations of charities were not regulated until 2002, when 

the Ministry of Islamic Affairs was put in charge of overseeing them. In the summer of 

2002, the Saudis claimed that all out-of-country charitable activities had to be reported to 

the Foreign Ministry, but later in the year a representative of the Foreign Ministry said he 

knew of no such regulation. They claimed that they were reviewing all domestic charities 

in 2002 but took no actions and did not inform the U.S. government of any findings, even 

while clandestine activity continued. They repeated promises throughout 2002 to 

establish a High Commission that would oversee all charitable activities, and then 

claimed to have created such an entity in December 2002. By late fall of 2002 the Saudi 

government said it was moving to regulate charities further, but the U.S. government had 

not seen any documentation to that effect as of spring of 2003. 

The Saudis responded to the increase in U.S. pressure, exemplified by the delivery of the 

al Haramain nonpaper in early 2003, by articulating additional counterterrorism policies. 

The measures were to include Ministry of Islamic Affairs preclearance of transfers of 

charitable funds overseas, host government approval of all incoming charitable funds 

from Saudi Arabia, and monitoring of charities’ bank accounts through audits, 

expenditure reports, and site visits. Also in the spring of 2003, the Saudi Arabia 

Monetary Authority (SAMA) was said to have instituted a major technical training 

program for judges and investigators on terrorist financing and money laundering. 
Terrorist Financing Staff Monograph 

123

On al Haramain, the Saudi press reported in February 2003 that the Saudi government 

was planning to restructure the charity. The Saudi government had also reportedly 

initiated an investigation of al Haramain and was examining the personal accounts of 

senior officers. However, the Saudis resisted taking action against a top HIF executive 

despite U.S. requests. In April 2003, the Saudi government said that a new Board of 

Directors would be appointed for al Haramain, no new offices would be permitted, no 

third-country nationals would be hired, all overseas offices were to have their own local 

lawyers and accountants, and a licensing procedure would be implemented. Again, there 

was a sense that the Saudis wished to take such actions quietly. On May 8, 2003, the U.S. 

embassy in Riyadh reported that the Saudi government would close ten al Haramain 

branch offices pending review of their finances. This claim was reiterated several times 

by Saudi or HIF officials over the summer of 2003. 

Although these measures were all steps in the right direction, the Saudi government 

generally failed to carry out a number of the actions pledged. For instance, they did not 

close the branch offices of HIF as promised. As well, the Saudi government remained 

cautious about speaking publicly about counterterrorism issues and ramping up its 

reforms. Some in the U.S. government thought that public statements by the Saudi 

government could have gone a long way toward deterring Saudi financial support for 

terrorists. Admittedly, the Saudis were, and still are, cautious about how any reforms and 

close cooperative efforts with the United States are perceived in the Kingdom. 

Underlying the Saudi government’s reluctance to act against charities funneling money to 

terrorists lay several issues.137 First, at the time the Saudi government did not view al 

Qaeda as a domestic threat. The Saudis simply may not have believed that al Qaeda 

would attack it, despite the known hatred of al Qaeda and Bin Ladin for the Saudi regime. 

The signs were there, however, and even the U.S. government had warned the Saudis of 

possible upcoming attacks in the Kingdom. 

Second, the Saudi government’s efforts on terrorist financing were domestically 

unpalatable. It had been content for many years to delegate all religious activities, 

including those of charities, to the religious establishment and was reluctant to challenge 

that group. Since the Saudi government did not view al Qaeda as a domestic threat at that 

time, it could not justify the potential domestic rancor that would have resulted from a 

strong program against terrorism financing. The challenge was to find a way to increase 

oversight over charities, mosques, and religious donations without endangering the 

country’s stability. Of course, by failing to reassert some measure of control over the 

religious establishment, the House of Saud was just as likely to endanger its stability. 

137 In addition to the points stated below, some with the U.S. government have speculated that the Saudi 

government resisted investigating al Haramain and other charities for fear that such investigations might 

unearth information implicating, or at least unflattering to, senior members of the Saudi government in the 

clandestine activities of the charity. The Commission staff has found no evidence that the Saudi 

government as an institution or as individual senior officials individually funded al Qaeda. 
National Commission on Terrorist Attacks Upon the United States 

124

Third, the Saudi government did not have the technical capabilities to stem the flow of 

funds to terrorists from charities in Saudi Arabia. The Mubahith lacked the necessary 

investigative expertise to track financial crimes. In addition, as described in an internal 

OFAC document from April 2002, “The SAG [Saudi Arabian government] does not have 

the legal or operational structures in place at this time to effectively implement the U.N. 

resolutions relating to the prevention and suppression of the financing of terrorist acts.”138

Although the Saudis claimed to be developing procedures to track all donations to and 

from charities in October 2002, by January 2004 they were described as just starting to 

have such capabilities. Moreover, tighter control over money flows can be achieved only 

if the banks in Saudi Arabia are capable of monitoring and freezing funds. In 2002, the 

U.S. intelligence community was highly skeptical that Saudi banks had the necessary 

technical abilities. 

The U.S. government was willing, and made several offers, to provide the Saudis with the 

necessary training. In 2002, the Saudis were described as “reluctant to host trainers from 

U.S. agencies on issues related to terrorist financing. This reluctance is partly cultural—

an attitude that training implies a lack of equality between the parties.” The U.S. 

government sent a Financial Services Assessment Team (FSAT) to Saudi Arabia in April 

2002 to learn about Saudi financial systems and structures and ascertain opportunities for 

U.S. assistance and training, but the Saudis failed to schedule several key meetings 

during this trip. 

May 2003: Turning a corner 

On May 12, 2003, al Qaeda operatives detonated three explosions in an expatriate 

community in Riyadh, killing Westerners and Saudi Arabians. Since then, the Saudi 

government has taken a number of significant, concrete steps to stem the flow of funding 

from the Kingdom to terrorists. The Saudi government, in one of its more important 

actions after the bombings, removed collection boxes in mosques, as well as in shopping 

malls, and prohibited cash contributions at mosques. This action was important because 

terrorist groups and their supporters have been able to siphon funds from mosque 

donations. Its sensitivity cannot be overestimated. U.S. Ambassador to Saudi Arabia 

Jordan described the removal of the collection boxes as a “cataclysmic event.” It was a 

real action that the Saudi public has both seen and been affected by; it has forced 

everyone to think about terrorist financing. 

On May 24, 2003, the Saudi government followed up with comprehensive new 

restrictions on the financial activities of Saudi charities. These included a requirement 

that charitable accounts can be opened only in Saudi riyals; enhanced customer 

identification requirements for charitable accounts; a requirement that charities must 

consolidate all banking activity into one principal account, with subaccounts permitted 

for branches but for deposits only, with all withdrawals and transfers serviced through the 

main account; a prohibition on cash disbursements from charitable accounts, with 

138 Department of the Treasury, “Note to File,” undated, but probably October 2002. 
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125

payments allowed by check payable to the first beneficiary and deposited into a Saudi 

bank; a prohibition on the use of ATM and credit cards by charities; and a prohibition on 

transfers from charitable accounts outside of Saudi Arabia.

Also, after the May 12 bombings the Saudis initiated action to capture or otherwise deal 

with known al Qaeda operatives, financial facilitators, and financiers in Saudi Arabia. 

Early in this campaign, the Saudis killed a key al Qaeda leader and financial facilitator 

known as “Swift Sword” in a firefight. The arrests and deaths of financial facilitators 

such as Swift Sword have been a blow to al Qaeda and have hampered its fund-raising 

efforts in the Kingdom. 

The May 12 bombings caused the Saudis to become more receptive to disrupting al 

Qaeda financing than ever before; the Saudis appeared ready to take seriously the 

cooperative aspect of “quiet cooperation.” At the same time, the U.S. government finally 

developed a coherent approach to working with the Saudis on combating terrorist 

financing. The United States had an agenda, the Saudi strategy, and was able to engage 

the Saudis more forcefully on the issues than it could have otherwise. Most importantly, 

the U.S. government raised the terrorist-financing dialogue to the highest levels. Fran 

Fragos Townsend, then deputy assistant to the President and deputy national security 

advisor for combating terrorism, was designated the senior White House liaison on 

terrorist financing, and President Bush has publicly stated his confidence in her.

The U.S. government was therefore in a position to test the Saudis’ new focus on terrorist 

financing. Townsend traveled to Saudi Arabia in early August 2003 and again in 

September 2003. One product of the early high-level meetings was the establishment of 

the joint task force on terrorist financing, described below.

Despite the positive atmosphere of the August meetings, one area of continuing concern 

was that the ten al Haramain branches the Saudi government had committed to closing in 

May 2003, before the bombings, were apparently still operating. There was apparently 

some question as to whether the al Haramain head office really had control over its 

branch offices and therefore whether closing the branch offices was the responsibility of 

the Saudi government or the host governments. Some in the U.S. government believe this 

discussion to be specious, since resources regularly flow from the head office to the 

branches. They argue, plausibly, that even if the Saudi government itself cannot control 

the flows of funds, it can pressure the headquarters to cut off these resources to the 

branches or pressure the heads of governments of the countries where the branch offices 

are located to close those offices. 

In the fall of 2003, the Saudi government passed new anti-money-laundering and 

terrorist-financing legislation. This law updated the 1995 anti-money-laundering law and 

improved reporting and record-keeping requirements, created new interagency 

coordination mechanisms, and established a financial intelligence unit to collect and 

analyze suspicious financial transactions. Also that fall, the Saudi government permitted 

a team of assessors from the Financial Action Task Force (FATF) and the Gulf 

Cooperation Council to visit the Kingdom to evaluate its anti-money-laundering and 
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terrorist-financing laws and regulations. Finally, in September 2003 the Saudi 

government questioned the executive director of HIF, Abd al-Rahman Bin Aqil. 

The joint task force on terrorist financing started operations in the fall of 2003 as well. 

The task force consists of staff from both the United States and Saudi Arabia. The task 

force seeks to identify and financially investigate persons and entities suspected of 

providing financial support to terrorist groups. The U.S. government offered the Saudis 

training in conducting financial investigations, and the Saudis “readily accepted.” This 

training focused on the value of tracking financial transactions in an investigation and 

provided practical case studies. The Saudi trainees were dedicated and enthusiastic, 

although very much in need of training. One FBI official said, “I cannot overemphasize 

the importance of this initiative and the efforts on the part of both our countries to make it 

work.”139

In November 2003, another bombing in Riyadh further jolted the Saudi government to 

take action on terrorist-financing issues and cooperate with the U.S. government. One 

U.S. government assessment described the impact of the 2003 Riyadh bombings on the 

Saudis, in conjunction with the May 12 bombings, as “galvanizing Riyadh into launching 

a sustained crackdown against al-Qaida’s presence in the Kingdom and spurring an 

unprecedented level of cooperation with the United States.” Similarly, it noted that “the 

attack of 9 November [2003], which resulted in the deaths of a number of Muslims and 

Arabs during the holy month of Ramadan, transformed Saudi public acceptance of the 

widespread nature of the threat in the Kingdom.”140 As a result, the Saudi government 

may have more latitude to act against terrorist financing than ever before. 

