Storming The Fortress Of Hidden Terrorist Funds

Even before President George W. Bush unveiled his "most wanted" list of suspected terrorist financiers, bankers around the world were rushing to make sure they weren't holding the wrong moneybags. Accounts had already been frozen in Britain and Switzerland when Germany uncovered a particularly alarming link in late September. German authorities froze an account at the Hamburg Sparkasse bank that belonged to Syrian businessman Marmoun Darkazanli, who publicly admitted that he knew all three of the suspected Sept. 11 hijackers who had lived in Hamburg. Darkazanli also admitted that he has worked for Mamdouh Mahmud Salim, who is in jail awaiting trial in the United States, where authorities believe he is a senior deputy to Osama bin Laden--and possibly his finance chief. Now Darkazanli's import-export business is suspected of being a front for bin Laden's terrorist network Al Qaeda.

The investigation of the suicide bombers' money trail has put the spotlight on just how easy it is for terrorists to exploit the world's financial systems. While tiny Caribbean- and Pacific-island banking centers like to portray themselves as discreet harbors for the wealth of the rich and powerful, investigators believe they have become money-laundering havens for terrorists and other criminals. The IMF estimates that global money laundering represents as much as 5 percent of the world's GDP--about $1.5 trillion. Despite all the talk of greater "transparency" in the global age, the international banking system still allows for a network of tax havens, offshore banking centers and regulatory loopholes in which savvy criminals can easily conceal funds. The current EU directive against money laundering targets drug traffickers--not other criminals, including terrorists. Even in better-regulated private banking centers like Switzerland and Luxembourg, secrecy can provide unintended shelter to the wrong sorts.

Financial authorities are working fast to shed more light on the money trail in the aftermath of the Sept. 11 attack. Dozens of suspicious accounts have been frozen across Europe, including in France and the Netherlands. G7 finance ministers have announced they will work with the U.S. government's Foreign Terrorist Asset Tracking Center to follow the money trail across borders. The Swiss and the Germans, realizing that the status quo won't do, have set up special task forces to look for clues in their own banking systems. Britain is introducing a package of legislation to increase the policing of financial markets and will also sponsor a new U.N. resolution that would impose tougher sanctions on countries that don't do enough to hunt down terrorists and their funds. The EU has moved with unprecedented speed, fast-tracking directives on money laundering and market manipulation.

All over Europe, regulators and police are tracking the money that leads to bin Laden, whose personal wealth has been estimated in the hundreds of millions of dollars. The investigations have already raised embarrassing questions about possible ties between major financial institutions and minor ones connected to known terrorists. For example, the Dutch bank ABN AMRO has a 40 percent interest in Saudi Hollandi Bank in Jidda, the largest non-Saudi-owned bank in the country. Saudi Hollandi has a relationship with the Sudanese Al Shamal Islamic Bank, said to have been founded by bin Laden. ABN AMRO is now reviewing the exact nature of the ties between the two banks.

In addition to ABN AMRO, several other financial institutions have been found to have relationships with the Al Shamal bank, including Credit Lyonnais (Suisse) and American Express. Maurice Monbaron, general manager of Credit Lyonnais in Geneva, says he blocked an Al Shamal account held at his bank because Credit Lyonnais didn't want to be seen doing business with untoward customers. "Just like a taxi driver can refuse a ride," he says. Monbaron adds that the amount of money in the account was very small--"enough to buy a nice suit in Geneva, perhaps." On Sept. 17 American Express Bank closed two Al Shamal accounts (one in New York, one in London) that had been dormant for two years. "The accounts were closed and the relationship was closed," says Lee Middleton, a spokesperson for American Express in New York.

European money-laundering investigations will likely drag on for months, if not years. Acting on U.N. Security Council resolutions, European authorities had already frozen more than $100 million worth of Taliban funds since last March. In addition to investigating a list of 27 names given by the United States, Europeans are now looking at other individuals and institutions that might be connected to terrorism. A master list of nearly 400 names is being circulated by the Basel Commission on Banking Supervision.