Bank Shot

Nine years after 9/11, getting between extremist groups and their funding remains an uphill struggle.

John Moore/Getty Images
John Moore/Getty Images

Last week the U.S. government indicted Faisal Shahzad for his failed attempt to blow up Times Square with a car bomb. In the text of the prosecutor’s case, one particular detail stands out: Shahzad’s operation was financed by the Pakistani Taliban, which sent him the money in two installments — one for $5,000, the other for $7,000. The cash arrived in the United States via hawalas, the traditional, informal South Asian networks used to transfer funds across international borders.

The transfer, both its method and small sum, speaks to the daunting difficulty of clamping down on terrorism financing. Had Shahzad’s plan succeeded, he would have strewn death and destruction across the heart of America’s biggest city for an amount that he could have used to buy, say, a really nice guitar. Consider that global foreign exchange markets process some $2 trillion each day, by some estimates. Five or seven K isn’t even a drop in the bucket — it’s more like an atom.

In that sense, the Shahzad case underlines the daunting challenge that faces those who are fighting on a mostly forgotten front in the West’s Long War against jihadi terrorism. Ever since 9/11, the United States and its allies have devoted enormous resources to finding, tracking, and stopping the flow of funds to militant groups around the world. As Shahzad’s attempted bargain-basement spectacular demonstrates, however, it’s a job that ranks on the difficulty chart right up with there with finding a cure for IEDs or tickling Ayman al-Zawahiri’s beard.

That isn’t to say there haven’t been successes. Al Qaeda and its various franchises have so far failed to pull off another large-scale attack inside America’s borders, and the "threat finance" experts claim some of the responsibility for that comforting nondevelopment. Within weeks of the attacks on the World Trade Center and the Pentagon, the U.S. government machinery swung into action, creating a variety of interagency efforts and task forces to throw light on the flow of funds to myriad groups. Diplomats and Treasury Department officials cracked down on the dubious activities of Saudi charities, pressured banks in Dubai to comply with international money-laundering standards, and worked to undermine Hezbollah business operations in South America.

And don’t think that it’s only people in suits who are involved; the Pentagon is part of the mix, too. Robert Chase is a retired Marine who runs the Interagency Action Group (IAG) at the U.S. Central Command, the branch of the U.S. military that oversees the wars in Afghanistan and Iraq. (Centcom’s stake in the issue came to light in May, when Gen. David Petraeus issued a remarkable press release praising a decision by senior Saudi clerics to issue a fatwa condemning anyone who knowingly finances terrorist attacks.) Chase’s remit covers the full gamut of what one might call "economic warfare" against terrorist and insurgent groups in an area of operations extending from Kenya to Kazakhstan. The IAG collaborates with agencies including the Treasury Department, the CIA, the Department of Homeland Security, the Drug Enforcement Administration, and even the U.S. Department of Agriculture. (Why the USDA? Two words: "opium poppies.") IAG activities range from training customs officers in Central Asia to frustrating the efforts of Hezbollah affiliates to worm their way into Beirut banks. "This has to do with the changing face of war itself," Chase says. "It’s not a strictly military matter. These are not organizations like traditional militaries."

Like so many other aspects of the fight against terrorism, however, it’s extremely hard to objectively measure the extent to which this work has borne fruit. Matthew Levitt, a veteran of the U.S. Treasury who now works for the Washington Institute for Near East Policy, points out that there are virtually no reliable standards for gauging the success of efforts to counter terrorist finance. He says that the two "metrics" used most often in press coverage — the amount of money seized and the number of organizations officially designated as sources of funding — just don’t provide an accurate picture. In the years after 9/11, he notes, many of the Islamic charities that sponsored various Middle East terrorist organizations were shut down under U.S. pressure — only to reopen under new names within a matter of months or days.

And it could hardly be otherwise, considering the complexity, and the murkiness, of the issues at hand. Just consider the hawala system, which traders and migrants have been using since the eighth century to move cash across the Middle East and South Asia. Roger Ballard, of the Britain-based Center for Applied South Asian Studies, points out that people outside the networks often make the fundamental mistake of treating hawalas like banks. Unlike banks, which specialize in storing the money of their depositors for a variety of purposes, hawalas focus on getting funds through the system as quickly as possible — which has the advantage of reducing bureaucracy to a minimum and, correspondingly, overhead as well. (As Ballard points out, what hawalas are transferring is an equivalent value rather than actual funds — in stark contrast to the unwieldy methods your bank will use if you ever ask it to send money overseas.)

All this makes hawalas volatile creatures: Money paid at one end has usually gone out the other by the time any outsiders hear about the transaction. And though the individual sums are often small, the aggregate amounts quickly run into the billions — much of which (including the remittances sent home by migrant laborers) is entirely legitimate in origin. All this makes life even more complicated for would-be financial detectives. "If you’ve decided that you’re going to search through billions of dollars of transfers to find the sums that terrorists are using to blow things up," says Ballard, "you’re looking for a needle in dozens of haystacks."

For that reason, there probably aren’t many cases in which the money-hunters manage to isolate the funds for a particular operation before it can happen. (In Shahzad’s case, the hawaladars who helped him get his cash almost certainly had no idea what the funds were going to be used for.) But there’s no question that following money trails can be an effective weapon — when you’re lucky enough to have a trail to follow. "By following the flows up and down the financial pipelines, you can discover individuals you didn’t know about before," says Levitt, who notes that financial flows — along with communications and travel patterns — are still among the most important intelligence tools that counterterrorism officials have at their disposal.

For his part, Chase agrees that it’s impossible to stanch the flow of all funds via hawalas and other networks — and that it probably wouldn’t make sense to try. What you can reasonably expect to do, though, he says, is disrupt operations. "You can’t necessarily stop the money," he says, "but you can make their lives extremely miserable." By way of example, he tells a story about the Afghan Threat Finance Cell (ATFC), an IAG affiliate aimed at stanching the flow of funds to the Taliban. Three months ago representatives from several Afghan hawalas approached the ATFC with a remarkable request: Centcom’s recent strike against one of their number had affected business to such an extent that the hawaladars were prepared to open their books to the Americans to show that they were clean. Centcom took them up on the offer (though Chase won’t reveal the precise results of this extraordinary collaboration).

Still, Chase gives his foes full credit when it comes to adaptability and innovation. The Taliban and their terrorist allies, he says, have shown considerable ingenuity in devising new ways to finance their operations. (One of the latest involves the use of stored-value cards; they can be issued anonymously, making them almost impossible to trace.) Small wonder, then, that no one can imagine what an ultimate "victory" against the sources of terrorist financing would possibly look like; all you can really do is keep plugging away at it. It’s called the Long War for a reason.

 Twitter: @ccaryl

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