Similarly, FBI officials have ranked Saudi cooperation on terrorist-financing issues as 

“good” since the May 12 and November 8, 2003, Riyadh bombings. The Saudis have 

aggressively interrogated people in their custody about financial matters, including 

questions posed by the U.S. government, and have provided actionable intelligence to the 

U.S. government. A senior CIA counterterrorism official agreed that there had been 

progress in our cooperation with the Saudis. He described it as “not perfect” but a big 

improvement from the difficult days before 9/11. In a sign of the level of U.S. confidence 

in the Saudi effort, the U.S. government is now releasing very sensitive intelligence to the 

Saudis.

By late fall of 2003, Saudis confirmed that since 9/11 they had taken several significant 

steps to modify their rules and regulations to stem the flow of funds to terrorists. In 

addition to the new charities regulations, the removal of zakat boxes, and the task force, 

as described above, the Saudi government said it had established the High Commission to 

oversee all charities, contributions, and donations; required all charities to undergo audits 

and institute control mechanisms to monitor how and where funds are dispersed; directed 

all Saudi charities to suspend activities outside Saudi Arabia; and investigated numerous 

139 Testimony of Thomas J. Harrington, Deputy Assistant Director, Counterterrorism Division, Federal 

Bureau of Investigation, before the House International Relations Subcommittee on the Middle East and 

Central Asia, March 24, 2004. 140 Department of State, Patterns of Global Terrorism 2003, April 2004, p. 67. 
Terrorist Financing Staff Monograph 

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banks accounts suspected of having links to terrorism and frozen more than 40 such 

accounts. The Saudi government has apparently also regulated hawalas through a 

mandatory licensing requirement and legal, economic, and supervisory measures and 

sought to decrease demand for unlicensed hawalas. 

With respect to al Haramain, the Saudi and U.S. governments took further action at the 

end of 2003 and into 2004. On December 22, 2003, the U.S. and Saudi governments 

designated Vazir, an NGO in Bosnia, and its representative a terrorist supporter. It was 

determined that Vazir was simply another name for the previously designated al 

Haramain office in Bosnia. Then, in January 2004 the United States and Saudi Arabia 

jointly designated four additional branches of al Haramain, in Indonesia, Kenya, 

Tanzania, and Pakistan. The two governments held an unprecedented joint press 

conference in Washington to announce the designation. The names of these branches 

were subsequently submitted to the United Nations, which instituted an international 

freeze on their assets. Also, in January 2004 Executive Director Aqil was removed from 

his position. One public explanation was that the firing related to recent incidents 

involving HIF’s operations in Bosnia. 

On February 19, 2004, federal law enforcement took action against both the al Haramain 

branch in Ashland, Oregon, and the imam of the HIF mosque in Springfield, Missouri. 

The FBI and the IRS conducted searches of the Ashland offices of HIF as part of an 

investigation into alleged money laundering and income tax and currency reporting 

violations. Treasury took the additional step of freezing, during the pendency of an 

investigation, the accounts of the branch in Oregon and the mosque in Missouri.

The Saudis continue to make changes to their charities laws and regulations. Rules 

implementing the anti-money-laundering and terrorist-financing law were issued in 

February 2004. Also in February 2004, FATF issued its report indicating that Saudi 

Arabia was in compliance or near-compliance with international standards for almost 

every indicator of effective instruments to combat money laundering and terrorist 

financing.

On February 29, 2004, the Saudi government announced that it had approved the creation 

of the Saudi National Commission for Relief and Charity Work Abroad to take over all 

aspects of overseas aid operations and assume responsibility for the distribution of 

charitable donations from Saudi Arabia. Although the U.S. government had no details 

about this commission as of the end of March 2004, one former U.S. government 

counter-terrorist-financing official said that such an entity could, in theory, replace 

charities such as al Haramain by subsuming all of HIF’s activities into its own. Al 

Haramain was said to be in the process of restructuring its administration and revising its 

financial regulations. Al Haramain was planning to refocus its charity work on Saudi 

Arabia, according to a statement by its new director, Sheikh Dabbas al Dabbas.

Continuing the pressure on al Haramain, the U.S. and Saudi governments jointly 

designated five additional branches of al Haramain (Afghanistan, Albania, Bangladesh, 

Ethiopia, and the Netherlands) on June 2, 2004. The United States also designated former 
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Executive Director Aqil. These names were subsequently submitted to the United Nations 

for an international freeze on their assets. 

Lessons Learned 

The U.S. government’s efforts to address issues raised by al Haramain before and after 

9/11 teach some critical lessons. First, to cause the Saudi government to move against 

terrorist financiers, the U.S. government has to acquire and release to the Saudis specific 

intelligence that will enable them to take the necessary action. Thus, the U.S. government 

was able to get the Saudis to take concrete actions against al Haramain, and charities 

generally, after it released the nonpaper containing specific intelligence about al 

Haramain and its employees to the Saudis in January 2003. Previously, the U.S. 

government appears, for the most part, to have tried to encourage the Saudis to act on the 

basis of little more than U.S. suspicions or assurances that the United States had 

intelligence it could not release. 

Second, counter-terrorist-financing efforts are an essential part of the overall set of 

counterterrorist activities and must be fully integrated into the broader U.S. 

counterterrorism strategy toward Saudi Arabia. Without such integration, those working 

on terrorist financing might not be aware of other bilateral counterterrorism issues. The 

U.S. government might then have the appearance of sending mixed or inconsistent 

messages on counterterrorism to the Saudis. Once the broader Saudi strategy was 

approved, the U.S. government was able to develop a consistent message across 

counterterrorism issues. It could push the Saudis more forcefully on terrorist-financing 

issues, including al Haramain, by, for example, delivering the nonpaper in January 2003. 

In direct response to the nonpaper, the Saudi government announced its decision to close 

ten branch offices of al Haramain. 

Third, U.S. counter-terrorist-financing strategy must be presented to the Saudi 

government by a high-level U.S. government representative. The perils of not speaking 

through a single high-level interlocutor were clear in the case of the reopenings of the 

Bosnian and Somali offices of al Haramain, as discussed above, when, as one key 

terrorist-financing official believed, the Saudis “gamed” us. It was not until the 

appointment of a senior White House official that the U.S engagement of the Saudi 

government on terrorist financing yielded its most concrete results. A PCC participant 

said the Saudis did not take terrorist financing seriously until Townsend was appointed. 

She has been able to apply consistent pressure, over a period of time, with the full 

backing of the White House. 

Fourth, the U.S. government needs a distinct interagency coordinating committee focused 

on terrorist financing to ensure that terrorist-financing issues are not lost in the overall 

counterterrorism effort. The PCC proved to be generally effective in focusing the U.S. 

government on terrorist financing and retaining the momentum of the immediate post9/11 period. It enabled different branches of the U.S. government to vet the information 

on al Haramain and assess the options. It ensured that al Haramain–related issues were 
Terrorist Financing Staff Monograph 

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not lost in the larger counterterrorism picture but were assessed periodically with the full 

attention of the interagency representatives.

At the same time, the coordinating committee must be fully integrated with the overall 

counterterrorism effort so that terrorist financing can be made part of the high-level 

diplomacy necessary to win the cooperation of key allies like Saudi Arabia. One way to 

achieve this goal is give the NSC the lead on the PCC, as is currently the case. The NSC 

is better able than any individual agency to integrate terrorist financing into 

counterterrorism through its leadership of the Counterterrorism Security Group; the NSC 

is better able to see how the different terrorist-financing tools fit together; the NSC is 

better able to task agencies and force agencies to reallocate resources; NSC leadership is 

more efficient because it has the authority to resolve more issues rather than forcing them 

up to the DC level; the NSC has the best access to information, especially regarding 

covert action; and the NSC is not operational and is therefore more neutral. Throughout 

the interagency process on al Haramain, NSC leadership of the PCC might have been 

useful to expedite the process and clarify the U.S. position.

The concept of a “terrorist-financing czar” has been proposed at times; while perhaps it 

could have been useful before 9/11, it would serve little purpose today and could detract 

from the U.S. government’s current efforts and recent successes. Terrorist financing is 

already on the agenda of senior officials, so there is no need for a czar to draw attention 

to the issue. Each of the relevant agencies has established new sections on terrorist 

financing or augmented existing groups to work on terrorist-financing issues. Further 

elevating the issue might overemphasize it or, at the very least, detract from current 

progress in the larger counterterrorism fight. Action against terrorist financing is only one 

tool in the fight against terrorism and must be integrated into counterterrorism policy and 

operations. A czar would undermine this goal. Such a position would also dilute the 

power of a unified message and the benefits of a single messenger on all terrorism-related 

issues that the leadership of the NSC seeks to provide.

Challenges Ahead 

Much remains to be done to address terrorist-financing issues in Saudi Arabia and the 

activities of Saudi charities, such as al Haramain, around the globe. Saudi Arabia has 

worked hard to institute an improved legal and regulatory regime. It remains to be seen if 

the new laws and regulations will be fully implemented and enforced, and if further 

necessary legal and regulatory changes will be made. The Saudis still have not 

established the National Commission as they promised in February 2004 and have not 

demonstrated that they are willing and able to serve as the conduit for all external Saudi 

donations in lieu of Saudi charities.141 Moreover, it is imperative that the Saudi 

government develop its capabilities to monitor cash flows; otherwise, it will not be able 

to assess a given entity’s or individual’s compliance with the new laws and regulations. 

The Saudi government’s acceptance of training from the United States and other 

141 The impact of the Saudi government’s June 2004 announcement of the formation of such a commission 

remains to be seen. 
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countries would demonstrate its willingness to assure that gains in expertise and 

capabilities are ongoing.

It remains to be seen whether the Saudi government will be willing to make politically 

and religiously difficult decisions. The action it has taken in 2004 against several al 

Haramain branch offices is unquestionably significant. Although the government has 

frozen the assets of branches of al Haramain, it has not used its leverage with the head 

office to ensure that no funds flow to the designated branches.142 Similarly, the Saudis 

have yet to hold prominent individuals—like the former head of al Haramain, for 

instance—accountable for terrorist financing. Such actions would send a signal both to 

potential targets and to the Saudi public that the Saudi government is serious about 

stemming the flow of funds to terrorists and their supporters.

