Boston Globe
September 15, 2001


By Michael Kranish

WASHINGTON -- The US effort to track international terrorist groups has been stymied in part by the refusal of some nations, especially in the Middle East, to cooperate in providing financial records that might reveal how money is laundered and eventually transferred to terrorist ''cells'' in the United States, government officials say.

The Bush administration, which until now has sent conflicting signals about the importance of money-laundering laws, yesterday announced the formation of a task force that it said would seek to disrupt terrorist financial networks. Funding for the task force was authorized last October, but went operational only ''in the last 48 hours'' after the terrorist attacks, an administration official said.

At the same time, an administration official who briefed reporters on condition of anonymity, issued a scalding criticism of countries that don't cooperate on money laundering, saying, ''You can't harbor terrorists and wink at terrorists and let terrorists use your territory and let them use your financial networks and do all of those things and at the same time say, `We're a friend of the United States.'''

Just days earlier, however, the Bush administration had been on the verge of unveiling a bank money-laundering strategy that would have eased some of this country's laws, as long sought by some US banks.

''They were definitely about to pull back and become less forceful in terms of bank accountability,'' said Senator John F. Kerry. Now, the Massachusetts Democrat said, he expects the Bush administration to reverse course ''or they would be held up to ridicule.'' The tracking of terrorist money is ''absolutely critical ... at the top of the list'' in tracing terrorists, Kerry said.

Noting that a top suspect, Osama bin Laden, is reputed to have a $300 million fortune and is holed up in Afghanistan, Kerry said, ''I guarantee you that money is not invested in the rocks of Afghanistan.'' Instead, he said, the money is spread throughout banks in countries with loose or nonexistent banking laws, making it much easier for bin Laden to finance terrorism.

The conflicting signals about the need to toughen money-laundering laws have come from some of President Bush's closest advisers. Lawrence Lindsey, chairman of the White House's National Economic Council, said in a 1999 speech that money-laundering laws may invade privacy.

In a comment that has taken on special emphasis in light of Tuesday's attacks, Lindsey said ''there is no question the threats posed by international terrorists and drug cartels are a serious threat to our national security and to our individual liberty.'' But, Lindsey warned, ''money laundering enforcement practices are the kind of blanket search that the writers of the Constitution sought to prohibit. We have overstepped the bounds of balance and reason.''

A Lindsey spokesman did not return a call seeking comment.

If Bush makes the fight against terrorism the focus of his presidency, as he has pledged to do, he may have no choice but to step much harder on money laundering than Lindsey and the banking industry might like. Laws may be enacted that would require anyone who sells a money order to a suspicious person to report that to the government. It may be one of the most vivid examples of how privacy may be affected by the events of Sept. 11.

The administration had planned to unveil its strategy on Wednesday, but that was canceled because of the terrorist attacks. The strategy now is to be unveiled in two weeks, possibly rewritten to be tougher.

To investigators, there may be no more effective way of tracking terrorists than the adage of ''follow the money.''

''We have a global financial services infrastructure,'' said Jonathan M. Winer, who from 1994 to 1999 was the top State Department official dealing with money laundering. ''What we don't yet have are global standards being enforced everywhere to keep the money that flows through that infrastructure clean. Dirty money can get into the system from a variety of locations, including most of the Middle East.''

Winer said the refusal of some nations to cooperate in a global money-laundering pact hurt investigations of terrorist financial networks in the past and threatens to do so in the current case. Winer said terrorist financing from the Middle East flows through several channels, with Islamic charities sometimes unwittingly used as a means to ''cleanse'' the money trail and hide the original source of the funds.

Copyright 2001, Boston Globe. All rights reserved.

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