We are optimistic that the U.S. and Saudi governments are on the right track in their 

mutual efforts on terrorist financing. Neither country can afford to lessen the intensity of 

its current approach. The Saudi government has come far in recognizing the extent of its 

terrorist-financing problem. We cannot underplay, however, the reluctance of the Saudi 

government to make the necessary changes between 9/11 and late spring of 2003. It 

remains to be seen whether it has truly internalized its responsibility for the problem. A 

critical part of the U.S. strategy to combat terrorist financing will be monitoring, 

encouraging, and nurturing Saudi cooperation while simultaneously recognizing that 

terrorist financing is only one of a number of crucial issues on which the U.S. and Saudi 

governments need each other. 

142 Again, the impact of the Saudi government’s June 2004 announcement dissolving al Haramain remains 

to be seen. 
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Appendix A: The Financing of the 9/11 Plot 

This appendix provides additional detail on the funding of the 9/11 plot itself and how the 

Commission staff investigated the plot financing.

Staff Investigation of the 9/11 Plot 

The staff’s investigation of the 9/11 plot built on the extensive investigations conducted 

by the U.S. government, particularly the FBI. The government thoroughly examined the 

plot’s financial transactions, and the Commission staff had neither the need nor the 

resources to duplicate that work. Rather, the staff independently assessed the earlier 

investigation. We had access to the actual evidence of the plotters’ financial transactions, 

including U.S. and foreign bank account statements, fund transfer records, and other 

financial records. We also had access to the FBI’s extensive work product, including 

analyses, financial spreadsheets and timelines, and relevant summaries of interviews with 

witnesses, such as bank tellers, money exchange operators and others with knowledge of 

the conspirators’ financial dealings. We were briefed by and formally interviewed the 

FBI agents who led the plot-financing investigation, sometimes more than once. 

In addition to the FBI, we met with key people from other agencies, including the CIA 

and the Financial Crimes Enforcement Network (FinCEN), who had relevant knowledge 

about the plot financing. Commission staff also interviewed law enforcement officials 

from other countries who had investigated the 9/11 plot, reviewed investigative materials 

from other countries, and interviewed relevant private-sector witnesses. Finally, the staff 

regularly received relevant reports on the interrogations of the plot participants now in 

custody.

Financing of the Plot 

To plan and conduct their attack, the 9/11 plotters spent somewhere between $400,000 

and $500,000, the vast majority of which was provided by al Qaeda. Although the origin 

of the funds remains unknown, extensive investigation has revealed quite a bit about the 

financial transactions that supported the 9/11 plot. The hijackers and their financial 

facilitators used the anonymity provided by the huge international and domestic financial 

system to move and store their money through a series of unremarkable transactions. The 

existing mechanisms to prevent abuse of the financial system did not fail. They were 

never designed to detect or disrupt transactions of the type that financed 9/11.

Financing of the hijackers before they arrived in the United 

States
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132

Al Qaeda absorbed costs related to the plot before the hijackers arrived in the United 

States, although our knowledge of the funding during this period remains somewhat 

murky. According to plot leader Khalid Sheikh Muhammad (KSM), the Hamburg cell 

members (Muhamad Atta, Marwan al Shehhi, Ziad Jarrah, and Ramzi Binalshibh) each 

received $5,000 to pay for their return from Afghanistan to Germany in late 1999 or early 

2000, after they had been selected to join the plot, and the three Hamburg pilots also 

received additional funds for travel from Germany to the United States. Once the nonpilot 

muscle hijackers received their training, each received $2,000 to travel to Saudi Arabia to 

obtain new passports and visas, and ultimately $10,000 to facilitate travel to the United 

States, according to KSM.143

We have found no evidence that the Hamburg cell members received funds from al 

Qaeda earlier than late 1999. Before then, they appear to have supported themselves. For 

example, Shehhi was being paid by the UAE military, which was sponsoring his studies 

in Germany. He continued to receive a salary through December 23, 2000. The funds 

were deposited into his bank account in the United Arab Emirates and then wired by his 

brother, who held power of attorney over the account, to his account at Dresdner Bank in 

Germany (although there is no evidence that al-Shehhi’s brother knew about or supported 

the plot).144 Binalshibh was employed intermittently in Germany until November 1999. 

Jarrah apparently relied on his family for support. Indeed, Binalshibh said that Jarrah 

always seemed to have plenty of money in Germany because his parents gave it to him. 

Notwithstanding persistent press reports to the contrary, there is no evidence that the 

Spanish al Qaeda cell, led by Barkat Yarkas and including al Qaeda European financier 

Mohammed Galeb Kalaje Zouaydi, provided any funding to support 9/11 or the Hamburg 

plotters. Zouaydi may have provided funds to Mamoun Darkazanli, who knew the 

Hamburg plotters as a result of being a member of the Hamburg Muslim community, but 

there is no evidence that he provided money to the plot participants or that any of his 

funds were used to support the plot.

Mounir Motassadeq, the Hamburg friend of the hijackers, held power of attorney over 

Shehhi’s Dresdner Bank account, from November 24, 1999, until at least January 2001. 

Motassadeq told the German investigators that he held the power of attorney to handle 

routine payments—for rent, tuition, and the like—for Shehhi when he traveled to his 

homeland. On one occasion he transferred DM 5,000 from Shehhi’s account to 

Binalshibh’s account while they were both out of town. Motassadeq’s role in managing 

Shehhi’s account was part of the conduct that led to his conviction in Germany for 

complicity in 9/11, a conviction that was subsequently reversed. 

Al Qaeda also paid for the training camps at which the 9/11 hijackers were selected and 

trained. We have not considered this expense as part of the plot costs, because the camps 

143 Another person, who operated a safehouse in Pakistan through which the hijackers transited, 

independently recalled that an al Qaeda courier provided at least one hijacker with $10,000 at KSM’s 

direction. 

144 Al-Shehhi’s last payment, received in December 2000, does not appear to have been moved to his 

account in Germany. 
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existed independently of the plot. The marginal cost of training the hijackers is a plot 

cost, but any estimate of it would be little more than a guess. 

Financing of hijackers in the United States 

The best available evidence indicates that approximately $300,000 was deposited into the 

hijackers’ bank accounts in the United States by a variety of means. Just prior to the 

flights, the hijackers returned about $26,000 to one of their al Qaeda facilitators and 

attempted to return another $10,000, which was intercepted by the FBI after 9/11. Their 

primary expenses consisted of tuition for flight training, living expenses (room, board and 

meals, vehicles, insurance, etc.), and travel (for casing flights, meetings, and the 

September 11 flights themselves). The FBI believes that the funds in the bank accounts 

held by the hijackers were sufficient to cover their expenses.145 The FBI, therefore, 

believes it has identified all sources of funding. Our investigation has revealed nothing to 

suggest the contrary, although it is possible that the $300,000 estimate omits some cash 

that the hijackers brought into the United States and spent without depositing into a bank 

account or otherwise creating a record.146

Al Qaeda funded the hijackers in the United States by three primary and unexceptional 

means: (1) wire or bank-to-bank transfers from overseas to the United States, (2) the 

physical transportation of cash or traveler’s checks into the United States, and (3) the use 

of debit or credit cards to access funds held in foreign financial institutions. Once here, 

all the hijackers used the U.S. banking system to store their funds and facilitate their 

transactions. 

The hijackers received assistance in financing their activities from two facilitators based 

in the United Arab Emirates: Ali Abdul Aziz Ali, a.k.a. Ammar al Baluchi (Ali), and 

Mustafa al Hawsawi. To a lesser extent, Binalshibh helped fund the plot from Germany. 

145 FBI Assistant Director, Counterterrorism Division, John S. Pistole, stated during a congressional hearing 

last fall that “the 9/11 hijackers utilized slightly over $300,000 through formal banking channels to 

facilitate their time in the U.S. We assess they used another $200-$300,000 in cash to pay for living 

expenses . . .” Senate Committee on Banking, Housing, and Urban Affairs, September 25, 2003, FDCH 

Political Transcripts at page 5. His statement concerning additional cash was apparently made in error. The 

FBI personnel most familiar with the 9-11 investigation have uniformly disagreed with it, and the FBI has 

never conducted any financial analysis that supports it. Although some FBI personnel involved in the early 

days of the investigation after 9/11 believed the hijackers had substantially more cash than that which was 

deposited in their accounts, the FBI view after more thorough investigation is to the contrary. 146 We will never know the exact amount of funds the hijackers deposited into their accounts, as they made 

transactions which made it difficult to trace the money. For example, at times they made substantial cash 

withdrawals, followed by substantial cash deposits. It is impossible to tell if the deposit reflected new funds 

or merely the return of funds previously withdrawn but not spent. Nor is a complete analysis of their 

expenditures possible. They conducted many transactions in cash. Although the FBI has obtained evidence 

of many these transactions, there surely were many others of which no record exists. Additionally, gaps 

remain in our understanding of what exactly the hijackers did in U.S., so it is possible that they spent funds 

on activities of which we have no knowledge. Because the hijackers’ activities and expenses are not fully 

known, we cannot say with certainty that every dollar has been accounted for. We believe, however, that 

the identified funding was sufficient to cover their known expenses and the other expenses they surely 

incurred in connection with their known activities. 
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Wire transfers 

Upon their arrival in the United States, the hijackers received a total of approximately 

$130,000 from overseas facilitators via wire or bank-to-bank transfers. Most of the 

transfers originated from the Persian Gulf financial center of Dubai, UAE, and were sent 

by plot facilitator Ali. Ali is the nephew of KSM, the plot’s leader, and his sister is 

married to convicted terrorist Ramzi Yousef. He lived in the UAE for several years 

before the September 11 attacks, working for a computer wholesaler in a free trade zone 

in Dubai. According to Ali, KSM gave him the assignment and provided him with some 

of the necessary funds at a meeting in Pakistan in early 2000. KSM provided the bulk of 

the money later in 2000 via a courier.147 Although Ali had two bank accounts in the UAE, 

he kept most of the funds for the hijackers in a laundry bag at home.148

Ali transferred a total of $119,500 to the hijackers in the United States in six transactions 

between April 16, 2000, and September 17, 2000. Nawaf al Hazmi and Khalid al 

Mihdhar, the first hijackers to arrive, received the first wire transfer. On April 16, 2000, 

Ali, using the name “Mr. Ali,” wired $5,000 from the Wall Street Exchange Centre in 

Dubai to an account at the Union Bank of California. The funds flowed through a 

correspondent account at the Royal Bank of Canada. Ali brought the $5,000 to the 

Exchange Center in cash. The Wall Street Exchange Center required identification, and it 

made a copy of Ali’s work ID, along with his cell phone number and work address—all 

of which helped the FBI identify him and his subsequent aliases after 9/11. Ali wired the 

money to the account of a San Diego resident whom Hazmi met at a mosque and had 

solicited to receive the transaction on his behalf.149

Ali wire transferred a total of $114,500 to the plot leaders Shehhi and Atta after their 

arrival in the United States. Ali did not return to the Wall Street Exchange Centre. 

Instead, using a variety of aliases, he sent the money from the UAE Exchange Centre in 

Dubai, where no identification was required. On June 29, 2000, Ali, using an alias, sent a 

$5,000 wire transfer to a Western Union facility in New York where Shehhi picked it up. 

Over the next several months, Ali sent four bank-to-bank transfers directly to a checking 

account jointly held by Shehhi and Atta at SunTrust Bank in Florida: $10,000 on July 18, 

$9,500 on August 5, $20,000 on August 29, and $70,000 on September 17. On three of 

these occasions he used an alias; once he went by “Mr. Ali.” In each case, Ali brought 

cash in UAE dirhams, which were then changed into dollars; the transaction receipts 

reflect the conversion. All of the bank-to-bank transactions flowed through the UAE 

Exchange’s correspondent account at Citibank. Although Ali made the last five 

147 Ali also said KSM gave him money at various other face to face meetings and also wired him money. 

He used these funds both to support the hijackers and to buy things for KSM. He also occasionally fronted 

his own money in support of the hijackers, to be reimbursed by KSM. As a result, he could not be sure 

exactly where he got every dollar he spent. 

148 Ali’s bank records show his accounts never contained sufficient funds to account for the money he sent 

to the United States, lending credence to his claim he kept the money in a laundry bag at home. 149. The person who received the funds came forward shortly after 9/11 to explain that he may have 

unwittingly aided two men who turned out to be hijackers. The FBI interviewed him extensively and 

satisfied itself that he did not knowingly aid the hijackers. 
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transactions using various aliases, he provided enough personal information to enable the 

FBI to unravel the aliases after 9/11.150

In any event, aliases were not the key to Ali’s security. Instead, he relied on the 

anonymity provided by bustling financial center of Dubai and the vast international 

monetary system. His employment as computer wholesaler provided perfect cover. Ali 

said he sent the final $70,000 in one large transfer because Shehhi had called and asked 

him to “send him everything.” According to Ali, KSM was displeased when he later 

learned of the transfer because he thought the size of the transaction would alert the 

security services. The amount did not worry Ali, however, because he knew that Dubai 

computer companies frequently transferred such amounts of money. Ali said he 

experienced no problem with this transfer, or any transfer in aid of the hijackers.151

Binalshibh also played a role in financing the plot by wiring, in four transfers, more than 

$10,000 from Germany to the United States. On June 13, 2000, Binalshibh sent 

$2,708.33 from Hamburg to Shehhi in New York via a Traveler’s Express/Moneygram 

transfer. On June 21, 2000, he sent $1,803.19 from Hamburg to Shehhi in New York by 

the same means. Binalshibh also sent two Western Union transfers from Hamburg to 

Shehhi in Florida, wiring $1,760.15 and $4,118.14 on July 25 and September 25, 2000, 

respectively. Binalshibh apparently funded these transfers by withdrawing money from 

Shehhi’s account at Dresdner Bank. 

In addition, Binalshibh, using an alias, sent $14,000, in two installments, to Zacarias 

Moussaoui in early August 2001. Binalshibh received the money for these transfers from 

Hawsawi, wired in two installments on July 30 and July 31.152

As it turned out, none of the wire transfers associated with the plot—from Dubai or 

Germany—raised any significant suspicion or concern. They were essentially invisible in 

the billions of dollars in wire transfers that take place every day throughout the world. 

Physical importation of cash and traveler’s checks 

The hijackers also brought into the United States a substantial amount of cash and 

traveler’s checks, beginning with the first hijackers to come to the United States, Mihdhar 

and Hazmi. Following their January 15, 2000, arrival in Los Angeles, they opened an 

account at Bank of America in San Diego with a $9,900 deposit on February 4, 2000. 

They likely brought in more cash they deposited, as they surely had to pay for goods and 

services in the period between their arrival in Los Angeles and the opening of their Bank 

150 The FBI effort was made possible by unprecedented cooperation from the UAE, which provided copies 

of the paperwork Ali used and allowed the FBI to interview witnesses. Later Ali confirmed he sent the wire 

transfers.

151 Central Banker Sultan bin Nasser al-Suweidi was quoted in the press earlier this year as contending that 

the UAE reported to U.S. officials Ali’s large wire transfer to Al-Shehhi a year before 9/11. See Associated 

Press, Dubai Banks Remain Focus of Terror Funding Investigation (Jan. 17, 2004) (printed from 

WSJ.Com, 2/5/05). We have found no evidence the UAE provided any such notification. We have been 

told Al-Suweidi later backed off the statement in discussions with the FBI. 

152 Binalshibh and Al-Hawsawi both used aliases for these transactions.
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of America account in San Diego, roughly three weeks later. The $16,000 that KSM said 

he gave Hazmi to support his and Mihdhar’s travel and living expenses in the United 

States is the likely source of their funds.153

Shehhi apparently also brought some cash into the United States. He purchased $2,000 in 

traveler’s checks from a New York bank on May 31, 2000, two days after his arrival in 

New Jersey. He had apparently withdrawn these funds from his Dresdner Bank account 

before he left Germany. Similarly, on June 28, two days after arriving in the United 

States, Jarrah opened an account at a bank in Venice, Florida, with a $2,000 cash deposit, 

apparently funds he had brought into the country.

The 13 muscle hijackers who arrived in the United States between April 23 and June 29, 

2001, brought with them cash or traveler’s checks for their own expenses and to replenish 

the funds of the hijackers who had previously arrived. These funds seem to have been 

provided directly to the muscle hijackers by plot leader KSM when he met with them in 

Pakistan before they transited the UAE en route to the United States, although their 

Dubai facilitators may have provided some additional funding.154 Ali recalled that the 

hijackers arrived in Dubai with money to purchase plane tickets and traveler’s checks, but 

said he may have provided some of them with additional funds. Hawsawi said he spent 

approximately $7,000–$9,000 in expenses for the hijackers in the UAE. 

Investigation has confirmed that six of the muscle hijackers who arrived in this period 

purchased traveler’s checks totaling $43,980 in the UAE and used them in the United 

States.155 Beyond these confirmed funds, the muscle hijackers almost surely brought in 

more money in cash or traveler’s checks that has not been identified. Some of the newly 

arrived muscle made substantial deposits shortly after entering the United States, and 

other hijackers made deposits soon after the muscle arrived. For example, Satam al 

Suqami and Waleed al Shehri arrived in the United States from the UAE on April 23, 

2001, and opened a bank account at SunTrust in Fort Lauderdale on May 1 with a deposit 

of $9,000. It appears likely that Suqami or Shehri brought in cash or purchased traveler’s 

checks in the UAE, although such a purchase has not been identified. Similarly, on June 

1, 2001, $3,000 was deposited into Jarrah’s SunTrust account and $8,000 was deposited 

into the Shehhi/Atta joint account. These funds may have been cash or traveler’s checks 

that investigation has not yet identified, purchased and brought into the United States by 

153 There has been substantial speculation that al-Mihdhar and al-Hazmi received the money in Thailand in 

January 2000, where they traveled with senior Al-Qaeda operative Khallad bin Attash, and where we know 

Khallad received funds from another al Qaeda operative. It now seems unlikely that the hijackers received 

funds from Khallad in Thailand in light of KSM’s account of providing them with funds and Khallad’s own 

account in which he explained Al-Mihdhar and Al-Hazmi made a spur of the moment decision to go to 

Bangkok with him after their initial meeting in Malaysia, largely to obtain Thai stamps on their passport, 

which they hoped would help ease their entry in the United States by making them appear more like 

tourists. Other evidence corroborates Khallad’s account, and it seems more likely the hijackers received 

operational funds from KSM in Pakistan, as he described, than on a trip they decided to make on the spur 

of the moment. 

154 As noted above, KSM said he gave each of the muscle hijackers $10,000 to facilitate their travel to the 

United States.)

155 5 The FBI has confirmed purchases by Majed Moqed, Wail Al-Shehri, Ahmed Al-Haznawi, Saeed AlGhamdi, Hamza Al-Ghamdi, Ahmed Al-Nami.
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one or more of the three additional muscle hijackers—Hamza al Ghamdi, Ahmed al 

Nami, or Mohand al Shehri—who had entered the United States on May 28, 2001.156

Plot facilitators Ali and Hawsawi provided logistical assistance to the muscle hijackers as 

they transited the UAE en route to the United States, including assistance in purchasing 

plane tickets and traveler’s checks. Phone records indicate that Ali aided the hijackers 

through May 2001 and that, thereafter, Hawsawi became the primary facilitator. A 

notebook Al-Hawsawi maintained shows payments he made to or on behalf hijackers 

transiting the UAE in June. 

Ali has confirmed his role in assisting the muscle hijackers while they were in the UAE. 

KSM provided them with Ali’s phone number, and they called him upon their arrival. He 

assisted them in purchasing airline tickets, traveler’s checks, and Western-style clothes; 

arranged hotels and food; and also taught them Western skills, such as ordering at fastfood restaurants. It is not clear why Hawsawi got involved in the plot. Ali said he 

requested that KSM send someone to Dubai to assist him with the transiting operatives 

because he feared the time required to support the hijackers and train them to adapt to 

Western life would impinge on his day job with the computer company. According to 

Ali, KSM then directed Hawsawi to help him; but by the time Hawsawi arrived, Ali 

discovered the hijackers were not staying very long in Dubai and did not demand much 

of his time. It is hard to imagine that Ali was so concerned about his day job, but no other 

reason for Hawsawi’s involvement is readily apparent. 

Hawsawi has acknowledged aiding some of the muscle hijackers in the UAE. In addition, 

he assisted and provided funds to Mohamed al Kahtani, who was selected as a hijacker 

and flew to Orlando before being denied access to the United States. Kahtani had $2,800 

cash in his possession when he arrived at the airport in Florida. 

The hijackers who traveled internationally after arriving in the United States also carried 

funds back with them. For example, Mihdhar purchased $4,900 in traveler’s checks in 

Saudi Arabia shortly before he returned to the United States on July 4, 2001, after an 

extended absence. According to Hawsawi’s notebook, Hawsawi gave the funds to 

Mihdhar in the UAE in June 2001 to buy these checks. In some instances, we cannot 

determine whether the hijackers brought in more cash from overseas travel. For example, 

in the weeks after Shehhi returned to Florida from a trip to Egypt on May 2, 2001, several 

large deposits were made into his SunTrust account ($8,600 on May 11 and $3,400 on 

May 22). It is unclear whether the deposits came from funds Shehhi received overseas, 

funds brought by the muscle hijackers arriving in late May, or funds previously 

withdrawn and not spent.

Zacarias Moussaoui brought more money into the United States than any other person 

associated with the 9/11 attacks. Moussaoui declared $35,000 to Customs when he 

arrived in the United States from London on February 23, 2001, and he deposited 

$32,000 into a Norman, Oklahoma, bank three days later.

156. Some hijackers declared funds when they entered the U.S., but others, who we know had funds with 

them, did not. 
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Accessing overseas accounts 

The hijackers also financed their activities in the United States by accessing funds 

deposited into overseas accounts. There are two primary examples of this method. Hani 

Hanjour maintained accounts at the Saudi British Bank in Saudi Arabia and at Citibank in 

the UAE. While in the United States, he accessed his foreign accounts through an ATM 

card to finance his activities. Approximately $9,600 was deposited into the Saudi British 

Bank account, and $8,000 into the Citibank account. Ali said he provided Hanjour with 

$3,000 to open the Citibank account and deposited another $5,000 into that account while 

Hanjour was in the United States.157

One of the muscle hijackers, Fayez Banihammad, also set up an overseas account to 

provide funding in the United States. On June 25, 2001, with the aid of Hawsawi, 

Banihammad opened two accounts at the Standard Chartered Bank in the UAE and 

deposited about $30,000 in UAE dirhams. According to Hawsawi, Banihammad brought 

the funds with him to open the accounts when he came to the UAE. Hawsawi was given 

power of attorney over the accounts on July 18, 2001. The accounts were accessible by 

an ATM card and a Visa card. Hawsawi received the Visa card from the bank after 

Banihammad departed for the United States and apparently sent it to Banihammad in the 

United States by express delivery. After his arrival in the United States on June 27,

Banihammad made cash withdrawals with both cards to help fund the plot in the United 

States, and he used the Visa card to purchase the 9/11 plane tickets for himself and one of 

the muscle hijackers and to pay his Boston hotel bill on the morning of 9/11. Hawsawi 

apparently bolstered Banihammad’s financing with a deposit of $4,900 on August 20, 

2001, into Banihammad’s SCB account. 

No aid from U.S. persons 

No credible evidence exists that the hijackers received any substantial funding from any 

person in the United States. With one possible minor exception discussed below, the 

FBI’s investigation has not revealed any evidence that any person in the United States 

knowingly provided any funding to the hijackers. Extensive investigation by Commission 

staff has revealed nothing to the contrary.

Despite persistent public speculation, there is no evidence that the hijackers who initially 

settled in San Diego, Mihdhar and Hazmi, received funding from Saudi citizens Omar al 

Bayoumi and Osama Bassnan, or that Saudi Princess Haifa al Faisal provided any funds 

to the hijackers either directly or indirectly. A number of internal FBI documents state 

without reservation that Bayoumi paid rent on behalf of Mihdhar and Hazmi, a claim 

reflecting the initial view of some FBI agents. More thorough investigation, however, has 

determined that Bayoumi did not pay rent or provide any funding to the hijackers. On one 

157 Hanjour also received $900 from his brother, who is not believed to be a witting supporter of the plot. 

The origin of the rest of the funds is unclear, although Hanjour may have received funds when he transited 

Pakistan in June 2000. 
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139

occasion he did obtain a cashier’s check to assist Mihdhar and Hazmi pay a security 

deposit and first month’s rent, but the hijackers immediately reimbursed him from their 

funds.

The one person who evidence indicates may have provided money to a hijacker in the 

United States was Yazeed al Salmi, a Saudi citizen who came to the United States on a 

student visa in August 2000; he settled in San Diego, where he came into contact with 

future hijacker Nawaf al Hazmi. On September 5, 2000, $1,900 was deposited into 

Hazmi’s San Diego Bank of America account from a set of $4,000 in traveler’s checks 

that Salmi had purchased in Riyadh, Saudi Arabia, on July 16, 2000. Little more is 

known about this transaction. After September 11, Salmi was detained as a material 

witness because of his contact with Hazmi, and was debriefed extensively by the FBI. He 

even testified to the grand jury before being deported to Saudi Arabia. Unfortunately, the 

FBI did not learn that Salmi’s traveler’s checks wound up in Hazmi’s account until after 

he was deported, and Salmi never informed his interrogators of the matter. In June 2004, 

Salmi was interviewed regarding the transaction, and claimed not to recall it. There are 

no other known witnesses to this transaction. 

Did Salmi fund Hazmi, knowingly or otherwise? It appears likely that Hazmi did nothing 

more than facilitate a transaction for Salmi. Indeed, Hazmi’s bank records reveal that he 

withdrew $1,900 in cash the same day he deposited the $1,900 in traveler’s checks. This 

large withdrawal is unusual for Hazmi, as he tended to make much smaller cash 

withdrawals or use his debit card. Moreover, Salmi did not yet have a bank account in the 

United States at the time of the transaction, so it is entirely possible that he simply asked 

Hazmi to do him the favor of cashing the traveler’s checks for him.158

There is no evidence that Salmi ever provided Hazmi with any other funds. Neither 

Salmi’s account at Bank of America nor Hazmi’s account there reflects any other 

transfers or indicia of transfers. There is no evidence that any other person in San Diego 

provided Hazmi or any other hijacker with any funds.159

No hawalas, self-funding, or state support 

The extensive investigation into the financing of the 9/11 plot has revealed no evidence to 

suggest that the hijackers used hawala or any other informal value transfer mechanism to 

send money to the United States. Moreover, KSM and the other surviving plot 

participants have either not mentioned hawalas or explicitly denied they were used. Wire 

transfers, physical importation of funds, and access of foreign bank accounts were 

sufficient to support the hijackers; there seems to be no reason al Qaeda would have used 

158 Al-Salmi opened an account at Bank of America on September 11, 2000, according to the account 

opening document. 

159 In September 2000, Al-Hazmi assisted another San Diego associate with a transaction by writing a 

check on his behalf. Thus, the associate provided Al-Hazmi with $3000, and Al-Hazmi immediately wrote 

a check for that amount on behalf of the associate. The transaction was a wash, which resulted in no 

funding of Al-Hazmi. 
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hawalas as well. Although al Qaeda frequently used hawalas to transfer funds from the 

Gulf area to Pakistan and Afghanistan, we have not seen any evidence that al Qaeda 

employed them in moving money to or from the United States.160

The hijackers were apparently not expected to provide their own financing once they 

arrived in the United States. There is no evidence that any of them held jobs in the United 

States, with the exception of Nawaf al Hazmi, who worked part-time in a gas station for 

about a month, earning $6 an hour. As discussed above, Shehhi received a salary from the 

UAE military though December 23, 2000, but did not do any work for this money. There 

is no evidence to suggest that any of the hijackers engaged in any type of criminal 

activity to support themselves. Finally, there no evidence that any government funded the 

9/11 plot in whole or part. 

Hijackers use of U.S. banks 

While in the United States, the hijackers made extensive use of U.S. banks. They chose 

branches of major international banks, such as Bank of America and SunTrust, and 

smaller regional banks, such as the Hudson United Bank and Dime Savings Bank in New 

Jersey. Plot leaders Atta and Shehhi may have chosen SunTrust because their Florida 

flight school banked there and directed its students to use it as well. The muscle hijackers 

who later linked up with Atta and Shehhi also opened accounts at SunTrust. There is no 

information available as to how or why the hijackers chose other banks. The hijackers 

typically opened checking accounts and Visa debit card accounts at the same time. 

All of the hijackers opened accounts in their own name, using passports and other 

identification documents. Contrary to numerous published reports, there is no evidence 

the hijackers ever used false Social Security numbers to open any bank accounts. In some 

cases, a bank employee completed the Social Security number field on the new account 

application with a hijacker’s date of birth or visa control number, but did so on his or her 

own to complete the form. No hijacker presented or stated a false number. 

The hijackers were not experts on the use of the U.S. financial system. For example, the 

teller who opened the initial Atta-Shehhi joint account at SunTrust in July 2000 said she 

spent about an hour with them, explaining the process of wiring money. On one occasion 

in June 2001, the hijackers aroused suspicion at a SunTrust branch in Florida while 

attempting to cash a check for $2,180. Shehhi presented identification documents with 

different addresses, and the bank personnel thought the signature on the check did not 

match his signature on file. The bank manager refused to sign the check and issued an 

internal alert to other SunTrust branches to watch the account for possible fraud. The 

internal alert was a routine notice sent in accordance with SunTrust’s loss avoidance 

procedures. SunTrust never considered reporting Shehhi to the government because it had 

no evidence he had done anything illegal. No one at SunTrust or any other financial 

institution thought, or had any reason to think, that the hijackers were criminals, let alone 

160 See chapter 2 re al Qaeda’s use of hawala, generally. 
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141

terrorists bent on mass murder, and no financial institution had any reason to report their 

behavior to the government.

The hijackers’ transactions themselves were not extraordinary or remarkable. The 

hijackers generally followed a pattern of occasional large deposits, which they accessed 

frequently through relatively small ATM and debit card transactions. They also made 

cash withdrawals and some occasionally wrote checks. In short, they used their accounts 

just as did many other bank customers. No one monitoring their transactions alone would 

have had any basis for concern.

Contrary to persistent media reports, no financial institution filed a Suspicious Activity 

Report (SAR) in connection with any transaction of any of the 19 hijackers before 9/11, 

although such SARs were filed after 9/11 when their names became public. The failure to 

file SARs was not unreasonable. Even in hindsight, there is nothing—including the 

SunTrust situation described above—to indicate that any SAR should have been filed or 

the hijackers otherwise reported to law enforcement. 

Return of funds to al Qaeda

From September 5 through September 10, 2001, the hijackers consolidated their unused 

funds and sent them to Hawsawi in the UAE. On September 5, Banihammad wired 

$8,000 from his account at SunTrust Bank to his Standard Chartered Bank account in the 

UAE. On September 8 through 10, the hijackers sent four Western Union wire transfers 

totaling $18,260 to Hawsawi at two different exchange houses in the UAE. In addition, 

Hazmi and Mihdhar deposited their excess cash into an account held by Mihdhar at First 

Union Bank in New Jersey, bringing the balance to $9,838.31 on September 10. That 

same day, Hazmi and Hanjour sent an express mail package containing the debit card 

linked to Mihdhar’s First Union account to a P.O. box in the UAE rented by Hawsawi. 

After the 9/11 attacks, a receipt for the sending of this package was found in Hazmi’s car 

at Dulles International Airport, and the FBI intercepted the package. 

Binalshibh said that when he spoke by phone with Atta in early September 2001, Atta 

said he wanted to return some leftover funds. At the time, Binalshibh was in Madrid 

trying to get a flight to Dubai, and had visa and passport problems. He explained his visa 

and passport issues to Atta and advised him to send the money to someone else. Atta then 

called Hawsawi to give him the information needed to pick up the wire transfers, as did 

the other hijackers who wired money to Hawsawi. Binalshibh and Atta also discussed the 

return of funds.

On September 11, Hawsawi used a blank check that Banihammad had provided him 

earlier and an ATM card to withdraw from Banihammad’s Standard Chartered Bank 

account the approximately $7,880 in dirhams that Banihammad had wired there. He then 

deposited about $16,348 in dirhams to his own checking account at Standard Chartered 

Bank, reflecting the proceeds of the wire transfers he had received. Next, he transferred 

$41,000 from his checking account to his Standard Chartered Bank Visa card and left 
National Commission on Terrorist Attacks Upon the United States 

142

Dubai for Karachi, Pakistan, leaving some funds in the account. On September 13, 2001, 

KSM used a supplemental Visa card issued for Hawsawi’s Standard Chartered Bank 

account to make six cash withdrawals at ATMs in Karachi totaling about $900.161 The 

remaining funds, roughly $40,000, were not withdrawn or transferred before the UAE 

froze the account after September 11. KSM has since acknowledged withdrawing funds 

returned by Atta to Hawsawi; he claimed he gave the money to a senior al Qaeda leader, 

Abu Hafs, in Kandahar. It is not clear if KSM was referring to the approximately $900 he 

withdrew from the account, or if Hawsawi had provided KSM with additional funds in 

cash after 9/11. 

The hijackers’ efforts during their final days to consolidate and return funds to al Qaeda 

reflect their recognition of the importance of money to the organization. Although some 

of the hijackers did squander relatively small amounts on superfluous purchases, 

including pornography, they generally consumed little, and plot leader Atta was 

especially frugal. Indeed, Binalshibh has explained that frugality was important to Atta 

because he did not want to waste funds he considered to be blessed and honored. 

Funding of Other Plot Participants 

In addition to the 19 hijackers, other plot participants received al Qaeda funding for their 

role in the plot. KSM said that he, Binalshibh, and Hawsawi each received $10,000 (in 

addition to the funds they provided the hijackers). The details of this funding are not 

entirely clear, but KSM said he personally used $6,000 of his money to rent a safehouse 

in Karachi. Ali required no support from al Qaeda, as he already lived and worked in the 

UAE. By contrast, al Qaeda had to pay for Hawsawi, the other UAE-based plot 

facilitator, because he traveled and was living there solely to support 9/11 and other al 

Qaeda operations. Hawsawi incurred substantial expenses on behalf of the plot, covering 

travel, apartment rental, car rental, and living expenses.

The available evidence does not make clear how Hawsawi received funds for his plotrelated activities. He claimed he received $30,000 in cash from Hamza al Qatari—then an 

al Qaeda financial manager—that Hawsawi brought into the UAE with him. Hawsawi 

claimed he received no other funds except for approximately $3,000–$4,500 that 

Banihammad brought to him, which he assumes came from KSM or Qatari. Although 

Hawsawi claimed that these funds were sufficient for all his activities in the UAE, their 

total was clearly less than Hawsawi’s known expenses in the UAE. These included aiding 

the 9/11 hijackers, financing his own living expenses, buying supplies for al Qaeda, 

wiring Binalshibh a total of $16,500, wiring funds to another likely al Qaeda operative in 

Saudi Arabia, and providing $13,000 to yet another al Qaeda operative who transited the 

UAE before departing for another operation on September 10, 2001. Moreover, KSM 

gave a different account of how Hawsawi was funded. In KSM’s version, Hawsawi had a 

budget of $100,000 and KSM provided all the funds, either by courier or by the muscle 

hijackers as they traversed the UAE after picking up the money from KSM in Pakistan. 

161 The supplemental Visa card had been applied for on August 25, 2001 in the name of an alias used by 

KSM. 
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143

While in the UAE, Hawsawi received two wire transfers totaling about $6,500 from a 

Sudanese national then living in Saudi Arabia. Both the transfers were sent in August 

2001 from the National Commercial Bank in Saudi Arabia to Hawsawi’s Standard 

Chartered Bank account in the UAE. According to information provided by a foreign 

security agency, the sender claims he was asked to wire the funds by Uthman al Shehri, 

the brother of hijackers Waleed and Wail al Shehri. The purpose of the transaction 

remains unknown, and the relevant witnesses are currently beyond the reach of the U.S. 

government. 

Binalshibh said that he met KSM in Karachi in June 2001; there KSM gave him a plane 

ticket to Malaysia, where he planned to meet with Atta.162 Binalshibh said he also 

received $5,000 from Abu Hafs to support his travel in June. He may have received 

additional funds during this trip. According to Binalshibh, he was living on al Qaeda 

money when he returned to Germany in June 2001. On September 3, 2001, Hawsawi, 

using an alias, wired $1,500 from the UAE to Binalshibh, also using an alias, in 

Hamburg, presumably to pay for his subsequent travel from Germany, which took place 

on September 5. 

Binalshibh also funded his activities in part by controlling Marwan al Shehhi’s bank 

account, which he apparently accessed with an ATM card, and with the assistance of 

Motassadeq, who held power of attorney over the account. Binalshibh himself said that 

Shehhi left him “a credit card” when Shehhi departed Hamburg for the United States in 

mid-2000. For example, Binalshibh withdrew money from Shehhi’s account to send 

$2,200 to the Florida Flight Training Center in August 2000 in apparent anticipation of 

his own arrival in the United States. Activity in Shehhi’s German bank account indicates 

that Binalshibh was accessing his funds while he was in the United States. 

In January 2001 Atta, sent a $1,500 wire transfer via Western Union from Florida to 

Binalshibh in Hamburg. There is no known explanation for this transaction, which seems 

especially odd because Binalshibh had access to Shehhi’s German account at the time. 

Total Cost 

We estimate that the total cost of the 9/11 attacks was somewhere between $400,000 and 

$500,000. The hijackers spent more than $270,000 in the United States, and the costs 

associated with Moussaoui were at least $50,000. The additional expenses included travel 

to obtain passports and visas, travel to the United States, expenses incurred by the plot 

leader and facilitators, and the expenses incurred by would-be hijackers who ultimately 

did not participate. For many of these expenses, we have only a mixture of fragmentary 

evidence and unconfirmed reports, and can make only a rough estimate of costs. Adding 

up all the known and assumed costs leads to a rough range of $400,000 to $500,000. This 

estimate does not include the cost of running training camps in Afghanistan where the 

162 The meeting in Malaysia ultimately did not take place because Atta was busy awaiting the arrival of the 

additional hijackers in the U.S.; the meeting took place later in Spain. 
National Commission on Terrorist Attacks Upon the United States 

144

hijackers were recruited and trained or the marginal cost of the training itself. For what its 

worth, the architect of the plot, KSM, put the total cost at approximately $400,000, 

including the money provided to the hijackers and other facilitators, although apparently 

excluding Moussaoui. Although we cannot know if this estimate is accurate, it seems to 

be reasonable, given the information available. 

Ultimately, knowing the exact total cost of the plot makes little difference. However 

calculated, the expense—although substantial—constituted a small fraction of al Qaeda’s 

budget at the time. As we discuss in chapter 2, al Qaeda’s annual budget for the relevant 

period has been estimated to be about $30 million. Even today, with its estimated 

revenues significantly reduced, al Qaeda could still likely come up with the funds to 

finance a similar attack. 

Origin of the Funds 

To date, the U.S. government has not been able to determine the origin of the money used 

for the 9/11 attacks. As we have discussed above, the compelling evidence appears to 

trace the bulk of the funds directly back to KSM and, possibly, Qatari, but no further.163

Available information on this subject has thus far has not been illuminating.164 According 

to KSM, Bin Ladin provided 85–95 percent of the funds for the plot from his personal 

wealth, with the remainder coming from general al Qaeda funds. To the extent KSM 

intended to refer to wealth Bin Ladin inherited from his family or derived from any 

business activity, this claim is almost certainly wrong, because Bin Ladin was not 

personally financing al Qaeda during this time frame.165 Ultimately the question of the 

origin of the funds is of little practical significance. Al Qaeda had many avenues of 

funding. If a particular source of funds dried up, it could have easily tapped a different 

source or diverted money from a different project to fund an attack that cost $400,000–

$500,000 over nearly two years. 

We know that a small percentage of the plot funds originated in the bank account of 

Shehhi, which apparently came from his military salary. Binalshibh drew on these funds 

to wire approximately $10,000 to Shehhi in the United States, as well as to support his 

own role in the plot to some degree. Al Qaeda does not necessarily have to completely 

fund terrorist operatives. Some, like Shehhi, have means and can fund themselves, at 

least in part, a factor that makes the fight on “terrorist financing” all the more difficult.

163 FBI Assistant Director Pistole testified that the FBI had traced the funds back to certain bank accounts in 

Pakistan, see Senate Govt. Affairs Committee, July 31, 2003, but the FBI has clarified that Pistole meant 

the funds were traced back to KSM in Pakistan. No actual bank accounts there have been identified. 

164 Senior al Qaeda detainee Abu Zubaydeh has commented on the source of the funding; he said that KSM 

received funds for the 9/11 operation directly from UBL, bypassing al Qaeda Finance Chief, Shayk Said, 

and suggested that some of the funds came from money that Zubaydeh had provided UBL for use in an 

operation against Israel. Zubaydeh, however, apparently did not participate in the 9/11 planning, and his 

statements lack any foundation. 

165 Instead, al Qaeda relied on donations provided by witting donors and diverted from legitimate charitable 

donations by al Qaeda supporters. See chapter 2 (discussing al Qaeda financing). It is also possible KSM 

meant that Bin Ladin funded the plot with funds he kept under his personal control. 
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Appendix B: Securities Trading 

This appendix describes the staff and U.S. government investigations into the issue of 

whether anyone with foreknowledge of the 9/11 attacks profited through securities 

trading, and explains the conclusion in the Commission’s final report that extensive 

government investigation has revealed no evidence of such illicit trading. 

Almost since 9/11 itself, there have been consistent reports that massive “insider trading” 

preceded the attacks, enabling persons apparently affiliated with al Qaeda to reap huge 

profits. The Commission has found no evidence to support these reports. To the contrary, 

exhaustive investigation by federal law enforcement, in conjunction with the securities 

industry, has found no evidence that anyone with advance knowledge of the terrorist 

attacks profited through securities transactions.

Commission Staff Investigation 

Commission staff had unrestricted access to the U.S. government officials who led and 

conducted the investigation into securities trading in advance of 9/11. In addition to 

interviewing the key personnel, Commission staff reviewed the nonpublic government 

reports summarizing the investigative results as well as backup data, including 

spreadsheets, memoranda and other analyses, and reports of interviews with traders, 

securities industry participants, and other witnesses. We obtained and reviewed the 

reports of investigations done by certain major nongovernmental securities industries 

bodies who share responsibility with the government for monitoring securities trading in 

U.S. markets, including the New York Stock Exchange and the National Association of 

Securities Dealers Regulation, and interviewed witnesses from a key private-sector entity. 

Commission staff also reviewed information provided by foreign securities regulators, 

interviewed German law enforcement officials, and interviewed U.S. law enforcement 

personnel regarding their contacts with their foreign counterparts on securities trading.

In addition, Commission staff drew on its review of extensive classified intelligence 

concerning al Qaeda and how it manages its operations and its finances, as well as 

debriefings of al Qaeda detainees, including 9/11 plot leader Khalid Sheikh Mohammed 

and other plot participants. This information proved useful in evaluating how closely held 

al Qaeda kept the 9/11 operation and the likelihood it would seek to profit from the 

attacks through securities trading.

The U.S. Government Investigation of Trading in the United 

States

The Securities and Exchange Commission (SEC) and the FBI, with the involvement of 

the Department of Justice, conducted the investigation of the allegation that there was 
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146

illicit trading in advance of 9/11; numerous other agencies played a supporting role.166

The SEC’s chief of the Office of Market Surveillance initiated an investigation into pre9/11 trading on September 12, 2001. At a multi-agency meeting on September 17, at FBI 

headquarters, the SEC agreed to lead the insider trading investigation, keeping the FBI 

involved as necessary. The Department of Justice assigned a white-collar crime 

prosecutor from the U.S. Attorney’s Office in Brooklyn to work full-time on the 

investigation; he relocated to Washington, D.C., on September 18. 

The SEC undertook a massive investigation, which at various times involved more than 

40 staff members from the SEC’s Division of Enforcement and Office of International 

Affairs. The SEC also took the lead on coordinating intensive investigations by the selfregulatory organizations (SROs) that share responsibility for monitoring the U.S. 

securities markets, including, among others, the New York Stock Exchange, the 

American Stock Exchange, the National Association of Securities Dealers Regulation, 

and the Chicago Board Options Exchange. The investigation focused on securities of 

companies or industries that could have been expected to suffer economically from the 

terrorist attacks. Thus, the investigators analyzed trading in the following sectors: 

airlines, insurance, financial services, defense and aerospace, security services, and travel 

and leisure services, as well as companies with substantial operations in the area of the 

World Trade Center. The investigation also included broad-based funds that could have 

been affected by a major shock to the U.S. economy. Ultimately, the investigators 

analyzed trading in 103 individual companies and 32 index or exchange-traded funds and 

examined more than 9.5 million securities transactions. 

The investigators reviewed any trading activity that resulted in substantial profit from the 

terrorist attacks. Investments that profited from dropping stock prices drew great scrutiny, 

including short selling167 and the purchase of put options.168 The SEC has long 

experience in investigating insider trading violations, which can involve the use of these 

techniques by those who know of an impending event that will make stock prices fall. 

The investigators also sought to determine who profited from well-timed investments in 

industries that benefited from the terrorist attacks, such as the stock of defense and 

security companies, and who timely liquidated substantial holdings in companies likely to 

suffer from the attacks. 

166 The SEC is an independent federal agency entrusted with enforcing the federal securities laws. Its 

Division of Enforcement has extensive experience in investigating insider trading. Because the SEC lacks 

authority to bring criminal cases, it regularly works jointly with the FBI and DOJ, as it did in this case, on 

potentially criminal securities law violations. 

167 Short selling is a strategy that profits from a decline in stock price. A short seller borrows stock from a 

broker dealer and sells it on the open market. At some point in the future, he closes the transaction by 

buying back the stock and returning it to the lending broker dealer. 168 A put option is an investment that profits when the underlying stock price falls. A put option contract 

gives its owner the right to sell the underlying stock at a specified strike price for a certain period of time. 

If the actual price drops below the strike price, the owner of the put profits because he can buy stock 

cheaper than the price for which he can sell it. By contrast, a call option contract is an investment that 

profits when the underlying stock price rises. A call option contract gives its owner the right to buy the 

underlying stock at a specified strike price for a certain time period. People illicitly trading on inside 

information often have used options because they allow the trader to leverage an initial investment, so that 

a relatively small investment can generate huge profits. 
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147

The SEC investigators reviewed voluminous trading records to identify accounts that 

made trades that led to profits as a result of the attacks. The SEC followed up on any such 

trades by obtaining documents and, where appropriate, interviewing the traders to 

understand the rationale for the trades. The SEC also referred to the FBI any trade that 

resulted in substantial profit from the attacks—a much lower threshold for a criminal 

referral than it would normally employ. Consequently, the FBI conducted its own 

independent interviews of many of the potentially suspicious traders. The SROs, which 

have extensive market surveillance departments, played a key role in the SEC 

investigation by providing information and, in some cases, detailed reports to the 

commission. In addition, the SEC directly contacted 20 of the largest broker-dealers and 

asked them to survey their trading desks for any evidence of illicit trading activity. It also 

asked the Securities Industry Association—the broker-dealer trade group—to canvass its 

members for the same purpose. 

The SEC investigation had built-in redundancies to ensure that any suspicious trading 

would be caught. For example, the SEC reviewed massive transaction records to detect 

any suspicious option trading and also obtained reports, known as the Large Option 

Position Reports and Open Interest Distribution Reports, that identified the holders of 

substantial amounts of options without regard to when those options were purchased. 

Similarly, to ensure full coverage, the SEC obtained information from a number of 

entities that play a role in facilitating short sales. Between these efforts, the work of the 

SROs, and the outreach to industry, the chief SEC investigator expressed great 

confidence that the SEC investigation had detected any potentially suspicious trade.

No Evidence of Illicit Trading in the United States 

The U.S. government investigation unequivocally concluded that there was no evidence 

of illicit trading in the U.S. markets with knowledge of the terrorist attacks. The 

Commission staff, after an independent review of the government investigation, has 

discovered no reason to doubt this conclusion.

To understand our finding, it is critical to understand the transparency of the U.S. 

markets. No one can make a securities trade in the U.S. markets without leaving a paper 

trail that the SEC can easily access through its regulatory powers. Moreover, brokerdealers must maintain certain basic information on their customers. It is, of course, 

entirely possible to trade through an offshore company, or a series of nominee accounts 

and shell companies, a strategy that can make the beneficial owner hard to determine. 

Still, the investigators could always detect the initial trade, even if they could not 

determine the beneficial owner. Any suspicious profitable trading through such accounts 

would be starkly visible. The investigators of the 9/11 trades never found any blind alleys 

caused by shell companies, offshore accounts, or anything else; they were able to 

investigate the suspicious trades they identified. Every suspicious trade was determined 

to be part of a legitimate trading strategy totally unrelated to the terrorist attacks. 
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Many of the public reports concerning insider trading before 9/11 focused on the two 

airline companies most directly involved: UAL Corp., the parent company of United 

Airlines, and AMR Corp., the parent company of American Airlines. Specifically, many 

people have correctly pointed out that unusually high volumes of put options traded in 

UAL on September 6–7 and in AMR on September 10.169

When the markets opened on September 17, AMR fell 40 percent and UAL fell 43 

percent. The suspicious options trading before the attacks fueled speculation that al 

Qaeda had taken advantage of the U.S. markets to make massive profits from its 

murderous attacks. The allegations had appeal on their face—just as al Qaeda used our 

sophisticated transportation system to attack us, it appeared to have used our 

sophisticated markets to finance itself and provide money for more attacks. But we 

conclude that this scenario simply did not happen. 

Although this report will not discuss each of the trades that profited from the 9/11 attacks, 

some of the larger trades, particularly those cited in the media as troubling, are illustrative 

and typical both of the nature of the government investigation into the trades and of the 

innocent nature of the trading. The put trading in AMR and UAL is a case in point: it 

appeared that somebody made big money by betting UAL and AMR stock prices were 

going to collapse, yet closer inspection revealed that the transactions were part of an 

innocuous trading strategy. 

The UAL trading on September 6 is a good example. On that day alone, the UAL put 

option volume was much higher than any surrounding day and exceeded the call option 

volume by more than 20 times—highly suspicious numbers on their face.170 The SEC 

quickly discovered, however, that a single U.S. investment adviser had purchased 95 

percent of the UAL put option volume for the day. The investment adviser certainly did 

not fit the profile of an al Qaeda operative: it was based in the United States, registered 

with the SEC, and managed several hedge funds with $5.3 billion under management. In 

interviews by the SEC, both the CEO of the adviser and the trader who executed the trade 

explained that they—and not any client—made the decision to buy the put as part of a 

trading strategy based on a bearish view of the airline industry. They held bearish views 

for a number of reasons, including recently released on-time departure figures, which 

suggested the airlines were carrying fewer passengers, and recently disclosed news by 

AMR reflecting poor business fundamentals. In pursuit of this strategy, the adviser sold 

short a number of airline shares between September 6 and September 10; its transactions 

included the fortunate purchase of UAL puts. The adviser, however, also bought 115,000 

shares of AMR on September 10, believing that their price already reflected the recently 

released financial information and would not fall any further. Those shares dropped 

significantly when the markets reopened after the attacks. Looking at the totality of the 

adviser’s circumstances, as opposed to just the purchase of the puts, convinced the SEC 

that it had absolutely nothing to do with the attacks or al Qaeda. Still, the SEC referred 

169 See, e.g., September 18, 2001 Associated Press Report. 170 A high ratio of puts to calls means that on that day far more money was being bet that the stock price 

would fall than that the stock price would rise. Such a ratio is a potential indicator of insider trading—

although it can also prove to have entirely innocuous explanations, as in this case. 
Terrorist Financing Staff Monograph 

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the trade to the FBI, which also conducted its own investigation and reached the same 

conclusion.

The AMR put trading on September 10 further reveals how trading that looks highly 

suspicious at first blush can prove innocuous. The put volume of AMR on September 10 

was unusually high and actually exceeded the call volume by a ratio of 6:1—again, 

highly suspicious on its face. The SEC traced much of the surge in volume to a California 

investment advice newsletter, distributed by email and fax on Sunday, September 9, 

which advised its subscribers to purchase a particular type of AMR put options. The SEC 

interviewed 28 individuals who purchased these types of AMR puts on September 10, 

and found that 26 of them cited the newsletter as the reason for their transaction. Another 

27 purchasers were listed as subscribers of the newsletter. The SEC interviewed the 

author of the newsletter, a U.S. citizen, who explained his investment strategy analysis, 

which had nothing to do with foreknowledge of 9/11. Other put option volume on 

September 10 was traced to similarly innocuous trades. 

Another good example concerns a suspicious UAL put trade on September 7, 2001. A 

single trader bought more than one-third of the total puts purchased that day, establishing 

a position that proved very profitable after 9/11. Moreover, it turns out that the same 

trader had a short position in UAL calls—another strategy that would pay off if the price 

of UAL dropped. Investigation, however, identified the purchaser as a well-established 

New York hedge fund with $2 billion under management. Setting aside the unlikelihood 

of al Qaeda having a relationship with a major New York hedge fund, these trades looked 

facially suspicious. But further examination showed the fund also owned 29,000 shares of 

UAL stock at the time—all part of a complex, computer-driven trading strategy. As a 

result of these transactions, the fund actually lost $85,000 in value when the market 

reopened. Had the hedge fund wanted to profit from the attacks, it would not have 

retained the UAL shares. 

These examples were typical. The SEC and the FBI investigated all of the put option 

purchases in UAL and AMR, drawing on multiple and redundant sources of information 

to ensure complete coverage. All profitable option trading was investigated and resolved. 

There was no evidence of illicit trading and no unexplained or mysterious trading. 

Moreover, there was no evidence that profits from any profitable options trading went 

uncollected.171

The options trading in UAL and AMR was typical of the entire investigation. In all 

sectors and companies whose trades looked suspicious because of their timing and 

171 The press has reported this claim, and the allegation even found its way into the congressional testimony 

concerning terrorist financing of a former government official. The government investigation would have 

detected such traders because the investigators focused on people who purchased profitable positions—

regardless of when or whether or when they closed out the position. Moreover, officials at the SEC and the 

Options Clearing Corporation, a private entity that processes options trading, pointed out that any profitable 

options positions are automatically exercised upon the expiration date unless the customer explicitly 

directed otherwise. Any direction not to exercise profitable options is a highly unusual event, which the 

OCC double-checks by contacting the broker who gave them such instruction. The OCC personnel had no 

recollection of any such contacts after 9/11. 
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profitability, including short selling of UAL, AMR, and other airline stocks, close 

scrutiny revealed absolutely no evidence of foreknowledge. The pattern is repeated over 

and over. For example, the FBI investigated a trader who bought a substantial position in 

put options in AIG Insurance Co. shortly before 9/11. Viewed in isolation, the trade 

looked highly suspicious, especially when AIG stock plummeted after 9/11. The FBI 

found that the trade had been made by a fund manager to hedge a long position of 4.2 

million shares in the AIG common stock. The fund manager owned a significant amount 

of AIG stock, but the fund had a very low tax basis in the stock (that is, it had been 

bought long ago and had appreciated significantly over time). Selling even some of it 

would have created a massive tax liability. Thus, the fund manager chose to hedge his 

position through a put option purchase. After 9/11, the fund profited substantially from its 

investment in puts. At the same time, however, it suffered a substantial loss on the 

common stock, and overall lost money as a result of the attacks. 

In sum, the investigation found absolutely no evidence that any trading occurred with 

foreknowledge of 9/11. The transparency of the U.S. securities markets almost ensures 

that any such trading would be detectable by investigators. Even if the use of some 

combination of offshore accounts, shell companies, and false identification obscured the 

identity of the traders themselves, the unexplained trade would stand out like a giant red 

flag. The absence of any such flags corroborates the conclusion that there is no evidence 

any such trading occurred. Indeed, the leaders of both the SEC and FBI investigations 

into pre-9/11 trading expressed great confidence in this conclusion.

International Investigation 

There is also no evidence that any illicit trading occurred overseas. Through its Office of 

International Affairs, the SEC sought the assistance of numerous foreign countries with 

active securities markets. The FBI also engaged with foreign law enforcement officials 

about overseas trading. There are two issues to consider with respect to the international 

investigation: overseas trading in U.S. securities and trading of foreign securities in 

overseas markets. 

Trading of U.S. securities overseas

The SEC sought the assistance of countries where there was significant trading of U.S. 

securities. Each of these countries had previously entered into information sharing 

agreements with the SEC to cooperate in securities investigations, and each willingly 

cooperated in the 9/11 investigation. According to the SEC, there is generally little 

trading of U.S. securities overseas, since U.S. securities trade primarily in U.S. markets. 

Thus, unusual trading in U.S. securities would not have been very hard for foreign 

regulators to detect. Each country the SEC contacted conducted an investigation and 

reported back to the SEC that there was no trading in U.S. securities in their jurisdiction 

that appeared to have been influenced by foreknowledge of the 9/11 attacks. 
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The foreign investigators also helped investigate suspicious trading in the U.S. from 

offshore accounts. For example, the SEC investigation revealed that shortly before 9/11 

an offshore account had taken a short position in a fund that tracked one of the major 

U.S. market indices—an investment that profited when the U.S. market declined. After 

9/11, the offshore investor closed out the position, reaping $5 million in profit. The 

SEC’s Office of International Affairs solicited help from a European country to 

investigate further. Although this trade was highly suspicious on its face, the European 

country’s investigation revealed that this investor was an extremely wealthy European 

national who often speculated by taking short positions in the U.S. market. In fact, the 

same investor had employed this strategy to lose $8 million in the six months preceding 

9/11.

Trading of foreign securities 

There is also no evidence that insider trading took place in the stock of any foreign 

company. The SEC asked its foreign counterparts to investigate trading in securities that 

trade primarily on foreign markets subject to foreign regulation. Indeed, a number of 

companies that suffered serious economic losses from the 9/11 attacks were foreign 

companies, which traded mainly on foreign markets. In particular, the insurance 

companies with the largest potential losses included Munich Reinsurance Co., Swiss 

Reinsurance Co., and Allianz AG, all foreign-based companies that primarily traded 

overseas.172 In addition to the SEC, the FBI team investigating the financial aspects of the 

9/11 plot frequently dealt with foreign law enforcement officials after 9/11 and raised the 

trading issue.173 Neither the SEC nor the FBI was informed of any evidence of any illicit 

trading in advance of 9/11 in any foreign securities.

Shortly after 9/11, Ernst Welteke, president of the German Central Bank, made a number 

of public statements that insider trading occurred in airline and insurance company stock, 

and also in gold and oil futures. These preliminary claims were never confirmed. In fact, 

German officials publicly backtracked fairly soon after Mr. Welteke’s statement was 

issued. On September 27, a spokesman for the German securities regulator, BAWe 

(Bundesaufsichtsamt für den Wertpapierhandel), declared that while the investigation 

was continuing, “there is no evidence that anyone who had knowledge of the attacks 

before they were committed used it to make financial transactions.”174 On December 3, 

2001, a spokesman for the BAWe said its investigation had revealed no evidence of illicit 

172 According to the SEC’s Chief, Market Surveillance, the countries with the most significant relevant 

trading of foreign corporations stock were the UK and Germany. The UK quickly and publicly reported it 

had found no illicit trading. See e.g., J. Moore, The Times, Bin Ladin did not Deal (October 17, 2001) 

(Chairman of Financial Services Authority reported that investigation failed to reveal evidence of irregular 

share dealings in London in advance of 9/11). Other countries publicly reported similar findings. See e.g.,

Associated Press Worldstream, Suspicion dispelled of insider trading in KLM shares before September 11 

attacks (reporting conclusion of Dutch government investigation that sharp drop in share prices of the 

national airline days before 9/11 were not caused by people who knew of terrorist attacks). 173 The chief of the FBI team also raised the issue with CIA and asked it to be alert for any intelligence on 

illicit trading; he received no such reports from the CIA. 

174 Agence France Presse (Sept. 27, 2001). 
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trading in advance of 9/11 and that the case remained open pending new information. The 

spokesman said separate investigations by state authorities had also yielded no 

information and had been closed. 175

Commission staff interviewed German law enforcement officials who said that 

exhaustive investigation in Germany revealed no evidence of illicit trading. Moreover, 

both SEC and FBI officials involved in the trading investigation told the Commission 

staff that German investigators had privately communicated to them that there was no 

evidence of illicit trading in Germany before 9/11. The FBI legal attaché in Berlin 

forwarded a lead to the German BKA (Bundeskriminalamt), which reported back that the 

trading allegations lacked merit. It appears, then, that Welteke’s initial comments were 

simply ill-considered and unsupported by the evidence.176

Other investigation corroborates the conclusion of no illicit 

trading

Since 9/11, the U.S. government has developed extensive evidence about al Qaeda and 

the 9/11 attacks. The collected information includes voluminous documents and 

computers seized in raids in Afghanistan and throughout the world. Moreover, the United 

States and its allies have captured and interrogated hundreds of al Qaeda operatives and 

supporters, including the mastermind of the 9/11 plot and the three key plot facilitators. 

No information has been uncovered indicating that al Qaeda profited by trading securities 

in advance of 9/11. To the contrary, the evidence—including extensive materials 

reviewed by Commission staff—all leads to the conclusion that knowledge of the plot 

was closely held by the top al Qaeda leadership and the key planners. It strains credulity 

to believe that al Qaeda would have jeopardized its most important and secretive 

operation or any of its key personnel by trying to profit from securities speculation.

175 See Australian Financial Review (Dec 3, 2001). 176 The SEC investigated trading of American Depository Receipts (ADRs) in foreign companies. ADRs 

are receipts issued by a U.S. bank for the shares of a foreign corporation held by the bank. ADRs publicly 

trade on U.S. markets. This investigation revealed no illicit trading.